BAT lowers full-year guidance, Aveva leaves final dividend unchanged

London open

The FTSE 100 is expected to open five points higher on Tuesday, having closed down 0.18% at 6,472.59 on Monday.

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British American Tobacco lowered full year guidance as it felt the impact of the coronavirus crisis on international travel sales and new products. The cigarette maker said it expected constant currency adjusted revenue growth of 1% - 3% from previous guidance of around the lower end of 3% - 5%. It also forecast mid-single figure adjusted diluted earnings per share growth, compared with a high single figure previously. BAT added that it still saw a continued dividend pay-out ratio of 65% of adjusted diluted EPS and growth in sterling terms, “supported by a strong liquidity position”.

Aveva left its final dividend unchanged as the industrial software company announced a 22% increase in annual profit and up to £60m of cost cuts. Adjusted pre tax profit for the year to the end of March rose to £213.8m from £175.4m a year earlier as revenue rose 8.8% to £833.8m. Statutory pretax profit almost doubled to £92m from £46.7m. The FTSE 100 company held its final dividend at 29p a share and said this reflected the resilience of its business. Aveva said it would spend £50-60m less than planned this year but did not intend to cut jobs, furlough employees or take government support.

Bellway updated the market on its trading on Tuesday, reporting that construction has restarted on about 230 sites, while all remaining sales offices in England are now open again. The FTSE 250 housebuilder said its balance sheet remained “strong”, with net bank debt standing at £157m as at 31 May, down from £261m a year earlier, with committed bank facilities of £545m. It said its forward sales position was “substantial”, with the order book comprising 6,038 homes, compared to 6,312 homes in early June 2019, carrying a value of £1.57bn, compared to £1.64bn a year ago.

Newspaper round-up

Britain’s retailers suffered a second successive slump in monthly sales during May as the coronavirus shutdown took its toll on the high street. Price cutting by furniture and homewares shops, which were among the worst hit, failed to entice customers to open their wallets, leaving last month’s sales figures down by 5.9% compared with the same month last year. – Guardian

British households are expected to rack up debts worth a combined £6bn because of the coronavirus crisis, as millions of people fall behind on credit card payments, council tax and utility bills. Sounding the alarm as the economic fallout from the health emergency mounts, the StepChange debt advice charity said 4.6m households risked building up dangerous levels of debt because of the pandemic. – Guardian

Britain's jobs market is suffering levels of inactivity never seen before, the Bank of England's chief economist has warned, as a record number of firms plan to lay off workers. Andy Haldane, a member of the Bank's Monetary Policy Committee, said Covid is widening the "pretty hefty" gap between rich and poor as lower-paid workers bear the brunt of the economic crisis. His warning came as a new survey revealed a sixth of businesses are preparing to cut jobs in the coming months. – Telegraph

The cracked reactors affecting Britain’s nuclear fleet pose an extra headache for Centrica, which wants to sell its 20 per cent interest in the plants to focus on its British Gas consumer operations. It began the sale in 2018 with the aim of getting rid of them by the end of this year, but admitted this February that it may now not be possible, citing the outages as an issue. Martin Young, of Investec, the banking and wealth management group, said that he would be “incredibly surprised” to see Centrica dispose of the stake within the next six months. – The Times

TUI Group has signed a deal with Booking.com to sell its tours, attractions and activities to customers of the online travel site. The Anglo-German tourism group said that eventually Booking.com’s customers would have direct access to a product portfolio of more than 70,000 excursions and experiences. – The Times

US close

Wall Street stocks closed higher on Monday as they continued to build upon last week's sharp gains and the S&P 500 returned to positive territory for the year.

At the close, the Dow Jones Industrial Average was up 1.70% at 27,572.44 and the S&P 500 was 1.20% firmer at 3,232.39, while the Nasdaq Composite saw out the session 1.13% higher at 9,924.74.

The Dow closed 461.46 points higher on Monday following a sharp rally on Friday, which also saw the Nasdaq Composite hit a record intraday high for the first time since 19 February, as investors continued to remain optimistic about the reopening of the economy despite ongoing protests across the nation.

As far as the new week was concerned, market participants will be holding out for comments from Federal Reserve chairman Jerome Powell regarding the futures of US interest rates on Wednesday. However, the Fed is expected to reiterate its commitment to unlined asset purchases as part of its efforts to keep markets functioning.

Investors were also focussed on efforts to reopen the US economy in the wake of Covid-19, with reopening plans in various stages across all 50 states.

However, while traders were backing stocks linked to the reopening of the economy, the likes of California, Utah, Arizona, North Carolina, Florida, Arkansas and Texas have all reported an increase in the number of coronavirus infections since having lifted restrictions, according to the Wall Street Journal.