(Alliance News) - Stock prices in London are seen opening slightly lower on Wednesday amid subdued trading in Asian equity markets as investors await a key central bank summit in the US later this week.
In early company news, Irish building products distributor Grafton posted stellar interim earnings, while UK construction firm Costain swung to a pretax profit.
IG futures indicate the FTSE 100 index is to open 7.98 points lower at 7,117.80. The blue-chip index closed up 16.76 points, or 0.2%, at 7,125.78 Tuesday.
Grafton Group reported a record first half performance, buoyed by upbeat trading from its Woodie's DIY, home and garden retail business in Ireland.
For the six months to June 30, revenue was GBP1.03 billion, up 46% from GBP703.7 million last year. Pretax profit was GBP142.9 million, almost five times higher than GBP29.5 million a year ago. Grafton also posted record adjusted operating profit of GBP142.4 for the period, up from GBP46.9 million.
Grafton declared an interim dividend of 8.5 pence per share, which the company said reflects its strong profitability and cashflow from operations. The company paid no interim dividend for 2020, though it paid a 14.5p final dividend for the year.
Looking ahead, Grafton said the overall outlook is positive following the successful rollout of vaccines in the four countries where it operates.
In addition, Grafton maintained its full-year guidance and expects operating profit of GBP240 million in 2021. It posted operating profit of GBP159.7 million in 2020.
The Dublin-based company said: "The recovery in the UK economy is on track and the outlook is positive. Some elements of the construction sector including housing repair, maintenance and improvement saw volumes fall sharply during the first lockdown then quickly recover by the end of last year.
"The UK RMI housing market was not directly impacted by further lockdowns this year and performed strongly in the first half at a time of reduced spending on travel, leisure and hospitality. We believe that this trend is likely to continue in the second half given the desire of households to improve the amount and quality of indoor and outdoor living space."
Maidenhead, Berkshire-based Costain Group said it was on course for to deliver full-year results in line with its expectations.
For the six months to June 30, Costain posted a pretax profit of GBP9.1 million, swinging from GBP92.3 million loss last year on revenue of GBP556.8 million, up from GBP459.9 million. Adjusted pretax profit was GBP9.4 million, up from GBP3.8 million a year before.
Costain did not declare an interim dividend but said it will continue to review the timing of the reinstatement of future dividends in the light of the company's performance and cash flow requirements.
"We continue to be successful in winning new contracts, building on last year's strong platform and making the most of the significant market opportunities. Our clients across all our chosen markets are continuing to progress their investment plans and to prioritise investment to meet their needs for decarbonisation, digitisation, levelling up and performance improvement," said Chief Executive Officer Alex Vaughan.
"We have good visibility on the completion of contracts for the remainder of this year which gives us confidence in delivering full year results in line with our expectations," Vaughan added.
Great Portland Estates said it has pre-let 121,800 square foot at 50 Finsbury Square in London to telecommunications company Inmarsat Global.
Refurbishment will extend the office floor plates within the existing envelope of the building, create a large reception as well as improve the retail, leisure and amenity offer, Great Portland Estates said. Practical completion is scheduled for late 2022.
Leasing Director Marc Wilder said: "Inmarsat is the world's leading global mobile satellite communications company and we are delighted to welcome them to our latest development. We are working with their team to create a world class London headquarters that responds to the needs of this forward-thinking organisation by providing an amenity-rich environment, combined with smart building technology powered by our award-winning app, sesame."
In Japan, the Nikkei 225 index ended flat. In China, the Shanghai Composite was up 0.4%, while the Hang Seng index in Hong Kong was down 0.2%. In Australia, the S&P/ASX 200 in Sydney closed up 0.4%.
"Today's Asia session has been a subdued one with little in the way of drivers one way or the other, and as such today's European open looks set to start slightly on the back foot," said CMC Markets analyst Michael Hewson.
In the US on Tuesday, stocks ended higher, with the Dow Jones Industrial Average up 0.1%, S&P 500 up 0.2% and Nasdaq Composite up 0.5%. There were record closes for the S&P 500 and Nasdaq Composite indices at 4,486.23 and 15,019.80 points, respectively.
US President Joe Biden's plans to spend nearly USD5 trillion to change the world's largest economy advanced in the House of Representatives on Tuesday, after Democratic leaders reached an agreement with centrist lawmakers to end a dispute that threatened the bills.
Biden and his Democratic allies controlling the chamber are pushing for passage of both a USD1.2 trillion overhaul to the country's infrastructure and a bill costing USD3.5 trillion over 10 years that would pay for improvements to education, health care and climate change resiliency.
While the infrastructure bill has already won passage in the Senate with some votes from Republicans, Democrats have found no opposition support for the second, larger bill, and were planning to approve it with their votes alone - a tough task given their narrow majorities in both chambers of Congress.
Focus is now on a speech by Federal Reserve Chair Jerome Powell on Friday to central bankers and finance chiefs for the Jackson Hole symposium, with hopes for an idea about the Fed's plans for monetary policy.
Hewson commented: "While its not surprising that the focus is very much on Fed chair Jay Powell's speech and a possible framework for a tapering of asset purchases by the end of the year, recent events could well see this pushed out to the September Fed meeting.
"The last-minute decision to hold this week's meeting virtually appears to be a tacit admission by the Federal Reserve that the surge in the Delta variant is still a clear and present danger to the US recovery, and while cases may well be starting to top out now, that may well reverse when the schools go back next month."
The pound was quoted at USD1.3720 early Wednesday, flat from USD1.3721 at the London equities close Tuesday.
The euro stood at USD1.1744, slightly lower from USD1.1747. Against the yen, the dollar was trading at JPY109.70, up slightly from JPY109.67.
Brent oil was trading at USD71.00 a barrel Wednesday morning, up from USD70.73 late Tuesday. Gold was quoted at USD1,795.65 an ounce, lower against USD1,806.44
The economic events calendar for Wednesday has the Ifo's German business climate monitor at 0900 BST and US durable goods orders at 1330 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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Costain (COST)
Grafton Group (GFTU)