(Alliance News) - The FTSE 100 index in London is set to open lower on Monday morning, as the analysts say the dollar rally has run its course for now.
A large proportion of the revenue of FTSE 100 companies is made in dollars, so they benefit from a strong dollar when converting results into sterling.
The pound was quoted at USD1.3889 early Monday, higher than USD1.3831 at the London equities close on Friday.
The euro traded at USD1.1866 early Monday, up from USD1.1856 late Friday in London. Against the yen, the dollar was quoted at JPY110.19, unchanged from JPY110.20.
"Federal Reserve buying has run ahead of US government issuance in the second quarter, and the end of the US debt ceiling suspension looms at the end of the month," commented OANDA Senior Market Analyst Jeffrey Halley. "A consequent fall of the US dollar and rally in stock markets is likely right in front of our faces."
IG says futures indicate the FTSE 100 index of London large-caps to open 24.5 points lower, or 0.3%, at 7,097.30 on Monday. The FTSE 100 index closed up 91.22 points, or 1.3%, at 7,121.88 on Friday.
In early UK company news, Tate & Lyle has agreed to sell a controlling stake in a new company and its subsidiaries, comprising its Primary Products business in North America and Latin America and its interests in the Almidones Mexicanos and DuPont Tate & Lyle Bio-Products joint ventures.
The assets will be sold to KPS Capital Partners. Tate & Lyle said it expects to receive gross cash proceeds of USD1.3 billion, resulting in net cash proceeds of USD1.2 billion after adjustments and transaction costs.
Following completion, the company said it intends to return GBP500 million to Tate & Lyle's shareholders through a special dividend and associated share consolidation. Completion is expected in the first quarter of 2022.
Tate & Lyle and KPS will each own 50% of new company - valued at around USD1.7 billion - with KPS having board and operational control.
Clothing retailer ASOS has formed a joint-venture with US-based multi-channel retailer, Nordstrom, which will invest for a minority interest in the Topshop, Topman, Miss Selfridge and HIIT brands.
ASOS said the joint-venture will help drive the growth of these brands and paves the way for exploration of a new wider strategic partnership aimed at building greater awareness and engagement in the US and Canadian market.
Under the joint-venture agreement, ASOS said it will retain operational and creative control, but work with Nordstrom to "leverage its US market expertise and extensive customer reach".
Online trading services provider Plus500 said its financial position remains robust and cash balances are healthy.
The company's revenue in the six months to the end of June was USD346.2 million, down from USD564.2 million posted for the first half of 2020, though up from 148.0 million in the same period of 2019. Customer Income, a key underlying growth metric for Plus500, reached USD379.2 million, lower than USD556.9 million a year earlier but up from USD175.0 million in 2019.
Plus500 said 136,980 new customers were onboarded during the recent half year, down from 198,176 a year before but up 47,540 two years before.
The company noted that its results reflect regulatory changes implemented in Australia during the period, the impact of which it is still assessing. Plus500 said it remains confident about its performance during the remainder of 2021 and beyond.
Review platform Trustpilot Group said it expects to report total revenue of USD62 million for the six months to the end of June, representing 31% growth over a prior year, or 22% growth at constant currency.
Trustpilot said it sees its annual recurring revenue at USD134 million, compared to USD99 million a year ago, representing 27% constant currency growth.
The company said it expects high-teens constant-currency revenue growth for the full year.
"We are encouraged by the progress we have made in the first half of the year and the board remains confident in the strategy and outlook for the business," said Chief Executive Peter Holten Muhlmann.
Dechra Pharmaceuticals reported a stronger-than-expected trading performance. The company said it delivered year-on-year organic revenue growth, supplemented by the product acquisitions of Osurnia and Mirataz.
Dechra said revenue for the financial year to June 30 increased by 21% at constant exchange rate or by 18% at actual exchange rate.
"We are pleased to have continued to outperform a robust market throughout the pandemic affected financial year. We have benefited from above average market growth in the majority of our key CAP markets," said Chief Executive Ian Page.
In Asia on Monday, the Japanese Nikkei 225 index closed up 2.3%. In China, the Shanghai Composite was up 0.3%, while the Hang Seng index in Hong Kong was up 0.4%.
"Asian shares are in the green this morning after their US peers ended last week on new record highs, as investors continued to bet that global growth remains on track despite new Covid-19 variants," commented Danske Bank Senior Analyst Aila Mihr.
The Dow Jones Industrial Average ended up 1.3%, the S&P 500 up 1.1% and Nasdaq Composite closing 1.0% higher.
US Treasury Secretary Yellen said Sunday she was "very concerned" about the risk that new variants of coronavirus could pose to the global economic recovery from the pandemic.
"We are very concerned about the Delta variant and other variants that could emerge and threaten recovery," she told reporters following the G20 meeting.
"We are a connected global economy; what happens in any part of the world affects all other countries."
On data front, Japan's machine tool orders growth slowed to 96% year-on-year in June, from 142% in May.
"The slowdown had to happen due to the unwinding of hugely favourable base effects," said Pantheon Macroeconomics Chief Asia Economist Freya Beamish. "The continued rise, 2.5% month-on-month, on our adjustment, was surprising after continuous gains for over a year."
In contrast, foreign orders fell for the first time in a year, by 4.5%, after a 2.7% increase in May.
"The data, therefore, present an early caveat for world industrial activity. Admittedly, trend in foreign orders has been extremely strong, and remains so for now. But the tick down could represent a turning point," added Beamish.
Gold was quoted at USD1,800.43 an ounce early Monday, down from USD1,809.40 on Friday. Brent oil was trading at USD75.19 a barrel, down from USD75.70 late Friday.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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Tate & Lyle (TATE)
Plus500 (PLUS)
ASOS (ASC)
Trustpilot (TRST)
