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(Alliance News) - High-level talks between Washington and Beijing on the status of the "phase one" trade agreement that were set to take place on Saturday were postponed, undermining market sentiment early Monday.
US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin reportedly were scheduled to hold a video conference with China's Vice Premier Liu He, according to the reports, including from Bloomberg, citing people familiar with the issue.
The phase one deal called for officials to hold a "check in" every six months, but neither government had confirmed the meeting, and USTR and Treasury have not responded to repeated requests for comments on the status of the talks.
Officials held a call in early May on the deal.
The US and China signed the accord in January which represented a partial truce in their months-long trade war, and obligated Beijing to import an additional USD200 billion in American products over two years, ranging from cars to machinery to oil to farm products.
But that was before the COVID-19 pandemic hit, and purchases of those goods have been lagging.
US President Donald Trump in recent weeks has stepped up rhetoric against China ahead of what's expected to be a tough fight for a second term – with the election in November – raising questions about the deal's fate as well as the possibility of a phase two agreement.
Here is what you need to know at the London market open Monday:
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MARKETS
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FTSE 100: called down 0.1% at 6,082.40
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Hang Seng: up 1.0% at 25,445.20
Nikkei 225: closed down 0.8% at 23,096.75
DJIA: closed up 34.30 points, 0.1%, at 27,931.02
S&P 500: closed 0.58 point at 3,372.85
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GBP: flat at USD1.3101 (USD1.3104)
EUR: up at USD1.1860 (USD1.1832)
Gold: up at USD1,948.11 per ounce (USD1,945.10)
Oil (Brent): up at USD45.11 a barrel (USD44.70)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
0830 EDT US Empire State manufacturing survey
1000 EDT US NAHB housing market index
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Speaker Nancy Pelosi is calling the US House of Representatives back into session this week to vote on a bill prohibiting the US Postal Service from implementing any changes to operations or level of service. The action comes amid growing concerns the Trump White House is trying to undermine the agency during the coronavirus pandemic while states expand mail-in voting options ahead of the November election. In a letter to Democratic politicians on Sunday evening, Pelosi also called on her colleagues to appear at a post office in their district on Tuesday for a coordinated news event. "In a time of a pandemic, the Postal Service is Election Central. Americans should not have to choose between their health and their vote," she wrote.
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BROKER RATING CHANGES
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JEFFERIES RAISES BURBERRY TO 'HOLD' (UNDERPERFORM) - PRICE TARGET 1400 (1250) PENCE
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GOLDMAN SACHS CUTS BUNZL TO 'NEUTRAL' ('BUY') - TARGET 2500 PENCE
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JEFFERIES RAISES ASOS PRICE TARGET TO 5900 (2300) PENCE - 'BUY'
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COMPANIES - FTSE 250
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Pork and poultry products supplier Cranswick said trading in the first quarter of its financial year has been strong, and its results for the current financial year ending March 27, 2021 are now expected to be ahead of previous expectations. For the 13 weeks to June 27, Cranswick said revenue was 25% ahead of the first quarter the year before, while like-for-like revenue was 19% higher. Cranswick said as a result of the current shift towards greater in-home consumption, retail demand has been "exceptionally robust". This - combined with increased poultry sales from its new Eye facility, which continues to perform strongly, and the benefit from new contract wins - has comfortably offset lower food service revenue, the company said. The positive performance has so far continued in the second quarter of the financial year, Cranswick said.
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COMPANIES - MAIN MARKET AND AIM
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Construction firm Costain said its performance was resilient in the first half of 2020 during the Covid-19 pandemic, with all contracts now operational, and it has made strong progress with its strategic objectives. Costain expects to report an operating profit, before the A465 and Peterborough & Huntingdon contracts, of GBP5.7 million for the first half, with both its trading divisions, Transportation and Natural Resources, profitable. The company reported an underlying operating profit of GBP21.2 million for the first half of 2019. Costain said its order book stood at GBP4.2 billion at June 30 and has over GBP1 billion of work on its frameworks. Costain added it has a strong balance sheet, with net cash of GBP140.9 million as at June 30. "We now have a strong balance sheet, over GBP2 billion of contracts and frameworks secured and confirmed in the period and continue to have a growing pipeline of opportunities. I am confident that we are well placed to deliver significant growth in profit in 2021," said Chief Executive Alex Vaughan.
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UK Mortgages acknowledged M&G Investment Management's decision on Friday not to make an offer for the company, reiterating MAGIM's proposals undervalued UK Mortgages and its future prospects. UK Mortgages said it now will commence its previously announced review of future strategy in a bid to create value for shareholders. "While the offer period has now ended, the board is very aware of the feedback from shareholders received through the period. The board is committed to ensuring that the review of future strategy provides shareholders with a strategy that delivers a clear pathway to enhanced liquidity as well as a narrowing and removal of the discount at which the shares trade versus the net asset value," Chair Chris Waldron said.
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BATM Advanced Communications said it expects to reinstate its dividend in 2020, after a strong first half left the company predicting a 32% revenue rise and 48% jump in earnings before interest, tax, depreciation and amortisation for the full year.
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COMPANIES - GLOBAL
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French pharmaceutical giant Sanofi will acquire all outstanding shares in Nasdaq-listed biopharmaceutical firm Principia Biopharma for USD100 per share, giving an equity value of USD3.68 billion. Principia is based in San Francisco, California and is focused on the treatment of immune-mediated diseases. Its shares closed down 1.2% at USD90.74 on Friday, giving a market capitalisation of USD3.01 billion. Principia shares have risen 66% since the start of 2020. The boards of both companies have approved the deal, but it remains subject to other conditions, including the tender of a majority of Principia's shares and the expiration of the waiting period under US antitrust law. Sanofi said Principia's Bruton tyrosine kinase inhibitors will add to its effort to build up a portfolio of treatments for autoimmune diseases.
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Monday's Shareholder Meetings
Cranswick
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By Tom Waite; thomaslwaite@alliancenews.com
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