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(Alliance News) - Stock prices in London are seen opening higher on Tuesday as investors welcomed news that the US and China have agreed to press on with their trade pact.
In early UK company news, industrial software maker AVEVA Group said it will acquire Softbank-backed OSIsoft in a deal worth USD5.0 billion. Anglo-Swedish drugmaker AstraZeneca reported positive developments on the coronavirus front. Marine services company James Fisher & Sons cut its interim dividend after a challenging first half.
IG futures indicate the FTSE 100 index is to open 20.27 points higher at 6,125.00. The blue-chip index closed up 102.84 points, or 1.7%, at 6,104.73 on Monday.
AVEVA Group said it has reached an agreement to acquire California-based OSIsoft, a fellow industrial software maker, at an enterprise value of USD5.0 billion.
AVEVA said the deal is expected to be funded by a combination of a capital raise by way of a rights issue of new shares, cash on balance sheet and new debt facilities, as well as issuing new shares to one of the selling shareholders.
AVEVA said it will hold a general meeting to approve the transaction and terms of the rights issue.
AVEVA said that approximately 88%, or USD4.4 billion of the total consideration will be paid in cash, which will be funded by a combination of USD3.5 billion from the proceeds of the proposed rights issue and USD900 million from existing cash on balance sheet and new debt facilities.
Turning to current trading, AVEVA said strong growth in subscription revenue has continued, while maintenance revenue was broadly flat and perpetual licences and services reduced substantially.
"As previously outlined, AVEVA faces a tough comparative period in the first half of 2021, particularly in Asia Pacific, partly due to the early renewal of a large contract in the prior financial year. The order pipeline for the remainder of the financial year is solid and is expected to benefit from large contract renewals in the second half of the financial year," the Cambridge-based company said.
AstraZeneca said it has started Phase 1 clinical trial of a monoclonal antibody combination for the prevention and treatment of Covid-19, with the first participants dosed to assess the tolerability of the treatment.
The trial will include up to 48 healthy participants in the UK aged 18 to 55 years and is being funded by the Defense Advanced Research Projects Agency, part of the US Department of Defense, and the Biomedical Advanced Research & Development Authority, part of the Office of the Assistant Secretary for Preparedness and Response at the US Department of Health & Human Services.
The Cambridge-based drugmaker said that should the treatment prove to be tolerated and have a favourable safety profile, AstraZeneca will progress it into larger late-stage Phase II and Phase III trials to evaluate its efficacy as a potential preventative and treatment approach against Covid-19.
James Fisher said the challenges brought about by the coronavirus crisis meant the first half of 2020 was one of the most demanding periods the marine services company has faced.
For the half-year to June 30, revenue fell 10% to GBP258.1 million from GBP286.9 million last year, and pretax profit dropped 60% to GBP7.1 million from GBP20.9 million.
James Fisher cut its interim dividend by 29% to 8.0 pence from 11.3p paid out last year.
Chief Executive Officer Eoghan O'Lionaird said: "Whilst the second half is expected to remain challenging and the outlook for our end markets is uncertain, we expect trading to improve through the second half, assuming no material deterioration in the Covid-19 situation. James Fisher is well diversified by geographical sector and end market.
"The resilience of the group, our strong liquidity position combined with swift actions taken to reduce costs, position James Fisher well for any improvement in market conditions in the second half and beyond. Whilst the financial performance in 2020 will be lower than 2019, the group remains well placed to deliver future growth for its shareholders."
Global investor sentiment was lifted overnight after top Chinese and US negotiators spoke on the phone and agreed to "push forward" their phase one economic deal, amid soaring tensions between the two sides on several fronts.
The US and China signed the accord in January, bringing a partial truce in their lingering trade war and obliging Beijing to import an additional USD200 billion in American products over two years, ranging from cars and machinery to oil and farm products.
But the Covid-19 pandemic has put pressure on the agreement, and China's purchases of those goods have been lagging. The two countries confirmed the talks in separate statements. Washington said the parties "addressed steps that China has taken to effectuate structural changes called for by the agreement".
Those changes, it said, would "ensure greater protection for intellectual property rights, remove impediments to American companies in the areas of financial services and agriculture, and eliminate forced technology transfer".
It added that both sides "see progress and are committed to taking the steps necessary to ensure the success of the agreement".
In the US on Monday, Wall Street ended higher, with the Dow Jones Industrial Average up 1.4%, S&P 500 up 1.0% and Nasdaq Composite up 0.6%. New York continued its string of new records on Monday, as the Nasdaq and S&P 500 notched all-time highs amid promising news about a new coronavirus treatment.
"The buoyant mood was maintained on reports that Chinese and US officials saw progress on phase one of the US-China trade deal, helping to drive stocks in Asia higher, and helping to underpin the progress from yesterday's gains. As such today's European open is likely to see a higher open," said CMC Markets analyst Michael Hewson.
The Japanese Nikkei 225 index ended up 1.4%. In China, the Shanghai Composite is down 0.4%, while the Hang Seng index in Hong Kong is down 0.2%.
The pound was quoted at USD1.3096 Tuesday morning, up from USD1.3075 at the London equities close Monday.
The euro was priced at USD1.1808, flat from USD1.1802. Against the yen, the dollar was trading at JPY106.00, slightly higher compared to JPY105.93.
Brent oil was quoted at USD45.24 a barrel Tuesday morning, up from USD44.88 a barrel at the London equities close Monday. Gold was trading at USD1,930.64 an ounce, lower against USD1,933.88.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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