LONDON MARKET PRE-OPEN: Top Level Changes At Stagecoach, IG And Saga

(Alliance News) - The FTSE 100 looks set to break this week's losing streak on Wednesday, aided by a lower pound and hope that US tariffs due to hit China at the end of the week will be avoided.

In early UK company news, Stagecoach reported a rise in interim profit and said its chair will step down but remain with the transport firm as a non-executive. IG Group hired the chair of BT's Openreach for the same role at the online trading firm, and Saga appointed the former chief executive of Superdry as its new CEO.

IG says futures indicate the FTSE 100 index of large-caps to open 23.14 points higher at 7,236.90 on Wednesday. The FTSE 100 index closed down 20.14 points, or 0.3%, at 7,213.76 on Tuesday.

Sterling was quoted at USD1.3124 early Wednesday, lower than USD1.3176 at the London equities close on Tuesday.

The pound fell sharply late Tuesday in London after YouGov's constituency-by-constituency poll predicted a narrower lead for the Conservatives than initially estimated.

YouGov's MRP poll predicts the Conservatives are on course for a 28-seat majority – but the margin of error and unknown impact of tactical voting means a hung parliament is still a possibility. A 28-seat majority would be the best Tory result since Margaret Thatcher's showing in 1987 – but it is down from the sizeable 68-seat victory that the same style poll had been predicting only two weeks ago.

Chris Curtis, YouGov's political research manager, said: "The margins are extremely tight and small swings in a small number of seats, perhaps from tactical voting and a continuation of Labour's recent upward trend, means we can't currently rule out a hung parliament."

David Cheetham, at XTB Markets, said: "Given the margin for error in this poll, as well as the trend which has shown a clear narrowing of the majority, it is safe to say that Thursday's election outcome is far from a forgone conclusion, and we are once more entering the realm of a possible hung parliament."

"Those looking to front run an expected Tory victory now have some food for thought and may be feeling less bullish than they were before tonight's reading and it would not be at all surprising if we get some further [weakness in the pound] in the next 48 hours as uncertainty is ramped up once more," he added.

Elsewhere, the euro was quoted at USD1.1086 early Wednesday, lower than USD1.1095 late Tuesday. Against the yen, the dollar was quoted at JPY108.71, flat versus JPY108.70.

In early UK company news, Stagecoach said it had a "solid" half-year as pretax profit rose.

Revenue for the six months to October 26 was GBP800.2 million, down from GBP1.01 billion a year ago. However, pretax profit rose to GBP65.9 million from GBP48.9 million.

The fall in revenue reflected the end of the Virgin Trains East Coast franchise in June 2018 and the end of the East Midlands Trains franchise in August 2019. The profit rise, meanwhile, was due to a non-repeating cost of GBP24.2 million taken a year ago in relation to the equalisation of guaranteed minimum pension benefits.

The transport operator said its expectations for adjusted earnings per share for the full year remain unchanged, having fallen to 10.0p in the half year from 12.9p a year ago.

Separately, Stagecoach unveiled some management changes, with Brian Souter to step down as chair at the end of the year but carry on as a non-executive director.

Ray O'Toole, a non-executive director, will be appointed as chair at the start of next year.

Deputy Chair & Senior Independent Director Will Whitehorn will support the chair transition and, as previously announced by Stagecoach, will step down from the board on June 30. At that point, reflecting the fact that an independent chair is in place, the role of deputy chair will be discontinued.

Souter co-founded Stagecoach and was its chief executive until 2013.

Souter said that "the time is right" to step down as chair. "My family and I continue to have a significant shareholding in Stagecoach, and I have every confidence in the management team, our strategy and the positive prospects of the business," he said.

In addition, Ann Gloag and Ewan Brown, both long-serving non-executive directors, will retire from the board at the end of 2019.

In other management changes on Wednesday, IG Group Holdings has appointed Robert McTighe as chair.

McTighe is the chair of Openreach, Together Financial Services, and Arran Isle. For over 20 years he has held various non-executive director roles in a range of both regulated and unregulated industries, said IG, whilst also spending eight years on the board of Ofcom and one year on the board of Postcomm.

Jonathan Moulds will continue to serve as interim chair until February 3, when McTighe's appointment takes effect.

McTighe's background in regulated industries comes as IG has had to adapt to recent European Securities & Markets Authority measures.

In 2018, the European regulator placed restrictions on marketing, distribution or sale of CFDs to retail clients, in order to protect investors from losing more money than they put in, restrict the use of leverage and incentives, and ensure that risk warnings are provided.

And in another new board hire, over-50s insurer Saga said it has appointed Euan Sutherland as chief executive, effective from January 6.

Most recently Sutherland was the CEO of clothing retailer Superdry. He resigned from Superdry back in April after shareholders voted to re-appoint founder Julian Dunkerton to turnaround the business.

"Alongside the recent appointments of Cheryl Agius as CEO of Insurance and Gilles Normand as COO, the board has every confidence in the team now in place to lead and accelerate Saga's turnaround strategy," said Saga Chair Patrick O'Sullivan.

Numis said that some directors, senior managers and employees of stockbroker AJ Bell have sold 6.4 million shares in total at a price of 400p each, raising GBP25.7 million. Shares in AJ Bell closed at 405p on Tuesday.

To come in the UK corporate calendar on Wednesday are annual results from TUI, expected around midday.

In the US on Tuesday, Wall Street ended slightly lower, with the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite indices all off 0.1%.

In Asia on Wednesday, Tokyo's Nikkei 225 index ended down 0.1%. In China, the Shanghai Composite closed up 0.2%, while the Hang Seng index in Hong Kong is 0.8% higher.  

A fresh round of levies on USD160 billion of Chinese exports to the US is due to be imposed on Sunday, and so far there has been no word from the White House on a possible delay to that date.

A ray of hope on Tuesday came from a report in the Wall Street Journal, which said that US and Chinese officials were working on a deal to postpone a round of tariffs set to hit Chinese imports in five days.

On Tuesday, however, US President Donald Trump's top economics adviser Larry Kudlow warned that the measures remained in play for now. "The reality is that those tariffs are still on the table," Kudlow said, although he did say that Trump had struck a "constructive and optimistic tone" on China.

Gold was quoted at USD1,464.45 early Wednesday, flat on USD1,463.59 at the London equities close on Tuesday.

Brent was quoted at USD63.94 early Wednesday, down from USD64.34 at the London equities close on Tuesday.

In the economic calendar on Wednesday, there are US consumer prices at 1330 GMT followed by the Federal Reserve's interest rate decision at 1900 GMT and a press conference with Fed Chair Jerome Powell at 1930 GMT.

"The Fed is likely to signal as little as possible this week other than to echo recent guidance from members' latest remarks, which indicate that the Committee sees policy in a good place barring a "material reassessment" to the outlook. In this context, we could expect Chair Powell to reiterate that while the bar to cutting rates is high, the bar for hiking is even higher," said Stephen Innes, chief Asia market strategist at AxiTrader.

By Lucy Heming; lucyheming@alliancenews.com

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