(Alliance News) - Stock prices in London are set to open lower on Monday with US-China trade uncertainty continuing to swirl internationally, and with local focus on UK gross domestic product data due out later in the morning.
In early UK company news, Informa backed its guidance after a "resilient" ten months, Sirius Minerals has come up with a two-stage mine development plan, and Greggs upgraded its annual guidance.
IG says futures indicate the FTSE 100 index of large-caps will open 29.08 points lower at 7,330.30 on Monday. The FTSE 100 index closed 47.03 points, or 0.6%, lower at 7,359.38 on Friday.
"Not a surprising start to the week with the market taking a cautionary approach in Asia today. Besides a touch of trade talk headline uncertainty, predictably macro concerns have fallen on Saturday's headline inflation releases out of China which was gloomy, to say the least," said Stephen Innes, market strategist at AxiTrader.
In Asia on Monday, the Japanese Nikkei 225 index closed down 0.3%. In China, the Shanghai Composite ended down 1.8%, while the Hang Seng index in Hong Kong is down 2.7%.
China's consumer prices increased at their fastest rate in almost eight years in October driven by a spike in pork prices caused by an outbreak of African swine fever, according to official figures released over the weekend.
The consumer price index – a key gauge of retail inflation – rose 3.8% last month on a year before, the National Bureau of Statistics said, accelerating from 3.0% in September and the highest annual rate since January 2012.
Analysts in a Bloomberg News poll had forecast a rate of 3.4%.
Prices of pork, the staple meat in China, have more than doubled in the past year, according to the NBS. More than a million pigs have been culled due to the widespread outbreaks since African swine fever appeared in August 2018, according to official statistics, but that is widely considered to be an underestimate.
The producer price index – an important barometer of the industrial sector that measures the cost of goods at the factory gate – declined 1.6% in October from the previous year, the NBS said. That came after prices shrank 1.2% in September, and represented the sharpest decline since August 2016.
In the latest US-China trade war news, US President Donald Trump said on Friday there is not yet any agreement to roll back tariffs.
Asked by reporters outside the White House if he would meet Chinese President Xi Jinping before the end of the year, Trump said: "We'll see." A key White House advisor earlier said the administration may consider holding off on the next round of tariffs due to be imposed on China on December 15.
In the US on Friday, Wall Street ended largely higher with the Dow Jones Industrial Average ending flat, the S&P 500 up 0.3% and Nasdaq Composite closing 0.5% higher.
In early UK company news, business-to-business publisher and events organiser Informa said it posted a "resilient" performance for the first 10 months of the year.
Group underlying revenue growth was 2.8% for the ten months to October 31, with the "significant, seasonally stronger" November and December trading period yet to come.
Forward pacing for the remainder of 2019 provides "reassurance" on its revenue growth guidance of 3.5%, Informa said. Further, "the breadth and balance of the enlarged group, the quality of our revenue growth and strong visibility of forward bookings and renewals into the first quarter of 2020" gives confidence in future growth.
"After ten months trading in 2019, despite an unpredictable economic [and] geo-political backdrop, the enlarged Informa Group continues to demonstrate resilience and performance, remaining on track for a sixth consecutive year of growth in underlying revenue, profit, adjusted earnings and cashflow," said Chief Executive Stephen Carter.
Sirius Minerals said it has come up with a two-stage project development mine plan following a shelved fundraise which had been intended to finance its North Yorkshire polyhalite project.
Due to the "market conditions" which hampered its ability to deliver necessary stage 2 financing, Sirius decided to undertake a strategic review and slowed the pace of development at the project.
"Our analysis has identified a two-stage development plan that enables us to achieve the key de-risking milestone of first polyhalite, when the service shaft reaches the polyhalite ore body, with an upfront capital requirement of about USD600 million. The additional works required to reach an installed and ramped up production capacity of 10 Mtpa contemplates up to USD2.5 billion of capital expenditure," said Managing Director & Chief Executive Chris Fraser.
The company is in discussions with potential strategic partners and debt investors with the aim of "securing the best route to finance our revised initial scope of work".
Baker Greggs reported solid growth in the fourth quarter thus far as it upgraded its full-year profit forecast.
Greggs said its performance in the fourth quarter of 2019 to date has "continued to be very strong" despite strengthening annual comparatives. In the six weeks to November 9, total sales were up 12% against a comparative of 9%, while like-for-like sales surged 8.3% against 4.0% growth a year ago.
In the year-to-date, total sales are up 13% and like-for-like sales 9.2% higher.
Greggs said it now expects underlying pretax profit to be above its previous expectations. In 2018, the maker of sausage rolls, both vegan and meat-filled, achieved profit of GBP89.8 million.
Cross border payments firm Finablr backed its guidance after strong year-to-date growth.
Adjusted income for the first nine months of the year was USD1.17 billion, up 9% on a year ago. Adjusted earnings before interest, tax, depreciation and amortisation was 22% higher at USD182.3 million.
The FTSE 250 constituent said each of its three segments delivered "strongly" during the period.
"We reaffirm the guidance and outlook provided at the time of IPO and remain highly confident in the future prospects of the business," said Chief Executive Promoth Manghat.
Funeral services provider Dignity reported a fall in revenue and profit in the year-to-date.
Revenue for the 39 weeks to September 27 was down 8% to GBP225.4 million, while underlying operating profit slid 30% to GBP47.9 million.
Third quarter trading was in line with expectations, while the operating performance in the year-to-date has also been consistent with forecasts given a significantly lower number of deaths - in the year-to-date, this was down 5%.
Board expectations for 2019 remain unchanged, though Dignity warned its operating performance in 2020 will "rely heavily" on the number of deaths, "which may or may not revert to higher levels witnessed in previous years compared to the 576,000 seen in the last twelve months to September".
Chief Executive Mike McCollum said: "I am pleased with the group's progress so far this year. Although deaths are lower, market share remains robust, the Transformation Plan remains on track and our journey to build a more modern technologically enabled business that offers clients a high-quality service at a variety of price points remains firmly intact."
In Monday's economic calendar, there are UK GDP, manufacturing production, industrial production and trade balance reports at 0930 GMT.
"Recent PMI's would appear to paint a rather feeble rebound from a disappointing Q2, however sometimes these can paint a much more pessimistic view of the economy than is immediately apparent," said Michael Hewson, chief market analyst at CMC Markets.
"Expectations are for the economy to rebound by 0.3% in Q3, more than offsetting the contraction in Q2, part of which was caused by a slowdown in the aftermath of economic activity being pulled forward into Q1, just before the first Brexit extension of 29th March. The rebound is largely expected to have been driven by the services sector, which makes up almost 80% of the UK economy and tends to do all the heavy lifting in most cases," he said.
The data comes after Moody's Investors Service on Friday downgraded the outlook for Britain's debt, citing mounting policy challenges amid the Brexit debate.
The agency cut the outlook to negative from stable but kept the debt at the investment-grade Aa2. Ratings agency Fitch had similarly put Britain on "negative watch" in February.
Pointing to "paralysis that has characterised the Brexit-era policymaking process," Moody's said London has "struggled to cope with the magnitude of policy challenges that they currently face."
By Lucy Heming; lucyheming@alliancenews.com
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