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(Alliance News) - Stock prices in London are seen opening slightly lower on Thursday, tracking falls in Asian equity markets, following a mixed batch of economic data from China.
In early company news, electricity utility SSE warned it expects to take a hit to earnings due to the coronavirus. Sports betting company GVC reported a fall in net gaming revenue as the lockdown shuttered its high-street stores. Royal Bank of Scotland Group will be rebranded as NatWest Group next week.
IG futures indicate the FTSE 100 index is to open 25.25 points lower at 6,267.40. The blue-chip index closed up 112.90 points, or 1.8%, to 6,292.65 Wednesday.
SSE said it expects the economic damage caused by the coronavirus on the wider economy to have adverse, albeit temporary, effects on several of its businesses during financial 2021, with the greater hit likely to be experienced in the first six months of the year, which began on April 1.
The power supplier expects the hit to operating profit for the first three months to be in line with expectations, with the damage to financial 2021 still anticipated to be in the range of GBP150 million to GBP250 million. SSE said it continues to keep this assessment under review and will provide guidance on adjusted earnings per share later in the financial year.
SSE added that it continues to target the delivery of the five-year dividend plan to financial 2023, including an 80 pence full-year dividend for 2021. SSE intends to declare a 24.4p interim dividend in November.
"We are delivering the comprehensive financial plan we set out last month at our full year results, continuing work on our disposal programme and successfully issuing over GBP1 billion in hybrid bonds. Although the key months of our financial year are still ahead of us, the steps we are taking leave us well placed to deliver on our financial objectives of promoting the long-term success of the company and paying dividends," said Chief Executive Alistair Phillips-Davies.
Bookmaker GVC Holdings said it made an encouraging start to the year, despite the effects of Covid-19, which saw its shops shuttered during the lockdown.
For the six months to June 30, net gaming revenue fell 11%, while online net gaming revenue was up 19% despite overall performance being hindered by the cancellation of sporting events due to the coronavirus. UK retail like-for-like net gaming revenue was down 86%, having been heavily hit due to closures.
GVC expects interim earnings before interest, tax, depreciation and amortisation to be in the range of GBP340 million to GBP350 million. It reported interim Ebitda of GBP376.8 million in 2019.
Separately, the Ladbrokes and Coral owner said Chief Executive Kenneth Alexander will retire from the role and will be replaced by Chief Operating Officer Shay Segev from Friday.
Aviva confirmed the sale of Friends Provident International business to RL360 Holding Co, a subsidiary of International Financial Group. Under revised terms, Aviva has sold a 76% shareholding in FPIL to IFGL for GBP259 million, of which GBP209 million is in cash and GBP50 million in deferred cash consideration.
Aviva said it entered into a shareholders' agreement with IFGL, under which Aviva has "certain ongoing commitments and customary rights" given the minority shareholding. Aviva had previously announced the sale of 100% shareholding in FPIL for a total consideration of GBP340 million.
Royal Bank of Scotland Group said it will formally change its name to NatWest Group PLC on July 22 following its announcement of the rebranding in February, as the lender distances itself from its troubled past and government bailout.
The Japanese Nikkei 225 index ended down 0.8%. In China, the Shanghai Composite is down 2.1%, while the Hang Seng index in Hong Kong is down 1.3%.
"Equity markets in Asia are in the red as there are concerns that spending and investment in China remains weak. Indices in Europe are expected to open a little lower," said CMC Markets analyst David Madden.
China saw forecast-beating economic growth in the second quarter after a record contraction in the previous three months, as businesses cautiously returned to normality after strict lockdowns across the country.
Gross domestic product expanded 3.2% in April to June, the National Bureau of Statistics said, smashing expectations and a massive improvement on the 6.8% contraction in the first quarter. The growth reading, while smashing the 1.3% growth tipped in an AFP poll of analysts, is still among the lowest rates on record on a quarterly basis.
However, while the reading was welcomed, analysts said investors had largely priced in a recovery and pointed to a worse-than-expected drop in retail sales in June - a small rise had been forecast - suggesting consumers are still reluctant to spend.
China retail sales in June fell 1.8% year-on-year, falling short of market expectations of a 0.3% increase.
The retail sector has taken on an increasingly significant role in China's economy as leaders look for consumers, rather than trade and investment, to drive growth.
"No matter how much stimulus and fiscal sugar you try to entice consumers with, they will not leave their apartment and go on a spending spree until they feel confident the landscape is virus-free," said AxiCorp's Stephen Innes.
The pound was quoted at USD1.2562 early Thursday, down from USD1.2604 at the London equities close Wednesday.
The UK jobless rate remained unchanged in the three months to June from the previous 3.9% in the three months to May, according to the Office for National Statistics.
The euro was changing hands at USD1.1400, soft from USD1.1419, ahead of the European Central Bank's interest rate decision at 1245 BST.
Against the yen, the dollar was trading at JPY106.95, firm from JPY106.88, in London.
Brent oil was trading at USD43.37 Thursday morning, flat from USD43.42 a barrel late Wednesday. Gold was quoted at USD1,808.57 an ounce, flat from USD1,809.00 an ounce.
The Organization of the Petroleum Exporting Countries and Russia are set to start rolling back record supply cuts agreed earlier in 2020, the Financial Times reported on Wednesday.
The oil cartel and its allies are set to scale back the cuts of 9.7 million barrels a day that took effect in May to 7.7 million barrels from August, the newspaper reported citing OPEC delegates.
OPEC is expected to taper further to cuts of 5.8 million barrels a day between January 2021 and April 2022, according to the FT.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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