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(Alliance News) - Stocks in London are set to start the week on the back foot amid concerns over rising coronavirus cases across the globe.
In early UK company news, Ultra Electronics unveiled a jump in interim profit in a stronger-than-expected set of results, Synthomer boosted its 2021 earnings guidance, and AstraZeneca's Imfinzi received Chinese approval.
IG says futures indicate the FTSE 100 to open down 57.49 points, or 0.8%, at 6,950.60 on Monday. The index of large-caps closed down 3.93 points, or 0.1%, at 7,008.09 on Friday.
The soft start for London follows a weak performance for equities in Asia on Monday.
In Tokyo, the Nikkei 225 index ended down 1.3%. In China, the Shanghai Composite was flat, while the Hang Seng index in Hong Kong was down 1.7%. The S&P/ASX 200 in Sydney ended down 0.9%.
In the US on Friday, Wall Street also had ended lower, with the Dow Jones Industrial Average down 0.9%, the S&P 500 down 0.8%, and the Nasdaq Composite down 0.8%.
"Equity markets are front and centre in Asia this morning, as increasing nerves about the delta-variant Covid-19 are sapping recovery hopes across the Asia-Pacific. Of course, you can choose your poison on that front globally, with the US, Europe, and the UK also experiencing rises in cases," said Jeffrey Halley, senior market analyst at Oanda.
Despite daily coronavirus cases surging, the UK government on Monday lifted pandemic restrictions on daily life in England, scrapping all social distancing in a step slammed by opposition parties and some scientists as a dangerous leap into the unknown.
From midnight, nightclubs were able to reopen and other indoor venues allowed to run at full capacity, while legal mandates covering the wearing of masks and working from home were scrapped.
UK Prime Minister Boris Johnson – who is self-isolating after his health minister was infected – urged the public to remain prudent and for any laggards to join the two-thirds of UK adults who are now fully vaccinated.
He defended the reopening – dubbed 'freedom day' by some media – despite some scientists' misgivings after daily infection rates in Britain topped 50,000, behind only Indonesia and Brazil.
Oanda's Halley said he expects "nerves" over the reopening decision to cap gains for sterling this week.
The pound was quoted at USD1.3751 early Monday, slipping from USD1.3788 at the London equities close on Friday.
In early UK company news, AstraZeneca said its Imfinzi has been approved in China for the treatment of extensive-stage small cell lung cancer.
Small cell lung cancer is a highly aggressive, fast-growing form of lung cancer, Astra said. The approval by China's National Medical Products Administration was based on positive results from the Caspian phase three trial, with safety and efficacy in the China cohort of patients consistent with the global results.
Ultra Electronics reported a stronger-than-expected first half, leaving the aerospace and defence engineering company confident on its prospects.
Revenue for the six months to July 2 slipped 2.1% to GBP404.5 million from GBP413.1 million a year before. However, on an organic basis, revenue rose 4.7%.
The revenue performance was a strong one "particularly given the mainly Covid-19 driven operational inefficiencies and supply chain disruption experienced in Q1 2021, which are now broadly resolved."
Pretax profit jumped 55% to GBP46.2 million from GBP29.8 million.
Looking ahead, Ultra Electronics said its focused strategy and improved execution allows for increased confidence in delivering above-market growth.
Chief Executive Simon Pryce said: "Our Focus; Fix; Grow transformation programme is already delivering ahead of plan and we are now more confident in our improvement potential with a better payback than originally anticipated. This should allow us to accelerate top-line growth and gain market share through additional investment in research & development, improved operational delivery and by further optimising our cost base."
Synthomer boosted its 2021 earnings guidance following good trading momentum in its first half.
The chemicals company said it has continued to see strong trading momentum across the business with volumes and unit margins ahead of a year ago in all divisions. The Nitrile latex business has been performing well, it added, driven by "exceptional demand" due to the pandemic.
As a result, Synthomer now expects 2021 earnings before interest, tax, depreciation and amortisation in excess of GBP500 million, compared to its previous guidance of above GBP450 million. In 2020, the company recorded Ebitda of GBP259.4 million.
"Synthomer continues to expect that the Nitrile latex business will return to more normalised levels during 2022," it added.
All Active Asset Capital said it is in "constructive discussions" with Audioboom about a possible offer for the podcasts producer at GBP12.00 per share.
If an offer is made, AAA said, it would consist of 12.5 new AAA shares and 200p in cash per Audioboom share. This would value Audioboom shares at GBP12.00 each, a premium of 36% to Friday's closing price of 885p.
AAA has received irrevocable undertakings to accept such an offer in respect of 4.1 million Audioboom shares, representing 26% of its share capital.
"The directors believe the combination of AAA and Audioboom would create a compelling portfolio of innovative, high growth technology investments that could create significant new accretive value for the shareholders of both companies in the future," said AAA.
There can be no certainty that any firm offer will be made, it stressed.
Separately, AAA said that Allenby has resigned as nominated advisor and broker due to a conflict of interest. AAA shares remain suspended, and it has one month to appoint a new nomad under AIM rules.
The euro traded at USD1.1803 early Monday, soft on USD1.1810 late Friday. Against the safe-haven Japanese yen, the dollar fell to JPY109.96 versus JPY110.15.
Gold was quoted at USD1,806.16 an ounce early Monday, down against USD1,813.55 on Friday.
Brent oil was trading at USD73.00 a barrel, soft on USD73.27 late Friday after the world's leading oil producers agreed on Sunday to continue to modestly boost output from August.
In a rare challenge to OPEC leader Saudi Arabia, the UAE had rejected a proposed deal earlier this month as "unjust", leading to a stalemate. But in a compromise, Sunday's discussions agreed to adjust output quotas next May for the UAE, Iraq, Kuwait, Russia and Saudi Arabia itself, meaning their actual cuts will be less.
Saudi Energy Minister Prince Abdulaziz bin Salman, who chairs the OPEC group, declined to say how the new quotas were decided and beneficiaries chosen, saying it had been part of "consensus building".
The economic events calendar on Monday has eurozone construction output at 1000 BST.
By Lucy Heming; lucyheming@alliancenews.com
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