(Alliance News) - Stock prices in London are seen opening slightly higher on Wednesday as investors mull the progress of stimulus talks in Washington, amid reports of the White House plan to review the US-China trade deal.
In early company news, investment management and pensions provider Legal & General maintained its dividend, despite posting a drop in interim profit. Soft drinks bottler Coca-Cola HBC said it is well-positioned as countries emerge from lockdowns after also posting a fall in half-year earnings.
IG futures indicate the FTSE 100 index is to open 9.10 points higher at 6,045.10. The blue-chip index closed up 3.15 points, or 0.1%, at 6,036.00 on Tuesday.
Legal & General reported lower earnings as the 184-year-old insurer was hurt by the fallout from the coronavirus pandemic.
For the half-year ended June 30, operating profit declined 6.3% to GBP946 million from GBP1.01 billion last year, while pretax profit dropped much more steeply, down 73% to GBP285 million from GBP1.05 billion.
Legal & General declared an unchanged interim dividend of 4.93 pence.
"We remain confident in our strategy and our ability to deliver resilient, organic growth through periods of macro-volatility, supported by strong competitive positioning in attractive and growing markets. Our confidence and our dividend-paying capacity are underpinned by the group's strong balance sheet with GBP7.3 billion in surplus regulatory capital, a GBP3.5 billion IFRS credit default reserve, and significant buffers to absorb a market downturn. We have a proven operating model which is reinforced by robust risk management practices," the insurer said.
Coca-Cola HBC reported a fall in earnings due lower volume and negative package and channel mix, as Covid-19 control measures caused out-of-home consumption of its soft drinks to dry up.
For the six months ended June 26, net sales revenue fell 16% to EUR2.83 billion from EUR3.35 billion last year, and operating profit declined 30% to EUR202.9 million from EUR288.9 million.
Pretax profit fell 36% to EUR167.2 million from EUR260.8 million.
Looking ahead, Coca-Cola HBC said current trading continues to confirm sequential improvement - with the second quarter the "trough" of performance caused by Covid-19 - but the bottler highlighted uncertainty as lockdown measures ease across its key territories.
"We are planning for the continuation of safety and social distancing measures in our markets for the foreseeable future, or until a pharmaceutical solution is widely implemented. We are also expecting a weaker consumer environment and the tourist season to be negatively impacted this year. Finally, there is still the risk of an impactful second wave of the virus," Coca-Cola HBC warned.
"We plan to capitalise on our advantages as the market recovers and remain flexible and focused on continuously driving efficiencies; however, it is still too early to provide financial guidance for the future."
Dublin-based healthcare services provider UDG Healthcare said it has named Non-Executive Director Shane Cooke as its new chair, succeeding Peter Gray who will retire on September 30. Cooke will assume the role on October 1.
Investors on Wednesday were contending with a myriad of issues that have continued to weigh on sentiment.
In the US, with key unemployment benefits and a ban on evictions already lapsed for millions of Americans, Republicans and Democrats remain far apart in talks on a fresh economic rescue package.
House Leader Nancy Pelosi has warned the Democrats will not budge from their USD3 trillion plan, which includes an extension of a USD600-a-week supplementary benefit. The Republicans' USD1 trillion proposal sees that handout slashed to USD200.
In addition, US-China tensions were in focus after the two sides said they would hold talks next Saturday to review their trade deal signed in January.
With the relationship between the two growing increasingly spiky - owing to issues including Hong Kong, the coronavirus and more recently TikTok - there are worries over the agreement, which brought an end to a protracted and painful trade war.
The pound was quoted at USD1.3090 early Wednesday, up from USD1.3062 at the London equities close Tuesday.
The euro stood at USD1.1812, up from USD1.1769. Against the yen, the dollar was quoted at JPY105.60, lower from JPY105.87.
Brent oil was quoted at USD44.37 Wednesday morning, firm from USD44.27 a barrel at the London equities close Tuesday.
Gold was quoted at USD2,021.59 an ounce on Wednesday morning, up sharply from USD1,995.19 an ounce at the London equities close Tuesday. The precious metal breached the USD2,000 mark for the first time late Tuesday.
Unease about the progress of US stimulus talks, the ever-weaker dollar caused by Federal Reserve monetary easing and new flare-ups in virus infections around the world sent gold surging to fresh record highs.
The Japanese Nikkei 225 index ended down 0.4%. In China, the Shanghai Composite is up 0.3%, while the Hang Seng index in Hong Kong is up 0.3%.
Growth of the Chinese service sector remained elevated during July as the economy maintained its recent recovery from the coronavirus pandemic, figures from the Caixin Insight Group showed.
The headline seasonally adjusted business activity index recorded 54.1 in July, down from 58.4 in June. Whilst down on the previous month's more than ten-year record, the index again signalled a marked rise in activity that was in line with the survey's long-term trend.
The economic events calendar has services PMI readings from Germany, the eurozone and the UK at 0855 BST, 0900 BST and 0930 BST respectively. The same is due from the US at 1445 BST, and before this is ADP employment change at 1315 BST and the trade balance at 1330 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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Coca-Cola HBC (CCH)
