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(Alliance News) - Stock prices in London are seen opening lower on Thursday following a downbeat finish in New York on rising inflation fears.
In early company news, speciality chemicals firm Johnson Matthey announced plans to exit an underperforming business. Fashion house Burberry reinstated its payout, and pandemic winner B&M European Value Retail saw its momentum continue.
IG futures indicate the FTSE 100 index is to open 15.75 points lower at 7,324.40. The blue-chip index closed up 66.11 points, or 0.9%, at 7,340.15 on Wednesday.
Johnson Matthey said that after a detailed review it concluded that the potential returns from its Battery Materials business would not "be adequate to justify further investment".
"Whilst demand for battery materials is accelerating, so is competition from alternative technologies and other manufacturers. Consequently this is rapidly turning into a high volume, commoditised market," it said.
Johnson Matthey said it has decided to pursue the sale of all or parts of the business with the intention of exiting "swiftly".
It said half-year results will be in line with market expectations, but full-year results will be at lower end of expectations. It cited supply chain shortages for its auto industry customers and labour shortages in the US hurting its Health business.
In addition, Johnson Matthey said Chief Executive Officer Robert MacLeod is set to retire, with Liam Condon hired to succeed him. MacLeod will step down in February after eight years and will stay on until July to help with the transition.
Condon, who will join JM as CEO March 1, is currently a member of the board of management of Bayer and president of its Crop Science Division, a role he has held for nine years.
B&M European Value Retail said it performed strongly throughout the first half of its financial year as its pandemic popularity continued.
For the 26 weeks to September 25, revenue increased by 1.2% to GBP2.27 billion from GBP2.24 billion last year and pretax profit rose 2.4% to GBP241.4 million from GBP235.6 million.
B&M declared an interim dividend of 5.0 pence up 16% from 4.3p paid last year.
"We have responded decisively to supply chain challenges by leveraging our strong supplier relationships, and we have improved in-store execution. As a consequence, we are fully stocked heading into the Golden Quarter, with stores already showcasing our excellent Christmas ranges," said CEO Simon Arora.
"Although the pathway to a 'new normal' remains uncertain and the industry faces a number of supply and inflationary pressures as we enter the second half of the financial year, we are very confident that the B&M Group is well positioned to navigate these and will continue to be successful both in the UK and in France," added Arora.
Burberry Group said it made strong progress in the first half helped by performances from the Americas, mainland China and South Korea.
For the 26 weeks to September 25, revenue jumped 38% to GBP1.21 billion from GBP878 million last year. Operating profit surged to GBP207 million from GBP88 million, and pretax profit more than doubled to GBP191 million from GBP73 million.
"Regionally, full-price sales almost doubled in the Americas, South Korea grew almost 80%, and Mainland China was up over 40% even as wide-reaching regional lockdowns and extreme weather impacted our performance in August in particular," Burberry said.
Burberry declared an interim payout of 11.6p per share having paid none in prior year due to the pandemic.
Looking ahead, Burberry maintained medium-term guidance for high single-digit top line growth.
"We have made strong progress in the half. Full-price sales are growing at a double-digit percentage, driving margin expansion and strong free cash generation. We are seeing an acceleration in performance in countries less impacted by travel restrictions and we remain confident of achieving our medium-term goals. I would like to thank Marco Gobbetti for his vision and leadership of Burberry's transformation. We are very excited that Jonathan Akeroyd is joining as our new CEO in April to build on the strong foundations to accelerate growth and deliver further value for our shareholders." said Chair Gerry Murphy.
Akeroyd is joining from Gianni Versace. He previously led British luxury brand Alexander McQueen.
On Wall Street on Wednesday, the Dow Jones Industrial Average closed down 0.7%, S&P 500 down 0.8% and Nasdaq Composite down 1.7%.
The US consumer price index surged 6.2% on an annual basis in October, an over 30-year high amid rising oil, auto and housing prices, according to data released before the New York market open on Wednesday.
This has led to growing concern that the US Federal Reserve will have to be more aggressive to contain prices, pulling back more quickly on its bond-buying programme and potentially raising the key US borrowing rate multiple times next year.
"Not only did US CPI hit its highest levels in 31 years, at 6.2%, but core prices also surged, rising to 4.6%. With the biggest components of the rise being in food and energy, there is rising concern that we could only be getting started with further increases in prices, especially as the weather hasn't even started to get cold yet," said CMC Markets analyst Michael Hewson.
"There is a fear now that consumers, as well as markets may well have to absorb further price rises, with all the inherent risks that brings for company profit margins, and consumer inflation expectations. As a result of yesterday's slide in US markets, after Europe had closed we look set for a slightly softer open this morning," Hewson added.
However, in Asia, the mood was a little lighter after Bloomberg reported that Chinese property company Evergrande had once again avoided a default after meeting a bond-payment due by the end of Wednesday.
The Japanese Nikkei 225 index closed up 0.6%. In China, the Shanghai Composite ended up 1.2%, while the Hang Seng index in Hong Kong was up 0.4%. The S&P/ASX 200 in Sydney closed down 0.6%.
Meanwhile, Tesla Chief Executive Elon Musk sold USD1.1 billion in shares of his electric car company, after indicating over the weekend he would sell 10% of his stock based on the results of a Twitter poll.
However the sell was put in motion on September 14, according to documents filed Wednesday, meaning it was not spurred by the survey's outcome.
Musk, the world's richest man, sold about 930,000 shares on Monday, a filing with the US Securities & Exchange Commission showed.
The pound was quoted at USD1.3406 early Thursday, down from USD1.3492 at the London equities close on Wednesday.
The euro was priced at USD1.1480, down from USD1.1529. Against the Japanese yen, the dollar was trading at JPY114.00, up from JPY113.86.
Brent oil was quoted at USD82.64 a barrel Thursday morning, down sharply from USD84.12 late Wednesday. Gold stood at USD1,854.25 an ounce, lower against USD1,856.96.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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