(Alliance News) - Stock prices in London are seen opening higher on Tuesday, with a Wall Street rally on Monday lifting the mood in Europe and Asia.
In early UK corporate news, lender Virgin Money hailed a "strong" first quarter, lifting its net interest margin outlook. Cineworld has moved to delay its payment obligations in discussions with dissenting shareholders of its Regal unit. Irn-Bru owner AG Barr said it is now trading ahead of pre-virus levels.
IG futures indicate the FTSE 100 index is to open 50.0 points, 0.7%, higher at 7,514.37. The blue-chip index had inched down just 1.70 points to 7,464.37 on Monday.
January was a difficult month for world markets, though the FTSE outperformed global peers, advancing 1.1%.
Wall Street closed higher on Monday. The Dow Jones Industrial Average advanced 1.2%, the S&P 500 index added 1.9%, and the Nasdaq Composite surged 3.4%.
Despite the strong end, the DJIA fell 3.3% in January, the S&P 500 5.3% and the Nasdaq Composite 9.0%.
Virgin Money said its trading in three months to December 31, its financial first quarter, was "in line with the board's expectations".
Customer lending fell 0.5% to GBP71.65 billion from GBP72.00 billion in the fourth quarter. It was down 1.9% annually.
Mortgage lending fell 0.5% quarterly and 2.2% annually. Business lending declined 2.2% quarter-on-quarter and 9.0% year-on-year.
On mortgages, Virgin Money said it "maintained market share while continuing to prioritise margin in a competitive environment". On business lending, the FTSE 250 listing noted a "subdued" environment amid weaker demand and lower government-backed lending.
Reflecting the focus on margin, Virgin Money's net interest margin improved to 1.77% in the first quarter, from 1.70% in the fourth quarter. It now expects a net interest margin of 1.75% for all of financial 2022, with growth in higher-yielding lending offset by competitive rates in mortgage lending.
Quarterly costs were in line with expectations and are tipped to be "broadly stable in FY22".
Store closures progressed, with 28 closed since the fourth quarter of its previous financial. Virgin Money's store footprint stands at 134.
"The group continues to expect to incur GBP275 million of restructuring charges across FY22 - FY24, with around half in FY22," Virgin Money added.
Chief Executive Officer David Duffy commented: "We are optimistic about the pace of recovery of the UK economy based on growing consumer and business confidence, underpinned by lower unemployment."
Picture house operator Cineworld said it has begun talks with former dissenting shareholders of its Regal Entertainment unit. The company wants to delay its payments under a unsecured facilities agreement related to a judgement in favour of Regal Entertainment Group shareholders.
Cineworld back in September said it will pay USD170 million as part of the judgement in favour of former shareholders of Regal. Cineworld acquired Regal back in February 2018.
The company said on Tuesday: "In order to facilitate these discussions, Cineworld has obtained waivers of, or undertakings to waive, any events of default arising from non-payment under the unsecured facility agreement from various other creditors. These creditors include certain holders of Cineworld's guaranteed convertible bond due 2025 as well as the lenders under certain of its existing debt facilities.
"Cineworld has initiated discussions with the Regal litigation parties with the aim of maximising its available liquidity and is hopeful that a satisfactory agreement can be reached within the period afforded by the waivers."
The news comes shortly after Cineworld reported it was cash flow positive in the fourth quarter of 2021, as box office and concession revenue in December got closer to pre-virus levels, helped by a strong film slate. Cineworld also is battling in the courts with Cineplex Inc over the cancelled acquisition by Cineworld of its Canadian peer.
Beverage maker AG Barr said it expects to report revenue of GBP267 million for the year that ended January 30. This would represent an 18% annual hike from GBP227.0 million in financial 2021 and a 4.4% rise from the GBP255.7 million achieved in financial 2020, before the onset of the pandemic.
AG Barr expects an operating margin before exceptional items of 15.6%, beating the prior year's 14.8%. Pretax profit before exceptional items is expected to be ahead of guidance.
"This strong trading performance was achieved despite the unexpected and increased UK government restrictions related to the Omicron Covid variant, and further emphasises the quality and resilience of our brands, business model and people," AG Barr explained.
"While government restrictions have impacted consumer behaviour across the year, both our Barr Soft Drinks and Funkin business units have traded well, particularly during the periods when restrictions were eased."
The Funkin brand produces pre-mixed cocktails.
AG Barr noted inflationary pressures have materialised as expected. It has made several cost control actions to reduce the impact of these, however.
The dollar was weaker early Tuesday.
The pound was trading at USD1.3472 early Tuesday, up from USD1.3425 at the London equities close on Monday. The euro rose to EUR1.1244 early Tuesday from USD1.1211 late Monday. Against the yen, the dollar fetched USD114.95, down from JPY115.25.
The economic events calendar on Tuesday has manufacturing PMI readings from Germany, the eurozone, the UK and US at 0830 GMT, 0900 GMT, 0930 GMT and 1445 GMT respectively.
In data already out, figures from Nationwide showed the UK housing sector kicked off 2022 with the strongest start to a year since 2005.
According to Nationwide, UK house prices surged 11% from a year before in January, following a 10% rise in December. The annual growth came largely in line with the FXstreet-cited market consensus.
House prices rose 0.8% in January from December, slowing from a 1.1% monthly hike in December. The average UK house price now stands at GBP255,556.
Nationwide noted January's annual growth was the strongest for the UK since June and represented the best start to a year since 2005.
In Tokyo, the Nikkei 225 closed up 0.3%, S&P/ASX 200 in Sydney added 0.5%. Financial markets are closed in Hong Kong and Shanghai for Lunar New Year.
The Reserve Bank of Australia kept interest rates unchanged and decided to end purchases under its bond purchase programme.
The RBA kept the cash rate target at 0.10% and the interest rate on Exchange Settlement balances at 0%.
"The decision to end purchases under the bond purchase programme follows a review of the actions of other central banks, the functioning of Australia's bond market and the progress towards the goals of full employment and inflation consistent with target," the RBA said.
The Bank of England and European Central Bank reveal their latest interest rate decisions on Thursday.
Brent oil was quoted at USD89.28 a barrel on Tuesday morning, down from USD91.12 at the London equities close on Monday. Gold stood at USD1,803.63 an ounce, up from USD1,797.05.
By Eric Cunha; ericcunha@alliancenews.com
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Barr (A.G.) (BAG)
Virgin Money Uk (VMUK)