(Alliance News) - Stock prices in London are seen opening lower on Friday in the wake of the stimulus plan announced by the incoming Biden administration, as focus now shifts to the plan being passed into law.
In early company news, industrial software company Aveva Group expressed confidence in its prospects. British American Tobacco said it would not face any action from the UK Serious Fraud Office, and drugmaker Indivior raised revenue guidance.
IG futures indicate the FTSE 100 index is to open 30.76 points lower at 6,771.20. The blue-chip index closed up 56.44 points, or 0.8%, at 6,801.96 Thursday.
Aveva Group said it saw a positive performance in for the three months ended December 31. The industrial software company said organic constant currency revenue growth in the period was over 26%. This was driven by a significant number of scheduled subscription renewals, including a large three-year contract renewal in the Food sector, it noted.
Aveva said contract renewals helped improve revenue growth to 1.5% in the nine months to December 31 on an organic constant currency basis. On the same basis, recurring revenue grew by 10%, taking it to 68% of overall revenue in the period.
"The board remains confident in the full year outlook for AVEVA. Notwithstanding the disruption seen to the trading environment in 2020, the trend towards the digitalisation of the industrial world is strong and the board remains excited about the significant growth opportunities ahead," the company said.
British American Tobacco said it has been informed by the UK Serious Fraud Office that the UK regulator has discontinued the investigation of suspicions of corruption by the company.
The SFO had opened a formal investigation in 2017 into possible misconduct by the Dunhill cigarette maker in Africa.
BAT said it was is pleased that the SFO has closed its investigation, and that the SFO is taking no further action on the matter.
Indivior raised its 2020 revenue guidance to a range between USD645 million and GBP650 million from a previous guided range of USD595 million to GBP620 million.
In addition, Indivior lifted its 2020 net revenue guidance for Sublocade to USD128 million to GBP130 million from USD120 million to GBP125 million. Sublocade, a treatment for opioid addiction, has seen benefits from modest stocking activity in the US in the fourth quarter, the company said.
As such, Indivior expects to deliver adjusted pretax profit ahead of its previous expectations.
The pound was quoted at USD1.3672 on Friday morning, lower from USD1.3681 at the London equities close Thursday, after data showed the UK economy shrank in November.
On a monthly basis, the UK gross domestic product shrank 2.6% in November after posting 0.6% growth in October, as restrictions were in place to varying degrees across all four nations of the UK during November.
The euro stood at USD1.2140, slightly lower from USD1.2145. Against the yen, the dollar was trading at JPY103.74, flat from JPY103.72.
US President-elect Joe Biden will propose injecting USD1.9 trillion into the economy when he takes office next week, as evidence mounts that the recovery from the sharp downturn caused by Covid-19 is flagging.
Dubbed the American Rescue Plan, the proposal released Thursday includes a host of measures aimed at revitalizing the world's largest economy.
The plans include an extra USD1,400 cash handout for individuals - to top up the USD600 in last month's stimulus - a hike in the minimum wage to USD15 an hour, and billions of dollars to ramp up vaccinations so that 100 million are administered in 100 days.
Top Senate Democrat Chuck Schumer and House Speaker Nancy Pelosi embraced Biden's plan, vowing to put it before lawmakers.
In the US on Thursday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.2%, S&P 500 down 0.4% and Nasdaq Composite down 0.1%.
The Japanese Nikkei 225 index closed down 0.6%. In China, the Shanghai Composite closed flat, while the Hang Seng index in Hong Kong is down 0.1%.
"Seems like this was already priced in, at least as far as magnitude," said Ilya Spivak, analyst at DailyFX. "The main question is how much of it gets compromised away to get it passed. That is probably the next layer of speculative uncertainty that markets are focused on. Hence the muted response."
Meanwhile, the US could see a boost of "exuberant spending" after the pandemic that causes price increases, but that may not lead to a spike in inflation, US Federal Reserve Chair Jerome Powell said on Thursday.
"As the pandemic recedes and we see potentially a strong wave of spending as people return to their normal lives and begin consuming various services, there could be quite exuberant spending and we could see some upward pressure on prices," Powell said during a talk hosted by Princeton University.
The Fed last year unveiled a new inflation targeting policy that will keep interest rates at zero for an extended period, and allow inflation to rise beyond 2.0% for a time in an effort to promote full employment.
Powell did not predict a post-pandemic consumer spending spree would lead to meaningfully higher inflation, but said if that did happen, the central bank is prepared.
Brent oil was trading at USD55.65 a barrel, flat from USD55.69 a barrel at the London equities close Thursday. Gold was priced at USD1,851.74 an ounce, higher than USD1,847.36.
Friday's economic calendar has US retail sales at 1330 GMT followed by US industrial production at 1415 GMT.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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British American Tobacco (BATS)
Indivior (INDV)