LONDON MARKET PRE-OPEN: Returns in store for BP shareholders

(Alliance News) - Stock prices in London are seen opening higher on Tuesday after the long Easter holiday weekend, driven by robust US economic data.

In early company news, BP paved the way for share buybacks after the oil major hit its debt reduction target ahead of schedule. Accounting software provider Sage Group sold its Swiss business. Home emergency cover provider Homeserve expects annual profit in line with market forecasts.

IG futures indicate the FTSE 100 index is to open 32.70 points higher at 6,770.00. The blue-chip index closed up 23.67 points, or 0.4%, at 6,737.30 on Thursday.

BP said it expects to hit its USD35 billion net debt target during the first quarter of 2021, due to the early delivery of disposal proceeds and a positive operating performance.

BP had previously guided that it would get its debt down to USD35 billion by the end of 2021. It had said net debt actually was expected to increase during the first half, due to severance payments, a payment to Noway's Equinor for the completion of their US offshore wind joint venture, and BP's annual USD1.2 billion Gulf of Mexico oil spill redress payment.

The oil major said during the first quarter it has received around USD4.7 billion of disposal proceeds, the largest being USD2.4 billion for the sale of its 20% interest in Oman's Block 61.

BP now expects disposal proceeds in 2021 to be at the top end of the previously announced USD4 billion to USD6 billion range.

BP also reported a strong business performance during the first quarter, driven by "trading, the price environment and resilient operations".

On reaching this net debt target, BP said it is committed to returning at least 60% of surplus cash flow to shareholders by way of share buybacks, which it announce further details on at its first quarter results on April 27.

"We are pleased to announce that we now expect to have reached our USD35 billion net debt target during the first quarter 2021. This is a result of earlier than anticipated delivery of disposal proceeds combined with very strong business performance during the first quarter. We look forward to updating the market at our first quarter results, including further information on share buybacks," said Chief Executive Officer Bernard Looney.

Sage Group said it has entered into an agreement for the sale of its Swiss business to Infoniqa, a provider of HR software solutions majority-owned by Warburg Pincus, for CHF50 million. The deal is expected to complete within the next twelve months.

Homeserve said it delivered a good performance in financial 2021, with pretax profit in line with consensus forecasts.

Homeserve estimates adjusted pretax profit for the year that ended March 31 to be around GBP191 million, up 5.5% from GBP181 million in financial 2020. Consensus adjusted pretax profit, the mean average of 16 analyst estimates, stands at GBP190.2 million.

Homeserve said renewed focus on homes during the virus pandemic highlighted the value of HomeServe's core propositions across its Membership and Home Experts businesses, it noted.

Oxford Biomedica said it has signed a new three-year development and supply agreement with German pharmaceutical company Boehringer Ingelheim for the manufacture and supply of viral vectors. The deal builds on the partnership started between the two companies in 2018.

"We now have a portfolio of partnerships spread across development of [chimeric antigen receptor T cells], [T-cell receptors] and in vivo gene therapeutics, utilising lentiviral vectors. We are proud to partner with Boehringer Ingelheim, a business with proven excellence in complex manufacturing projects, as well as expertise in developing innovative medicines for patients with serious unmet medical needs," said CEO John Dawson.

The call for a higher open in London stem from a strong close in the US on Monday, with the Dow Jones Industrial Average up 1.1%, S&P 500 up 1.4% and Nasdaq Composite up 1.7%.

The S&P 500 and Dow set new records on Monday, while the Nasdaq also saw strong gains, after data on Friday showed far more US jobs than expected were created last month, reinforcing the view of a strong recovery.

The US economy regained 916,000 jobs in March, the biggest increase since August, with nearly a third of the increase in the hard-hit leisure and hospitality sector, the Labor Department reported.

In addition, the service sector in the US grew at its fastest pace in almost seven years in March, increasing price pressure, according to a IHS Markit survey on Monday.

The IHS Markit US services purchasing managers' index of business activity came in at 60.4 points in March, up from 59.8 in February and the flash estimate for March of 60.0. Last month's reading was the highest since July 2014.

The Japanese Nikkei 225 index ended down 1.1% on Tuesday. In China, the Shanghai Composite closed up 0.5%, while the Hang Seng index in Hong Kong is up 2.0%.

China's services sector posted stronger growth in March, according to survey results issued on Tuesday, with hiring also picking up and optimism surging to its highest level in over 10 years.

The Caixin headline seasonally adjusted business activity index posted 54.3 points in March, improved from 51.5 in February. It was further above the 50.0 no change mark, suggesting growth quickened in March.

The pound was quoted at USD1.3912 early Tuesday, up from USD1.3830 at the London equities close Thursday.

UK Prime Minister Boris Johnson said Monday that non-essential stores, hairdressers and pub beer gardens will reopen from April 12 in England, but people must not be complacent about the risks still posed by coronavirus.

Confirming the next step on the road map out of lockdown, Johnson told a Downing Street press conference he was looking forward to a pint of beer in a week's time. But he said the difficulties facing countries in Europe illustrated the risks still posed by the pandemic.

Johnson's comments came as the government published the latest findings from its reviews of Covid status certification - so-called "vaccine passports" - and international travel. The review suggested a certification scheme could have an "important role to play both domestically and internationally, as a temporary measure" - but Johnson faces opposition from members of Parliament on both sides of the Commons who are concerned about the civil liberties implications.

The global travel taskforce review warned "the state of the pandemic abroad, and the progress of vaccination programmes in other countries" meant it was impossible to say yet whether foreign holidays would be allowed from May 17, the date earmarked as the earliest possible for the resumption of international trips.

The euro was priced at USD1.1812, up from USD1.1765 late Thursday. Against the yen, the dollar was trading at JPY110.20, lower from JPY110.60.

Brent oil was quoted at USD62.80 a barrel on Tuesday morning, down from USD63.63 late Thursday in London. Gold was trading at USD1,735.55 an ounce, higher against USD1,728.70.

The economic events calendar on Tuesday has eurozone unemployment at 1000 BST.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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