(Alliance News) - Stocks in London on Tuesday morning are set to follow a big decline in New York overnight, as investors nervously await the start of the Jackson Hole central banking symposium later this week.
The meeting of central bankers will begin on Thursday, with a keynote speech from US Federal Reserve Chair Jerome Powell scheduled for Friday.
IG says futures indicate the FTSE 100 index of large-caps will open down 41.19 points, or 0.5%, at 7,492.60 on Tuesday. The FTSE 100 closed down 16.58 points, or 0.2% at 7,533.79 on Monday.
In a quiet morning for UK company news, John Wood's interim loss widened, while CyanConnode's annual loss slimmed. Mulberry's chair plans to depart next month.
John Wood Group reported a widened interim loss as revenue stalled, and said cash generation is its "top priority" going forward.
Revenue for the six months to June 30 edged 0.4% lower to USD2.56 billion from USD2.57 billion a year before. However, the engineering and consulting firm's pretax loss nearly doubled to USD31.5 million from USD18.4 million as finance expenses rose 19% to USD64.1 million from USD53.9 million.
"Our first half of the year saw strong momentum in activity levels and order book growth but more to do on cash generation. It is encouraging to see the operational momentum in our business, especially the growth in our Projects and Consulting order book," John Wood said.
The company suffered free cash outflow of USD363 million, which included a working capital outflow of USD208 million and exceptional cash costs of USD102 million.
For the full year, John Wood expects revenue around USD5.2 billion to USD5.5 billion and adjusted Ebitda around USD370 million to USD400 million.
Revenue in 2021 was USD6.40 billion, so the decline in 2022 would be at least 14%. Revenue had fallen by 15% in 2021 from USD7.56 billion in 2020.
The order book stood at USD6.42 billion at the end of the half-year, up from USD6.13 billion a year prior.
"The strong order book gives me confidence for the future but there is a lot more to do on cash generation and this is our top priority," said Chief Executive Ken Gilmartin.
He added: "We are developing an updated strategy for Wood that will draw on our core strengths, return us to growth and deliver sustainable free cash flow...I look forward to sharing our plans at our capital markets day in November."
Given its "current elevated levels of debt", John Wood will not recommend any dividends in relation to 2022. The firm will reconsider this in 2023 as the sale of the Built Environment Consulting business promises to "transform" the balance sheet.
John Wood's last payout was in respect of the first half of 2019. A final dividend for that year was pulled due to the onset of the Covid-19 pandemic.
BT said it has been notified by the UK secretary of state that no further action is to be taken in relation to Altice Europe's move in December to raise its stake in the London-listed telecoms firm to 18% from 12%.
Luxury fashion company Mulberry said Non-Executive Chair Godfrey Davis plans to step down at the end of September, to be replaced by Andrew Roberts.
Roberts is a non-executive director who was appointed to the board in 2002. "He has a broad experience of international property markets, the branded luxury hospitality sector and global financial markets and is currently managing director of Como Holdings (UK) Ltd, a company ultimately owned by Ong Beng Seng and Christina Ong, who also ultimately own Chalice Limited, a 56.2% shareholder in Mulberry," Mulberry noted.
Davis, who joined Mulberry in 1987, will remain associated with the company as "life president in a non-board role".
CyanConnode reported a narrowed loss after achieving "record" annual revenue.
Revenue for the financial year to March 31 rose to GBP9.6 million from GBP6.4 million the year before - its highest annual revenue to date - with its pretax loss narrowing to GBP1.2 million from GBP2.7 million.
"We've been delighted with the results achieved during the financial year being reported, which showed record revenues being achieved, and a positive adjusted Ebitda. FY22 also saw record numbers of modules being shipped and record cash being collected," said Executive Chair John Cronin.
In New York on Monday, the Dow Jones Industrial Average ended down 1.9%, the S&P 500 closed down 2.1%, and the Nasdaq Composite shed 2.6%
Ahead of Fed Chair Powell's remarks, the dollar strengthened and stocks on Wall Street dropped.
"Yesterday's surge in the US dollar to new 20-year peaks against the euro appears to suggest that investors are becoming increasingly concerned that the Federal Reserve may well not pivot on monetary policy next year," said Michael Hewson, chief market analyst at CMC Markets.
Sterling was quoted at USD1.1724 early Tuesday, lower than USD1.1787 at the London equities close on Monday.
The euro slipped further below parity with the dollar, trading at USD0.9909 early Tuesday from USD0.9964 late Monday.
As well as interest rate worries, Europe was troubled by energy supply concerns, after Russian energy supplier Gazprom said gas deliveries through the Nord Stream pipeline will cease from August 31 to September 2 for "maintenance".
"It is necessary to carry out maintenance every 1,000 hours" of operation, Gazprom said in a statement. As a result, "gas transportation through the Nord Stream pipeline will be suspended for three days".
News of the decision risks reviving fears of shortages in Europe, which has already accused Moscow of energy blackmail.
With higher energy prices pushing up inflation - a barrel of Brent oil trading at USD96.84 early Tuesday, up from USD93.26 late Monday - Tuesday's PMIs will be in sharp focus.
There are flash purchasing managers' index readings from the eurozone at 0900 BST, the UK at 0930 and the US at 1445 BST. A preliminary consumer confidence reading from the eurozone is released at 1500 BST.
"One does not have to be a clairvoyant to predict that the PMIs are likely to have fallen. In view of high energy prices, wage pressure, material shortages and supply chain issues, a lack of skilled labour and a flagging global economy, companies are facing strong headwinds. That means the actual question is: do the PMIs suggest at this stage that the expected recession might be more pronounced that many expect?" commented Commerzbank's Antje Praefcke.
Against the yen, the dollar was quoted at JPY137.29, flat versus JPY137.26.
In Asia on Tuesday, the Japanese Nikkei 225 index ended down 1.2%. In China, the Shanghai Composite was down 0.1%, while the Hang Seng index in Hong Kong was down 1.2%. The S&P/ASX 200 in Sydney closed down 1.2%.
Japan's private sector is expected to suffer its first drop in activity in six months, survey results from S&P Global showed Tuesday, as both services and manufacturing firms suffered setbacks.
The au Jibun Bank flash Japan composite PMI fell to 48.9 points in August from the final score of 50.2 in July. Any reading below the neutral 50.0-point mark indicates a contraction.
Gold was quoted at USD1,736.26 an ounce early Tuesday, flat against USD1,736.39 on Monday.
By Lucy Heming; lucyheming@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.
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