Royal Mail trading in line, Compass Group reports revenue growth

London open

The FTSE 100 is expected to open 36 points higher on Thursday, having closed up 0.57% at 7,482.48 on Wednesday.

Stocks to watch

Royal Mail said recent trading was broadly in line with expectations but the company warned that its outlook was challenging. Letter volumes will fall faster than expected next year and the parcels and letters business is more likely to be loss-making, Royal Mail said.

Compass Group said its organic revenue for the three months ended 31 December grew 5.3% on Thursday, which it said was driven by strong levels of new business wins and good retention rates, particularly in North America. The FTSE 100 foodservice company, which was holding its annual general meeting later in the day, said its cost action programme - announced in November - was progressing as expected, with the benefits offsetting the anticipated impact of lower volumes in the business and industry division in Europe.

Tate & Lyle said it expected full year earnings per share growth to be in a range of flat to low single digits on a constant currency basis as in maintained guidance for the full year. Underlying trade for the three months to end-December was consistent with the first half and in line with expectations.

Newspaper round-up

It would take Boris Johnson two full terms as prime minister to fulfil his pledge to “level up” the British economy, according to one of the UK’s leading economic think tanks. The National Institute of Economic and Social Research (NIESR) said Johnson’s plans would probably take more than a decade to raise the level of economic output across the country, due to capacity constraints. - Guardian

Amazon is promoting poor-quality products with an “Amazon’s Choice” badge as cunning sellers manipulate the algorithmic recommendation system behind the label, according to research from the consumer rights group Which?. Many of the most popular items sold on Amazon.co.uk are labelled Amazon’s Choice, a thin blue badge that renders a product more visible on the search results page. - Guardian

A Brussels crackdown on contactless payments could cause mass confusion for millions of customers and trigger a €57bn (£48bn) hit to businesses across Europe, experts have warned. The new Strong Customer Authentication (SCA) rules require banks to verify a customer’s identity every time they make payments totalling €100 (£85). – Telegraph

The break-up of GlaxoSmithKline is set to become one of the most expensive corporate demergers to date after the drugs group estimated that it would cost £2.4 billion. The FTSE 100 company yesterday issued details of its ambitious plans to spin-off its consumer healthcare joint venture with Pfizer via a listing on the London Stock Exchange in 2022. – The Times

Redrow has appointed a new chief executive from within its ranks after the housebuilder faced a shareholder revolt over its leadership. The FTSE 250 company said that Matthew Pratt, 44, a long-serving employee who was promoted to chief operating officer last year, would take over in July. John Tutte, 63, executive chairman, will step back to the role of non-executive chairman and will leave the company completely next year. – The Times

US close

US stocks closed in the green on Wednesday, as investors mulled the latest headlines related to the coronavirus outbreak, and as senators voted not to impeach president Donald Trump.

The Dow Jones Industrial Average ended the session up 1.68% at 29,290.85, the S&P 500 added 1.13% to 3,334.69, and the Nasdaq Composite advanced 0.43% to 9,508.68.

At the open, the Dow was 212.51 points higher after the previous session saw stocks attempt to regain some of the heavy losses recorded at the end of the previous week, when China's fast-spreading coronavirus sparked a sell-off on Wall Street.

Markets closed just as the US Senate voted on whether to impeach the president, with lawmakers electing not to impeach Trump, by 52 to 48 and 53 to 47 on each of the two articles of impeachment.

A two-thirds majority would have been needed to oust the president from office.

Sentiment was also boosted earlier after Reuters revealed that a Chinese TV outlet said a research team at Zhejiang University had found an effective drug to treat people with the new strain of the virus.