(Alliance News) - Stock prices in London are set to open cautiously lower on Monday after the UK and EU over the weekend agreed to continue trade negotiations, lifting the pound.
Focus also will be on AstraZeneca, which announced a USD39 billion acquisition in the US on Saturday, while there was also M&A news on Monday as Electronic Arts crashed Take-Two Interactive's offer for London-listed Codemasters.
In other company news, Polypipe expects to beat annual profit expectations.
UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen agreed to go the "extra mile" in a bid to prevent a no-deal scenario on January 1 when transition arrangements come to an end.
"There is so much to be resolved and with so little of the year remaining, this week should be when everything finally comes together," said Craig Erlam at Oanda.
He added: "As long as the two sides are talking, there remains the belief that common sense will prevail and a deal will be reached that avoids the cliff edge on January 1st. I expect volatility will remain rather heightened in the coming days."
IG says futures indicate the FTSE 100 index of large-caps to open 4.75 points lower at 6,542.00 on Monday. The FTSE 100 closed down 53.01 points, or 0.8%, at 6,546.75 on Friday.
Sterling was quoted at USD1.3358 early Monday, more than a US cent up from USD1.3217 at the London equities close on Friday. The euro traded at USD1.2145 early Monday, up from USD1.2110 late Friday.
There is also a deadline facing US lawmakers. 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.
The Trump administration on Tuesday proposed an increased bailout of USD916 billion, but it was later rejected by Democrats, who refused to accept its inclusion of a cut to unemployment benefits. Whatever is agreed on will likely be eclipsed by the massive bailout plan that President-elect Joe Biden has promised to adopt after his inauguration on January 20.
In the US on Friday, Wall Street ended mixed, with the Dow Jones Industrial Average closing up 0.2%, the S&P 500 down 0.1%, and Nasdaq Composite down 0.2%.
In early UK company news, 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.
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.
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.
Over the weekend, 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.
In Asia on Monday, the Nikkei 225 in Tokyo index closed up 0.3%. Against the yen, the dollar rose to JPY104.00 versus JPY103.90.
In China, the Shanghai Composite closed up 0.7%, while the Hang Seng index in Hong Kong is down 0.5%. Â
Gold was quoted at USD1,832.30 an ounce early Monday, lower than USD1,843.56 on Friday. Brent oil was trading at USD50.56 a barrel, higher than USD50.04 late Friday.
In Monday's economic calendar, there is eurozone industrial production at 1000 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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