Yahoo Finance What to watch: Pound up on May's new deal, G4S profits dive, and French Connection sales slide
Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:
Pound up on May’s new deal
The pound jumped against both the dollar and the euro late on Monday evening after Theresa May said she had secured “legally binding” promises from the EU over Brexit.
The UK Prime Minister flew to Stasbourg on Monday evening to hold last minute talks with EU chief Jean-Claude Juncker. May said she secured an agreement that there will be “no indefinite backstop” – the key sticking point for many hard-line Brexiteers.
The announcement came less than 24 hours ahead of a crucial vote in Parliament on May’s proposals. MPs are due to vote this evening on whether to approve or reject the Prime Minister’s Brexit withdrawal agreement.
May was widely expected to lose the vote but the last minute concessions have revived hopes of getting the deal passed. This has boosted the pound. Sterling was up 0.08% against the euro to €1.17 (GBPEUR=X) and up 0.2% against the dollar to $1.32 (GBPUSD=X).
UK GDP data, trade balance data, and industrial and manufacturing production data for January are all due at 9.30am local time, which could influence the pound depending on the numbers. GDP is forecast to grow by 0.2% month-on-month.
G4S profits dive
Security firm G4S (GFS.L) posted a 63% drop in profits on higher costs related to a settlement of a class action in California and a charge for pension equalisation regulation in the UK.
The company made a pre-tax profit of £143m in 2018 compared with £387m the year earlier. Revenue fell 4% to £7.5bn which the company said was due to the “relative strengthening” of the average sterling exchange rate and the disposal of businesses.
G4S shares slid by almost 5% on the results.
The company also announced plans to spin-off its cash handling business in the second half of the year after receiving a number of expressions of interest. The cash handling business is thought to be worth as much as £1.6bn.
French Connection sales slide
French Connection (FCCN.L) returned to a modest profit last year, but sales continued to fall.
The retailer said on Tuesday it made made an underlying operating profit of just £100,000 in 2018 compared with a £2.1m loss the year earlier. Pre-tax losses widened to £9.3m from £3.8m.
Revenue was relatively flat at £135.3m, while like for like sales fell 6.8% due to tough market conditions for retailers in the UK.
French Connection’s chairman and chief executive Stephen Marks said: “I am pleased to report that we have achieved our target of returning the group to underlying profitability this financial year.
“This is only part of our overall journey, however it represents a significant achievement given the results over recent years.”
Mothercare sells Early Learning Centre
Retailer Mothercare (MTC.L) is selling its Early Learning Centre business to the owner of toy chain The Entertainer for up to £13.5m as it seeks to slash its debt pile.
Mothercare said it had agreed the deal with TEAL Brands, the holding company of The Entertainer, but will retain around £6m of Early Learning Centre stock to offload.
The move will help it pay around £17.5m of debt over the next year.
Domino’s gets stuffed
Domino’s Pizza (DOM.L) reported a 22% tumble in annual pre-tax profits to £61.9m after suffering “growing pains” in its international business.
Woes in its international arm offset an otherwise robust showing from the UK and Ireland, where like-for-like sales rose 4.6%.
David Wild, chief executive of Domino’s, said: “2018 was a mixed year. In the UK and Ireland, which account for around 90% of the business, we extended our excellent track record of growth and cash generation, responding well to the very challenging environment for the casual dining market.
“Internationally, we have experienced some growing pains which have hampered our overall financial performance.”
European markets
European stock markets were mixed, with the strong pound weighing on the FTSE but continental markets higher. The majority of FTSE companies reporting earnings in dollars and so a strong pound against the dollar means shares look more expensive given the underlying earnings.
Britain’s FTSE 100 (^FTSE) was down by 0.4%, Germany’s DAX (^GDAXI) was up by 0.2%, France’s CAC 40 (^FCHI) was up by 0.2%, and Euronext 100 (^N100) was more or less flat.
Irish shares outperformed in Europe, with Dublin’s ISEQ (^ISEQ) up by 1.2% after May’s progress negotiating a compromise on the Brexit “Irish backstop”. Ireland’s leader Leo Varadkar said the outcome of the last-ditch negotiations between the UK and European Union were “positive.”
Asian markets were higher overnight. Japan’s Nikkei 225 (^N225) ended the session up by 1.7%, Hong Kong’s Hang Seng index (^HSI) was up by 1.4%, and China’s benchmark Shanghai Composite (000001.SS) was 1.1% higher.
What to expect in the US
US stock futures were pointing to a slightly higher open. S&P 500 futures (ES=F) were up by 0.1%, Dow Jones Industrial Average futures (YM=F) were flat, and Nasdaq futures (NQ=F) were up by 0.2%.
