Ashmore Share News (ASHM)

(Alliance News) - Stock prices in London are set for a higher start to the week despite a lack of drivers with the US market shut for a holiday on Monday.

In early UK company news, Unilever set out the strategic rationale behind its approach for GSK Consumer Healthcare, housebuilder Taylor Wimpey backed market forecasts after seeing strong demand in 2021, and Ashmore reported a decline in assets under management.

IG says futures indicate the FTSE 100 index of large-caps to open up 22.15 points, or 0.3%, at 7,565.10 on Monday. The FTSE 100 closed down 20.90 points, or 0.3%, at 7,542.95 on Friday.

"Today's market open looks set to see European stocks open higher, with the main focus this week, away from US earnings, set to be on the latest wages, unemployment and inflation numbers from the UK economy, and the Bank of Japan tomorrow," said CMC Markets chief market analyst Michael Hewson.

UK unemployment is out on Tuesday and inflation out on Wednesday. The annual inflation reading is expected to come in at 5.2% for December, according to FXStreet consensus, which would be up on 5.1% in November and still way ahead of the Bank of England's 2% target.

A BoJ policy-setting meeting began on Monday, with a decision on monetary policy due to be announced on Tuesday.

In focus at the start of the week, China's pandemic-defying economic growth slowed in the final months of 2021, official data showed.

The world's second-biggest economy, a key driver of global growth, expanded 8.1% in 2021 on its strong virus recovery, National Bureau of Statistics data showed, beating forecasts of 8.0% in an AFP poll, and the 2.3% reading for 2020. But much of that growth came in the first half of the year, with the economy shaken by a series of shocks towards the end of 2021.

They came as China's central bank cut the rate on its one-year policy loans to 2.85%, the first drop since April 2020 at the height of the pandemic and a clear signal from authorities that the outlook this year remains uncertain.

In China, the Shanghai Composite ended up 0.6% on Monday, while the Hang Seng index in Hong Kong was down 0.7% in late trade. The S&P/ASX 200 in Sydney closed up 0.3%, and the Nikkei 225 in Tokyo ended up 0.7%. Against the yen, the dollar was quoted at JPY114.49 early Monday in London, up from JPY113.82 late Friday.

In early UK company news, Unilever confirmed its takeover approach for GSK Consumer Healthcare and set out a strategic update, planning to push further into health, beauty and hygiene.

These categories offer "higher rates of sustainable market growth", it said, adding that major acquisitions should be carried out alongside the divestment of lower growth brands.

GSK Consumer Healthcare would be a good fit with this new direction, Unilever explained. The deal would combine Unilever's consumer and branding knowledge with GSK Consumer Health's technical over-the-counter capabilities.

Over the weekend, GlaxoSmithKline confirmed it received and rejected three unsolicited and non-binding bids for its Consumer Healthcare business from consumer goods maker Unilever.

The latest offer from Unilever was made on December 20 and had a total acquisition value of GBP50 billion, comprising GBP41.7 billion in cash and GBP8.3 billion in Unilever shares. The offer was rejected by the Brentford, England-based pharmaceutical group, on the grounds that the offer undervalued the business. The approach was first reported by the Sunday Times newspaper on Saturday.

Unilever said: "The acquisition would create scale and a growth platform for the combined portfolio in the US, China, and India, with further opportunities in other emerging markets."

As well as addressing its long-term strategic direction, Unilever said it has also been focused on accelerating its existing businesses. It will announce a major initiative to enhance performance later this month.

GSK said it remains focused on carrying on with the proposed demerger of the Consumer Healthcare arm and having it list on the London Stock Exchange in mid-2022. The business was formed in August 2019 as a joint venture with Pfizer, which has a 32% interest, while GSK holds the remaining 68%.

Taylor Wimpey backed market forecasts for 2021 in a year which saw strong demand for its homes.

Total UK home completions rose by 47% to 14,087 in 2021, and the net private reservation rate was 0.91 homes per outlet per week, up from the previous year's 0.76. Demand was underpinned by low interest rates and good mortgage availability, while house price inflation fully offset cost pressures.

The business "performed very well", and the housebuilder expects to report 2021 results in line with expectations, with significant improvement in operating margin. The current year has started well, with forward indicators positive despite wider economic uncertainty.

"Market conditions remain supportive, and we continue to see strong demand for our homes. Our strategy of optimising sales rates, prices and operational excellence and efficiencies is enabling us to drive a significant improvement in operating margin," said Chief Executive Pete Redfern.

Hikma Pharmaceuticals said it has agreed to buy the Canadian assets of Teligent for USD45.8 million, representing the firm's expansion into Canada.

The deal includes a portfolio of 25 sterile injectable products, three in-licenced ophthalmic products, and a pipeline of seven additional products, four of which are approved by Health Canada.

Hikma's purchase follows Teligent in October filing for voluntary protection under Chapter 11 of the US Bankruptcy Code. As part of this, Teligent initiated a sale of its core assets, allowing Hikma to snap up its Canadian portfolio.

"This acquisition further expands our portfolio of essential sterile injectable medicines and gives Hikma an entry into the highly attractive Canadian injectables market," said Hikma Injectables President Riad Mishlawi.

Emerging markets asset manager Ashmore reported a decline in assets under management over the course of the last three months of 2021.

Assets under management finished December at USD87.3 billion, down from USD91.3 billion at the end of September. This decline comprised net outflows of USD2.2 billion and negative investment performance of USD1.8 billion.

"Against the backdrop of generally declining Emerging Markets over the quarter, Ashmore's relative performance was positive in local currency, equity and investment grade strategies, and weaker in some US dollar-denominated strategies," the firm highlighted.

The euro traded at USD1.1424 early Monday, flat versus USD1.1423. Sterling was quoted at USD1.3679, firm against USD1.3675 at the London equities close on Friday.

UK Prime Minister Boris Johnson is "contrite" over allegations of Covid rule-breaking and will seek to "address the underlying culture in Downing Street" that led to partygate, a Cabinet minister said.

Conservative Party Chair Oliver Dowden admitted there were "failings" in No 10, following a series of leaks about alleged lockdown parties, but he denied it was a resigning matter for Johnson.

It comes after The Sunday Times reported that the prime minister is devising a policy announcement blitz and a cull of his inner circle as he looks to survive the publication of senior civil servant Sue Gray's report into so-called partygate.

In the US on Friday, Wall Street ended mixed, with the Dow Jones Industrial Average ending down 0.6%, the S&P 500 up 0.1% and the Nasdaq Composite up 0.6%. US financial markets will be closed on Monday to mark Martin Luther King Day.

Gold was quoted at USD1,821.66 an ounce early Monday, firm on USD1,818.19 on Friday. Brent oil was trading at USD86.46 a barrel, higher than USD85.56 late Friday.

By Lucy Heming; lucyheming@alliancenews.com

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