(Alliance News) - Stock prices in London are seen opening higher on Thursday following gains in US equity markets overnight, as investors look ahead to a slew of PMI readings.
In early UK company news, sportswear retailer JD Sports Fashion bowed to shareholder pressure over its corporate governance, splitting its chair and CEO roles. Primark-owner Associated British Foods reported a positive financial third quarter. Industrial software firm Aveva outlined new financial targets to 2026.
IG futures indicate the FTSE 100 index is to open 21.23 points higher at 7,058.70. The blue-chip index closed down 50.08 points, or 0.7%, at 7,037.47 on Wednesday.
JD Sports Fashion said trading in the immediate period after the reopening of non-essential shops in England was encouraging in the UK as both existing and new consumers to the company's product ranges. Consistent with other retailers, it said, store footfall remains fragile with online traffic at elevated levels.
Looking ahead, JD said it is on track to deliver pretax profit before exceptional items for the financial year ending in January 2022 at an increased level of "no less than" GBP550 million. It posted pretax profit before exceptional items of GBP421.3 million in financial 2021.
JD Sports, which has been under fire over its corporate governance practices, said it will divide the current roles of executive chair and CEO before its next annual general meeting and a comprehensive process will commence shortly. JD Sports is holding its 2021 AGM on Thursday.
Last month, JD defiantly responded to a media report about the position of Executive Chair & Chief Executive Peter Cowgill, saying it would not split the CEO role from that of chair. Cowgill has been executive chair of JD since 2004 and assumed CEO responsibilities in 2014.
JD said "We fully accept that the composition of our board should reflect the current scale, momentum and global positioning of the group as well as its increased level of market capitalisation. In addition, the board fully supports the initiatives driven by the Hampton-Alexander Review and the Parker Review and acknowledges the need to create additional diversity within its membership.
The Hampton-Alexander review focuses on increasing the number of women on FTSE boards. The Parker Review sets FTSE 100 firms a target of appointing one person from an ethnic minority background to their boards by the end of 2021.
"We are also mindful that certain board members have served on the board for longer than the recommended period of tenure within the Corporate Governance Code. The board, therefore, recognises the need to address its composition as soon as possible and have invited the independent non-executive directors to commence the selection process and make recommendations to the Nominations Committee."
Associated British Foods reported a rise in third quarter revenue, driven by growth from its Primark clothing chain.
For the three months that ended June 19, total revenue at constant currency was up 47% to GBP3.65 billion from the same time last year.
Third-quarter revenue in the Grocery division was up 2% to GBP2.71 billion, up 10% in the Agriculture arm to GBP391 million, and up 21% in the Sugar unit to GBP406 million.
AB Foods said like-for-like sales for the quarter at Primark were 3% ahead of the comparable period two years ago when sales were at pre-Covid levels.
The Ingredients unit saw revenue edge up 3% from a year ago in the third quarter to GBP376 million, while revenue in the Retail arm, which houses Primark, tripled from a year ago to GBP1.6 billion in with the reopening of all stores and the opening of seven new stores.
Industrial software firm Aveva Group said it has had a good start to financial 2022, achieving 10% revenue growth in the first two months of the financial year on an organic constant currency basis.
In addition, Aveva said it was setting new five-year financial targets to the year ending March 31, 2026.
Aveva, which is holding a capital markets day on Thursday, is targeting a revenue compound annual growth rate of around 10% over the period. The company said its revenue growth will be supported by revenue synergies relating to its OSIsoft acquisition, which are expected to be at least USD100 million in 2026.
Aveva also targets an adjusted operating profit margin of at least 35% in 2026.
Wall Street ended higher on Wednesday, with the Dow Jones Industrial Average up 0.6%, S&P 500 up 0.1% and Nasdaq Composite up 0.2%.
The Japanese Nikkei 225 index closed down 0.3% on Thursday. In China, the Shanghai Composite was up 0.2%, while markets in Hong Kong were closed for Special Administrative Region Establishment Day holiday. The S&P/ASX 200 in Sydney ended down 0.7%.
The Chinese manufacturing sector expanded at a weaker pace in June, with firms recording slower increases in both output and new orders, survey results from IHS Markit showed.
The headline seasonally adjusted purchasing managers' index – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – edged down to 51.3 points in June from 52.0 in May. This figure is still above the 50.0 point mark, with anything above denoting expansion.
The Japanese manufacturing sector also recorded weaker expansion in June amid supply chain disruptions, data from Markit showed.
The headline au Jibun Bank Japan manufacturing purchasing managers' index – a composite single-figure indicator of manufacturing performance - dipped to 52.4 points in June from 53.0 in May.
This was a fifth consecutive monthly improvement in the health of the sector, though the pace of the expansion was the softest since February.
The pound was quoted at USD1.3810 early Thursday, flat from USD1.3812 at the London equities close Wednesday.
The euro was priced at USD1.1840, down from USD1.1856. Against the yen, the dollar was trading at JPY111.12, up from JPY110.94.
Brent oil was quoted at USD74.65 a barrel Thursday morning, down from USD75.02 at the London equities close Wednesday.
The OPEC+ group of oil-producing countries are to meet Thursday via videoconference and are expected to agree to boost output in August to meet demand and limit recent price rises.
The cost of crude oil has surged back to levels last seen in October 2018, which would normally support arguments in favour of boosting production.
India, the world's third-largest consumer of crude, has urged OPEC+ to phase out its current regime of cuts and allow prices to fall as inflation pressure threatens to hobble economic recovery.
Gold was trading at USD1,775.00, up from USD1,764.86 late Wednesday in London.
The economic calendar Thursday has manufacturing PMIs from Germany, the eurozone and UK at 0855 BST, 0900 BST and 0930 BST respectively, with the US Markit PMI print at 1445 BST and the ISM report at 1500 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
AB Foods (ABF)
JD Sports (JD.)