(Alliance News) - The pound rose sharply after the UK and EU agreed on Sunday to waive their self-imposed deadline for a post-Brexit trade agreement and continue talking, possibly right up to the end of the transition period on December 31.
Against the dollar, the pound was up one-and-a-half US cents early Monday from its level late on Friday as the Sunday deadline had loomed.
Also in focus for the stock market early Monday was takeover activity, after AstraZeneca announced a massive acquisition in the US, while an American video-games giant waded in with an agreed offer for the UK's Codemasters.
AstraZeneca was down 7.0% early Monday, while Codemasters was up 18%.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: marginally lower at 6,545.71
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Hang Seng: down 0.3% at 26,425.21
Nikkei 225: closed down 0.3% at 26,732.44
DJIA: closed up 47.11 points, or 0.2%, at 30,046.37
S&P 500: closed down 0.1% at 3,663.46
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GBP: up sharply at USD1.3367 (USD1.3217)
EUR: up at USD1.2147 (USD1.2110)
Gold: down at USD1,833.56 per ounce (USD1,843.56)
Oil (Brent): up at USD50.60 a barrel (USD50.04)
(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
EU European Parliament opens last plenary before Brexit transition ends.
1100 CET EU industrial production
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The EU's lead negotiator Michel Barnier will update diplomats from the 27 member states on Monday as talks continued on a post-Brexit trade deal with the UK. The UK and EU refused to set a new deadline following a decision to continue discussions, but time is tight for a deal to be reached and approved by the end of the month when current arrangements expire. There was fresh hope on the prospect of a deal after UK Prime Minister Boris Johnson and Europe's top official Ursula von der Leyen agreed to "go the extra mile" and continue discussions beyond Sunday's initial deadline. Barnier will set out the state of play to ambassadors from the EU's member states in Brussels on Monday morning. The ongoing talks has fuelled speculation that Parliament in the UK may be forced to sit over the festive period to vote on any agreement.
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The surge in coronavirus cases across London is "deeply concerning" and requires further government action to be brought under control, Sadiq Khan has said. The Mayor of London wrote to Johnson on Sunday requesting for an immediate increase in Covid-19 testing provision across the capital in response to the rising number of infections. Khan also asked for a compensation scheme to be put in place for businesses ahead of any further restrictions being imposed on the city. He warned that moving London from Tier 2 into Tier 3 would have a "catastrophic" economic impact on businesses and put "hundreds of thousands of livelihoods at stake". The UK government said it will review all tiers in England on December 16.
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Rightmove said that demand for housing in the UK will outweigh consumer uncertainty in 2021, with prices expected to grow by a single-digit percentage and slightly slower than in 2020. In the Rightmove monthly house price index, the property portal forecasted the national average price to grow by 4% in 2021 as "housing priorities stay high on people's life agendas". On a yearly basis in December, the Rightmove index showed that average UK house prices rose by 6.6%. Prices fell 0.6% month-on-month.
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Talks on new economic relief for millions of Americans hit hard by the Covid-19 pandemic are set to continue Monday in Washington between the White House and Congress, with less than two weeks to go before a previous plan expires. US Treasury Secretary Steven Mnuchin and speaker of the House of Representatives Nancy Pelosi spoke on the phone for a half-hour on Sunday, according to a tweet by the top Democrat's spokesman Drew Hammill, and plan to speak again on Monday. Democrats and Republicans have been locked in negotiations since July on plans for supplementary financial aid to households, businesses and local communities suffering from the country's worst economic downturn since the Great Depression. Aid to the unemployed as part of a massive recovery plan of USD2.2 trillion adopted in the spring expires on Boxing Day, when millions of Americans will find themselves without income.
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Japanese industrial production was higher in October than in the prior month but down from 2019, data from Japan's Ministry of Economy, Trade & Industry showed. The seasonally adjusted index of production rose 4.0% month-on-month to 95.2 points in October. This exceeded the preliminary figure, which showed a 3.8% industrial production rise for October.
