(Alliance News) - Stock prices in London are set for a flat open on Thursday as investors track the twists and turns of the US-China trade saga, with the latest reports suggesting the two are moving towards a deal.
In early UK company news, DS Smith reported a strong rise in interim profit, Dunelm raised its annual profit forecast and IG Group Holdings guided for broadly flat half-year revenue.
IG says futures indicate the FTSE 100 index of large-caps to open 1.0 point higher at 7,189.50 on Thursday. The FTSE 100 index closed up 29.74 points, or 0.4%, at 7,188.50 on Wednesday.
"Equity markets underwent a bit of a turnaround yesterday on reports that, despite the heating up of rhetoric over politics and trade in the first part of this week, the US and China are moving closer to agreeing a deal on the number of tariffs that would be rolled back in any phase one trade deal," said Michael Hewson at CMC Markets.
"With markets in Asia playing catch up and moving higher, today's European market open is expected to be a flat one as markets try to make sense of the latest developments," he continued. "For now we can focus on the latest German factory orders data for October which are due out, as well as the latest EU Q3 GDP numbers and November retail sales."
In Asia on Thursday, the Japanese Nikkei 225 index ended up 0.7%. In China, the Shanghai Composite is up 0.8%, while the Hang Seng index in Hong Kong is up 0.4%.
In the US on Wednesday, Wall Street ended higher, with the Dow Jones Industrial Average ending up 0.5%, the S&P 500 up 0.6% and the Nasdaq Composite up 0.5%.
In early UK company news on Thursday, packaging firm DS Smith reported a robust rise in profit, helped by acquisitions.
Revenue for the six months to October 31 rose 4% to GBP3.19 billion, while pretax profit was up 31% to GBP213 million. The company lifted its interim dividend by 4% in response to 5.4 pence per share.
The revenue rise was principally due to acquisitions, DS Smith said, which was partially offset by lower volumes and sales prices within the paper and recycling businesses.
"Assuming current macro-economic conditions prevail, we anticipate an acceleration of volume growth in the second half of the year which, together with the resilience of our business model, supports our expectation of further growth in the year," said Chief Executive Miles Roberts.
Home furnishings retailer Dunelm lifted its annual profit outlook as it reported strong margins, a successful transition of customers to its new digital platform, and well contained costs.
Dunelm said it now has a modern, flexible, cloud-native platform that will be used to accelerate the development of its customer proposition.
"Customers have responded well to the new website, and we are delighted that during this critical transition period we did not see any adverse impact to our performance, maintaining our strong sales growth both online and in stores," said Dunelm.
In addition, gross margins have been stronger than expected as a result of sourcing gains and better sell through, the retailer said, while operational costs well "well controlled".
As a result, Dunem expects annual pretax profit to be higher than previous expectations, though this comes with the assumption that there is no significant change in consumer demand following the UK general election next week.
IG Group Holdings said half-year net trading revenue is expected to be broadly flat.
Net trading revenue for the first half of its financial year is expected around GBP250 million, compared to GBP251 million a year ago. The comparative period benefited from two months of trading prior to European regulatory intervention measures came into effect, however.
Revenue in core markets is expected to be around GBP210 million, down 6% on last year. The core business served, on average, 78,500 over-the-counter leveraged clients per quarter in its core markets in the first half, 4% higher than that seen in the second half of the 2019 financial year.
Daily Mail & General Trust reported a sharp fall in interim profit on non-repeating disposal gains.
Revenue was flat at GBP1.34 billion in the half-year to September 30, but pretax profit slumped to GBP134 million from GBP707 million. However, in the prior year, the company was boosted by GBP658 million in profit on the sale of assets.
Adjusted pretax profit for the half-year fell 21% to GBP145 million from GBP182 million.
In the Consumer Media division - which houses newspapers the Metro, the Daily Mail and the Mail on Sunday as well as MailOnline - revenue was up 2% on an underlying basis. Growth in MailOnline and DailyMailTV helped to offset a 3% decrease in circulation revenue and a 1% decline in print advertising sales.
The cash operating income margin and operating margin for the division will reflect a mix of an expected underlying revenue reduction, the benefit of continued cost efficiencies within the newspapers, MailOnline's growing profitability and the inclusion of the 'i', the company said.
DMGT last Friday had announced the purchase of the i newspaper from JPI Media for GBP49.6 million in cash.
Boohoo Group founders Mahmud Kamani and Carol Kane have sold a combined total of 50 million shares in the fast fashion retailer via an accelerated share bookbuild, placing managers Zeus Capital and Jefferies International said.
This represents a 4.3% stake in the company. The shares were sold at 285p each, with the stock closing at 297.10p on Wednesday.
boohoo on Tuesday reported a record performance over the Black Friday weekend, and said trading since its half-year end in August had remained strong.
Following the sale, Kane continues to hold a 2.7% stake and Kamani 13.1%.
Among currencies, the euro was quoted at USD1.1084 early Thursday, broadly unchanged from USD1.1087 late Wednesday. Against the yen, the dollar was quoted at JPY108.87 versus JPY108.80.
"USD rates rebounded yesterday on the back of soothing news on the trade war front and better-than-feared ISM non-manufacturing; this halted a broad USD sell-off. As for EUR/USD, it has come a long way from the recent bottom and temporarily broke USD1.1100 yesterday. We look for a strong jobs report tomorrow and a hawkish Fed next week and thus see potential for EUR/USD to fall back below USD1.1000 in the short term," said Danske Bank.
Sterling was quoted at USD1.3134 early Thursday, firm on USD1.3118 at the London equities close on Wednesday.
Gold was quoted at USD1,475.01 early Thursday, up from USD1,473.24 at the London equities close on Wednesday.
Brent was quoted at USD62.90, lower than USD63.26 at the London equities close on Wednesday ahead of Thursday's OPEC meeting.
Faced with slowing global economic growth and abundant reserves putting pressure on oil prices, the OPEC group and its partners could seek to deepen output cuts when they meet in Vienna on Thursday and Friday.
The cuts of 1.2 million barrels per day from October 2018 levels were originally fixed in December last year and were already extended at OPEC's last meeting in July. Some observers expected the cuts to remain in place possibly until the end of 2020.
But Iraqi oil minister Thamer Ghadban on his arrival Tuesday in Vienna suggested some members would push for output to be slashed by an additional 400,000 barrels per day. However, he added that any cut was "very much subject to the member countries". In comments reported by Bloomberg on Wednesday, Ghadban was in favour of extending the current deal to the end of next year.
The economic events calendar on Thursday has eurozone third-quarter GDP figures at 1000 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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