Grafton reports better-than-expected trading conditions, Elementis lowers profit expectations
London open
The FTSE 100 is expected to open eight points higher on Tuesday, having closed up 0.39% at 7,617.60 on Monday.
Stocks to watch
Builders merchant Grafton on Tuesday reported better-than-expected trading conditions in November and December despite a weaker UK market. The group was now expected to report full year adjusted operating profit of around £202m and £190m on a pre-IFRS 16 basis for its continuing operations. Group revenue from continuing operations increased by 2.7% in 2019 to £2.67bn. Growth in constant currency was 2.9% and average daily like-for-like revenue rose 1.9%.
House builder Taylor Wimpey said it expected full year results to be in line with expectations despite economic and political uncertainties caused by Brexit. “While 2020 will continue to be a year of change for the UK, we welcome the increased political stability following the general election. We start the year with a strong order book and continue to target a smoother profile of completions throughout the year but expect 2020 to continue to be second half weighted,” the company said on Tuesday.
Specialty chemicals company Elementis updated the market on its trading on Tuesday, reporting that the final quarter of the year was “somewhat subdued”, and as a result, adjusted operating profit for 2019 was now expected to be between $122m and $124m (£94.04m and £95.58m). The FTSE 250 company did say that its operating cash conversion was expected to be in line with its medium-term performance objective of at least 90%. It said it would announce its full-year results for the 12 months ended 31 December on 4 March.
Newspaper round-up
The government has been urged to rethink its tax and benefit rules for low-paid workers after it emerged that some staff at the bakery chain Greggs could get to keep just a quarter of their £300 annual bonus as a result of universal credit deductions. Greggs announced last week that its 25,000 workers would receive a windfall of up to £300 under a £7m reward scheme linked in part to the success of the company’s vegan sausage rolls. – Guardian
Vanguard, the world’s second largest asset manager, has refused to sign up to a group of major investors demanding that polluters respond to the climate crisis, despite its rival BlackRock relenting to pressure to do so. The US investment manager’s decision leaves it increasingly isolated after BlackRock last week joined Climate Action 100+ (CA100+), a group of asset managers that pushes the largest fossil fuel producers to show how they will meet carbon dioxide reduction targets. - Guardian
The hi-fi entrepreneur Julian Richer has called for “evil” zero-hours contracts to be banned. Speaking at the Trades Union Congress (TUC) headquarters in London, Mr Richer, 60, who handed control of Richer Sounds to his staff last year, said he felt like a “ham sandwich at a bar mitzvah” as the voice of business in the room, but added: “If we can’t give working people basic security, we should be ashamed.” – Telegraph
The former chief executive of Persimmon who was sacked after an outcry about his £76 million bonus has resurfaced at another Yorkshire housebuilder. Jeff Fairburn, 53, has been appointed chief executive of Berkeley Deveer after buying a 50 per cent stake in the business. The company builds homes starting from about £200,000 in the North of England. Mr Fairburn has kept a low profile since he was ousted from Persimmon in November 2018. Persimmon’s profit per house almost tripled under his leadership and £2.2 billion was returned to shareholders. – The Times
Carlos Ghosn has launched what is likely to be a series of legal attempts to force Renault to pay him millions of euros in pensions and other benefits. An employment tribunal hearing is scheduled next month to assess Mr Ghosn’s initial claim that the French carmaker owes him €249,999.99 that he says should have been paid when he stood down as chief executive last year. – The Times
US close
Wall Street stocks closed higher on Monday as market participants cheered news that the US would be removing China from a list of currency manipulators ahead of the pair's "phase one" trade deal later in the week.
At the close, the Dow Jones Industrial Average was up 0.29% at 28,907.05, while the S&P 500 was 0.70% stronger at 3,288.13 and the Nasdaq Composite was 1.04% firmer at 9,273.93.
The Dow closed 83.28 points higher on Monday after seeing out last week in the red despite briefly breaking the psychologically-important 29,000 point level earlier in the session as a disappointing jobs report weighed on sentiment.
Sentiment was boosted after the US announced it would be removing China from a list of currency manipulating countries, raising optimism ahead of the agreement. The decision to take China out of the currency manipulator list came over five months after the country was added to it.
A trade delegation from Beijing were set to travel to Washington on Monday before inking the pair's "phase one" trade deal on Wednesday. While the deal will reportedly lower tariffs and increase Chinese purchases of US agricultural products, no official details have been released as of yet.
The Wall Street Journal reported that the US and China had also agreed to hold semiannual talks aimed at resolving disputes and pushing for reforms and the South China Morning Post said that the Chinese government had stated that the trade war was "not over yet".