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BROKER RATING CHANGES
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BARCLAYS RAISES FLUTTER PRICE TARGET TO 16000 (13000) PENCE - 'OVERWEIGHT'
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BERENBERG CUTS ROLLS-ROYCE PRICE TARGET TO 140 (250) PENCE - 'BUY'
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GOLDMAN SACHS RAISES AB FOODS PRICE TARGET TO 2600 (2340) PENCE - 'NEUTRAL'
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COMPANIES - FTSE 100
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Lindon-based life and general insurer Aviva said it has agreed to sell its entire shareholding in its wholly-owned life insurance business in Vietnam, Aviva Vietnam Life Insurance Co Ltd to Manulife Financial Asia Ltd for an all-cash consideration. Aviva didn't disclose the sale price but said the deal will increase its IFRS net asset value and Solvency II surplus by about GBP100 million. Aviva said the transactioin is expected to complete in the second half of 2021. Last week, Aviva complete the sale of its stake in its Hong Kong joint venture, saying this was the HK deal was the fourth this year as part of its simplification strategy.
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On Saturday, AstraZeneca - which is finalising a vaccine against Covid-19 - said it was buying US biotech firm Alexion Pharmaceuticals Inc for USD39 billion to boost its work on immunology. "Alexion has established itself as a leader in complement biology, bringing life-changing benefits to patients with rare diseases," AstraZeneca Chief Executive Pascal Soriot said in a statement, announcing the year's biggest deal in the pharma sector. Both boards have agreed to the cash-and-stock deal, which values Alexion at USD175 a share, a premium of 45% to the Boston-based company's closing price on Friday in New York of USD120.98.
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COMPANIES - FTSE 250
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Polypipe said its performance in November and the likely outcome for December has "again exceeded expectations". Revenue for November was 8.0% higher than the prior year, with Residential markets performing particularly well. Operating margins continue to benefit from the drop through of improved volumes, although are still not back to normal levels due to "operating inefficiencies" caused by Covid-19. Polypipe now expects underlying operating profit for 2020 to be around GBP40 million, versus the current consensus range of GBP35 million to GBP37 million. "The group enters the new year with a strong order book and some cautious optimism, although uncertainty currently exists about the effects of a no-deal Brexit," the plastic piping systems manufacturer said.
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Dignity said Finance Director Steve Whittern has resigned from the board with immediate effect, and will leave the company at the end of the year. Dean Moore, who was appointed as a non-executive director in March, will become interim chief financial officer on Whittern's departure, having previously been CFO at Cineworld and N Brown. The funeral services provider added that it "has not lost sight of the need to drive the ongoing root & branch review through to an economic conclusion." "Accordingly, given that our over-arching desire to grow sustainable long-term market share could have ramifications for short-term performance, we are working closely with our largest shareholder in order to endorse the combination of compelling propositions and price points to best leverage the strengths of our existing resources," said Dignity.
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COMPANIES - MAIN MARKET AND AIM
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The US's Electronic Arts crashed Take-Two Interactive's takeover offer for Codemasters, wading in with an approach valuing the London-listed video game developer at GBP945 million. Redwood City, California-based EA's 604 pence per share cash offer tops Take-Two's bid, made in November, of 120p per share in cash and 365p in Take-Two shares, valuing Codemasters at 485p per share and GBP726 million as a whole. Codemasters directors intend to recommend unanimously that shareholders vote in favour of the EA deal, and the board withdrew its recommendation of the Take-Two offer. "The board of Codemasters firmly believes the company would benefit from EA's knowledge, resources and extensive global scale - both overall and specifically within the racing sector. We feel this union would provide an exciting and prosperous future for Codemasters, allowing our teams to create, launch and service bigger and better games to an extremely passionate audience," said Codemasters Chair Gerhard Florin.
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Monday's Shareholder Meetings
River & Mercantile Group PLC - AGM
Kibo Energy PLC - AGM
Celtic PLC - AGM
Renewables Infrastructure Group Ltd - EGM re authority to allot shares
Ironveld PLC - GM re share placing
Proactis Holdings PLC - AGM
Urban&Civic PLC - GM re acquisition by the Wellcome Trust
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By Tom Waite; thomaslwaite@alliancenews.com
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