(Alliance News) - Stock prices in London look set to open lower on Wednesday as investors grapple with a fresh surge in coronavirus cases across the US and Europe and lost hope for new stimulus from Washington.
In early company news, clothing and homewares retailer Next raised its annual profit guidance after full-price sales in its third quarter exceeded its expectations. Blue-chip property developer Land Securities poached its new finance head from FTSE 250-listed Grainger. Luxury carmaker Aston Martin Lagonda successfully raised GBP125 million in the latest stage of a turnaround led by Chair Lawrence Stroll.
IG futures indicate the FTSE 100 index is to open down 22.09 points at 5,706.90. The blue-chip index closed down 63.02 points lower, or 1.1%, at 5,728.99 Tuesday.
Next said full price sales in the third quarter were better than it had anticipated and were up 2.8% against the same time last year. Total sales, including markdown sales, were up 1.4%.
The retailer said sales performance by product category remains "very similar to the second quarter", with Home and Childrenswear over-performing while demand for men's and women's formal and occasion clothing remains weak.
Further, Next said online sales remain strong, both in the UK and overseas. In the Retail unit, out of town retail parks continue to perform better than high streets and shopping centres, due to the pandemic.
As such, Next forecasts annual pretax profit to come in at GBP365 million, higher than the GBP300 million guided with its interim results in September. In financial 2020, Next posted pretax profit of GBP748.5 million.
Land Securities said it has appointed Vanessa Simms as its new chief financial officer to replace Martin Greenslade who announced his departure last month. Simms is currently CFO at FTSE 250-listed residential landlord Grainger and is expected to join LandSec by no later than June 1 next year. She has previously held senior positions at student accommodation provider Unite Group and warehouse investor SEGRO. Grainger said the search for Simms's replacement is underway.
Aston Martin Lagonda confirmed it raised gross proceeds of GBP125 million from its capital raise, issuing 250 million shares at 50 pence each. Aston Martin shares closed 4.5% higher at 54.50p each in London on Tuesday.
The luxury carmaker late Tuesday unveiled plans for a bumper fundraising and an expanded technical pact with trade investor Mercedes-AMG.
The expected lower start for equities comes as European leaders are being forced to revert to strict, economically damaging measures to control the spread of Covid-19 amid a spike in deaths and new cases.
Chancellor Angela Merkel is expected to push for a "lockdown light" in crisis talks with Germany's regional leaders Wednesday, as the number of coronavirus cases rise and hospital beds fill up.
The proposed new restrictions would include closing restaurants and bars and putting strict limits on private and public gatherings while keeping schools, daycares and shops open, according to the best-selling Bild daily.
Meanwhile, UK Prime Minister Boris Johnson is under growing pressure to impose heightened coronavirus restrictions as the UK recorded its highest daily Covid-19 death toll since May.
As total deaths involving the virus reach 61,000 across the UK, Downing Street did not deny a projection provided by government scientists which suggested the toll could remain high throughout the winter and result in more fatalities than in the spring.
With US lawmakers unlikely to agree on a new rescue package before next week's election, analysts believe the new wave of virus infections and lingering uncertainty over the vote mean equities face a difficult few days.
President Donald Trump said Tuesday that Republicans will approve a pandemic rescue package for the US economy after the November 3 election, seeming to concede defeat on efforts to reach a deal this week.
Trump also improbably predicted Republicans would regain control of the lower house of Congress, and blamed House Speaker Nancy Pelosi for the impasse in talks over steps to help counteract the devastating impact that the health crisis has had on households and businesses.
After months of negotiations between Pelosi and Treasury Secretary Steven Mnuchin, and despite signs of recent progress, there appears to be no time left to get the deal approved before Trump and Biden go before voters next Tuesday.
"Risk reduction continues, with a pre-election US stimulus package looking all but a pie in the sky. However, the evolution of European Covid restrictions where significant economies are about to topple back into the Covid sudden stop abyss that sees the market awash in red. While compounding the gloom, it feels like the market is trying to go into next week's US election light as possible," commented AxiCorp's Stephen Innes.
The Japanese Nikkei 225 index closed down 0.3%. In China, the Shanghai Composite ended up 0.5%, while the Hang Seng index in Hong Kong is down 0.1%.
The pound was quoted at USD1.3062 on Wednesday morning, flat from USD1.3067 at the London equities close Tuesday.
The euro stood at USD1.1784, down from USD1.1830. Against the yen, the dollar was trading at JPY104.21, down from JPY104.43.
Brent oil was quoted at USD40.57 a barrel Wednesday morning, lower from USD41.20 at the London equities close Tuesday. Gold was quoted at USD1,909.42 an ounce, flat against USD1,908.04.
The economic events calendar on Wednesday has Irish retail sales at 1100 GMT and a Bank of Canada interest rate decision at 1400 GMT.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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Next (NXT)
Grainger plc (GRI)
Aston Martin Lagonda (AML)