LONDON MARKET PRE-OPEN: Hargreaves Assets Up; Another Inchcape Sale

(Alliance News) - Stocks in London are set for a cautiously higher open on Wednesday ahead of the latest round of US-China trade talks.

In early UK company news, Hargreaves Lansdown saw a rise in first-quarter assets under administration despite its Woodford entanglement, while Dunelm reported softer trading conditions in September but nonetheless backed its annual outlook. Inchcape made another disposal.

IG says futures indicate the FTSE 100 index of large-caps to open 8.1 points higher at 7,174.60 on Thursday. The FTSE 100 index closed up 23.35 points, or 0.3%, at 7,166.50 on Wednesday.

"The much talked about trade talks between the US and China will kick off today. Yesterday we heard that China are interested in brokering a partial trade deal, which helped stocks in Europe as well as the US. The positive signals from China are all well and good, but hopes aren’t too high as certain topics are not up for discussion as far as China are concerned," said David Madden at CMC Markets.

The Chinese delegation headed by Vice Premier Liu He will meet with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin in a renewed attempt to end a trade war that threatens global economic growth.

Recent US decisions have damped hopes that these talks will lead to a positive outcome, however. These include Washington's decision to place visa restrictions on Chinese officials over accusations of human rights violations against minority Muslim Uighurs and to blacklist 28 Chinese organizations that the US says pose a risk to national security.

In the US on Wednesday, Wall Street ended higher, with the Dow Jones Industrial Average ending up 0.9%, the S&P 500 up 0.9% and the Nasdaq Composite up 1.0%.

In Asia on Thursday, the Japanese Nikkei 225 index closed up 0.5%. In China, the Shanghai Composite is up 0.6%, while the Hang Seng index in Hong Kong is up 0.3%.

In early UK company news, fund supermarket Hargreaves Lansdown saw a rise in new business and clients in the first quarter.

The firm reported net new business of GBP1.7 billion in the three months to September 30, with net new clients of 35,000. Assets under administration at the period-end totalled GBP101.8 billion, up 3% on the June 30 figure.

Net figure for the quarter amounted to GBP128.1 million, up 6% year-on-year.

"I'm pleased to report a solid start to our financial year for client, net new business and revenue growth. We continue to focus on our strategy of delivering excellent service, information and value during these continued uncertain times for our clients," said Chief Executive Chris Hill.

Back in June, Hill "expressed his regret" for the "distress, uncertainty and inconvenience" caused by fund manager Neil Woodford freezing redemptions from his funds, which had been included in the Hargreaves Wealth 50 list.

Hill made no further comment on Woodford in his statement Thursday.

Home furnishings retailer Dunelm said trading was strong at the start of its first quarter, but conditions softened in September.

Like-for-like sales increased 6.4% in the first quarter, or the 13 weeks to September 28. Like-for-like store sales were up 2.9%, and online sales surged 35%. Total sales were up 7.5%, benefiting from new stores.

The beginning of the quarter was particularly strong, the firm said, reflecting continued market share gains and a weak comparative period last year. In September trading was mixed amid a softer homewares market.

Despite this recent market softness and increased political uncertainty, Dunelm backed its annual outlook.

"We are pleased with our performance in the first quarter, building on the strong growth delivered over the last year. Our customers continue to respond well to our specialist product and service offering and we are excited by the numerous opportunities ahead of us," said Chief Executive Nick Wilkinson.

Sabre Insurance said gross written premiums were down in the first nine months of the year, as expected.

Sabre said gross written premiums were GBP152.9 million for the nine months to September, down from GBP162.6 million a year ago. Full-year premiums are expected to be 7% lower than 2018, in line with previous guidance.

Meanwhile, Sabre expects to deliver a combined ratio in 2019 slightly above its "mid-70%'s" target.

"Our performance so far in this financial year has been in line with our expectations, and we remain confident that we will deliver a combined ratio slightly below our long-term target and an attractive dividend for the full year," said Chief Executive Geoff Carter.

Automotive distributor Inchcape said it has sold its Fleet Solutions business to Toyota Fleet Mobility for GBP100 million. Inchcape said the sale will result in a gain on disposal. The assets of the business had been held on the Inchcape balance sheet at GBP78 million.

This follows recent disposals of "less productive" dealerships in the UK, and retail sales in Australia and China. Inchcape is focused on its core Distribution operations, the firm said, and these disposals have "meaningfully streamlined" the group in this direction.

The Fleet Solutions business leases fleet vehicles and provides fleet management services to B2B customers, including Toyota. The scope of the business means there is limited synergy with Inchcape's UK retail dealership business, the firm explained.

The transaction is expected to complete in the fourth quarter of the year and the impact on Inchcape's 2019 trading profit will be "minimal".

Retailer N Brown Group swung to an interim profit despite revenue dipping.

Revenue in the half-year to August 31 was down 5.4% to GBP432.9 million, though N Brown swung to a pretax profit of GBP18.8 million from a GBP27.1 million loss a year ago. This was mainly because the firm booked a GBP65.4 million in exceptional costs a year ago, versus just GBP25.0 million in the recently ended period.

The Simply Be owner kept its dividend flat at 2.83p per share.

"The retail environment remains heavily promotional, but we are concentrating on continuing to improve our customer proposition and ensuring we operate as efficiently as possible, which has led to an increase of 4% in adjusted Ebitda for the period. We remain focussed on implementing our plans and the board's full year expectations are unchanged," said Chief Executive Steve Johnson.

The economic events calendar on Thursday has UK industrial and manufacturing figures, along with a gross domestic product estimate for August, at 0930 BST and US inflation readings at 1330 BST.

"The British production data could confirm the expectation of a slight improvement in August. Pound bears remain alert to any disappointment to send cable below the USD1.22-support," commented Ipek Ozkardeskaya at London Capital Group.

The pound was quoted at USD1.2217 early Thursday, flat on USD1.2222 late Wednesday.

In UK politics, Britain and the EU on Wednesday agreed to hold last-ditch talks aimed at securing a Brexit deal with just days left to thrash out an agreement, as the two sides accuse each other of failing to compromise.

Brexit Secretary Steve Barclay will meet his EU counterpart Michel Barnier in Brussels in an attempt to break the impasse before an October 17-18 summit.

Barnier played down hopes of a breakthrough before EU leaders meet, even as he promised to work around the clock to the deadline. He said the EU could not accept Britain's proposals as they stand, arguing they would undermine peace and weaken the European single market.

By Lucy Heming; lucyheming@alliancenews.com

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