Weak sales see Micro Focus revise forecasts, PZ Cussons to sell two subsidiaries
London open
The FTSE 100 is expected to open 25 points lower on Thursday, having closed up 0.35% at 7,114.71 on Wednesday.
Stocks to watch
Micro Focus said weak sales had forced it to revise its revenue forecasts even lower and accelerate a review of the company. The software maker said revenue on a constant currency basis for the year ending October 31 would be 6% - 8% lower compared with previous guidance of a fall of 4% - 6%. “Weak sales execution has been compounded by a deteriorating macro environment resulting in more conservatism and longer decision making cycles within our customer base,” the company said on Thursday.
Imperial Leather maker PZ Cussons has agreed to sell its Greek food subsidiary Minerva and its Polish personal care brand Luksja. Chief executive officer Alex Kanellis said: “The proposed sale of Minerva and Luksja forms part of PZ Cussons' new strategy to 'Focus, Scale and Accelerate', announced along with our final FY19 results on 23 July 2019. “We are streamlining the group to focus investment on core personal care and beauty brands to deliver higher margin earnings, in geographies that can scale, with the aim of returning the group to sustainable, profitable growth.”
AstraZeneca announced on Thursday that its phase 3 ‘TULIP 2’ trial for ‘anifrolumab’ - a potential new medicine for the treatment of systemic lupus erythematosus (SLE) - met its primary endpoint, achieving a statistically-significant and clinically-meaningful reduction in disease activity compared to placebo, with both arms receiving standard of care. The FTSE 100 pharmaceuticals firm said the reduction was measured using the British Isles Lupus Assessment Group-based Composite Lupus Assessment (BICLA) at week 52. It said the BICLA required improvement in all organs with disease activity at baseline with no new flares, and added that the safety profile of anifrolumab was consistent with previous trials.
Newspaper round-up
The British car industry has witnessed its worst period of decline since 2001, as rising global trade tensions and Brexit uncertainty combine to provide a dire operating environment for manufacturers. UK car production was down more than 10% year on year in July and has now fallen for 14 consecutive months, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT). The decline is now longer than the 13-month downturn between October 2008 and October 2009 at the height of the global financial crisis. – Guardian
Sir Jim Ratcliffe, one of Britain’s richest men, has set his sights on the US shale gas industry as his fracking ambitions in the UK wane. The owner of petrochemicals giant Ineos is on the hunt for shale gas investments within the US fracking heartlands of the Permian Basin, according to sources. The billionaire industrialist is understood to have begun assessing a number of US shale projects over the summer as part of a multibillion-dollar debut in the US oil and gas industry. – Guardian
MPs trying to thwart Brexit have been accused of risking a “constitutional crisis” by the minister who personally asked the Queen to shut down Parliament for five weeks. Jacob Rees-Mogg, the Leader of the Commons, hit back at those who accused Boris Johnson of being undemocratic, reminding them that Parliament’s duty was to “respect the will of the voters” who had chosen to leave the EU. – Telegraph
The administrators to London Capital & Finance have claimed they face a “concerted and very likely co-ordinated” attempt to frustrate their investigation into the collapse of the scandal-hit minibond company that owes more than £237 million to over 11,600 savers. Smith & Williamson has told bondholders that attempts to recover their money will “undoubtedly” involve a “significant number of legal actions”. In a progress report circulated to LCF’s creditors, they warned the complicated nature of the case meant their investigations were likely to last several years. – The Times
Britain’s jobs boom has lifted the proportion of working households to a record high, according to official figures. In the three months to June there were 2.9 million households in the UK where no one held a job, the lowest level since records began in 1996, according to the Office for National Statistics. While the proportion of workless households fell to 13.6 per cent, the proportion of households where all adults held a job rose to 58.2 per cent, at 12.5 million. – The Times
US close
US stocks finished higher on Wednesday, as investors appeared to shrug off ongoing trade fears and a flashing recession indicator in focus.
The Dow Jones Industrial Average ended the session up 1% at 26,036.10, the S&P 500 added 0.65% to 2,887.94, and the Nasdaq 100 was 0.29% firmer at 7,587.90.
At the open, the Dow was 34.81 points firmer, after closing lower on Tuesday amid ongoing negativity around Washington's trade war with Beijing, which weighed on investor sentiment.
Futures before the session on Wednesday initially had stocks opening markedly lower after the closely watched spread between the 10-year Treasury yield and the two-year rate fell to minus six basis points early in the morning.
That extended losses from the previous session which saw the spread record its lowest level in a dozen years.
A 10-year rate below the two-year yield is considered by many fixed income traders to be an important recession prognosticator in the United States.