City sources predict FTSE 100 will open down 15 points from yesterday's close of 5,334.
Stocks to watch
Tullow Oil says it has continued to perform “very strongly” in 2010 and remains “very positive” about the outlook for the year. Significant progress has been made on the Ugandan pre-emption and farmdown, the Jubilee Phase 1 development project in Ghana remains on track for first oil in the fourth quarter and the Tweneboa-2 appraisal well has established Tweneboa as a major oil and gas-condensate field.
Kesa Electricals reported a 1.2% drop in like for like sales in the period from 9 January to 30 April as a positive performance at its larger French operations failed to offset weakness at the Comet retail chain. Darty France's like for like sales increased by 0.5%, excluding the Darty Box, though Comet's revenue dropped by 4.0% on a like for like basis.
Software group Micro Focus expects to report total revenues of approximately $432m ($274.7m) for the last six months after a 'solid' end to the period. Group EBITDA margin, excluding exceptional items and stock based compensation, for the same period, is expected to be approximately 40% for the full year, the firm added.
Wellstream is trading in line with expectations and said the level of award activity currently being experienced, particularly in Brazil, gives it confidence in the outlook for the business. The group, which designs and manufactures flexible risers and flowlines for the oil and gas industry, said its order book has improved since the year end with a number of key awards, particularly in Brazil.
In the Press
The pound broke through the $1.50 mark as David Cameron’s coalition Government took charge, vowing to provide “strong and stable” leadership, the Telegraph reports. Despite fears that a hung parliament would be catastrophic for the UK economy, sterling leapt by a cent on the resignation of Gordon Brown as Prime Minister. It was trading just below $1.50 in late trading in New York, up 2.5 cents since lunchtime. George Osborne will be Chancellor in the new Conservative-Liberal Democrat administration. The Lib Dems’ Vince Cable is expected to become his number two as Chief Secretary to the Treasury.
Capital gains tax will be increased significantly for non-business assets, as part of a radical package of tax reforms agreed by the new Conservative-Liberal Democrat coalition government. The 18% rate of tax on gains on non-business assets will be increased to close to the 40 per cent higher rate of income tax, meeting a central plank of Lib Dem policy, according to Tory insiders, reports the FT.
Sir Stelios Haji-Ioannou has ripped up easyJet’s growth strategy and launched a personal and unprecedented verbal assault on the budget carrier’s “overrated” chief executive. The rebuke from Sir Stelios came as Andy Harrison delivered his last set of results for easyJet before his departure to the hotel operator Whitbread next month, the Times reports.
Newspaper tips
The world’s biggest hotel company provided further evidence of recovery yesterday, filing its first quarterly growth in revenue per available room (revpar) — the key industry metric — for 18 months. The 0.2 per cent increase at InterContinental Hotels Group is modest, but, crucially, the improvement is on an upwards trend. Despite the strong share performance — up 24% this year — at Ł11.03, or 22 times 2010 earnings, this is no time to check out says the Times.
Regardless of what sort of government we get, and how long it lasts, one thing that is abundantly clear is that public spending will be slashed to lower the gargantuan budget deficit. This bodes ill for some companies but is positive for outsourcers such as Capita, which stands to gain from the impending efficiency drive. Capita is not particularly expensive but neither is it so cheap to offset the short-term political uncertainty that faces it and its business model. On balance, hold says the Independent.
Trading on 23 times this year's forecast earnings (falling to 19.6 times next year's), satellite operator Inmarsat is not cheap and has been fattened by bid rumours. Even so, it reamins a solid, long-term hold says the Independent.
US close
US stocks closed lower after an afternoon rally completely lost momentum in the final hour of trading. Dow Jones closed down 36 points at 10,748. Nasdaq was flat at 2,375 while the S&P 500 gave up 3 at 1,155.
Nervousness over the eurozone bail-out plan hit sentiment after the surge yesterday when news of the €750bn plan first broke.
Wholesale inventories rose 0.4% in March compared with a 0.6% rise in February. The improvement was slightly below expectations but the wholesale inventory figures are the highest they have been for eight months.
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