(Alliance News) - Stock prices in London are set to open lower on Friday, taking direction from a disappointing session in Asia as Hong Kong gears up for another weekend of unrest.
In early UK company news, Ocado has signed a partnership with Japanese grocer Aeon, the US FDA has granted AstraZeneca's Imfinzi priority review, and newspaper publisher Reach said its annual trading was in line with management expectations.
IG says futures indicate the FTSE 100 index of large-caps to open 30.83 points lower at 7,385.60 on Thursday. The UK flagship index closed down 13.35 points, or 0.2%, at 7,416.43 on Thursday.
Markets in Europe had stumbled into the red on Thursday amid fears US legislation supporting pro-democracy protesters in Hong Kong could derail trade talks with China.
China threatened retaliation against Washington on Thursday after US President Donald Trump signed legislation supporting Hong Kong pro-democracy protesters, just as the world's top two economies edge towards a trade truce.
"If anything, yesterday's declines were pretty modest given the circumstances, though one should also take into account the absence of US markets, as well as fairly low volumes. Nonetheless if investors were really concerned about a significant escalation in tensions, yesterday's price action certainly didn't show it," said CMC Markets Chief Market Analyst Michael Hewson.
He continued: "Asia markets this morning have seen more of a decline and this is likely to see a similarly weak European open this morning though some of the losses could also be some month end portfolio readjustment, after a fairly decent November."
"It's still expected to be a fairly quiet end to the week and month today with markets in Europe set to finish November in positive territory, and a third successive monthly gain."
Adding to the tensions, Hong Kong police ended their two-week siege of a university campus that became a battleground with pro-democracy protesters, as activists vowed to hold fresh rallies and strikes in the coming days.
Renewed calls to hit the streets came after Beijing and city leader Carrie Lam refused further political concessions despite a landslide victory for pro-democracy parties in local elections last weekend.
In Asia on Friday, the Japanese Nikkei 225 index closed down 0.5%. In China, the Shanghai Composite closed down 0.6%, while the Hang Seng index in Hong Kong is 2.1% lower.
Financial markets in the US were closed on Thursday for the Thanksgiving holiday and will reopen on Friday for a half-day session.
Commenting on the session in Asia, AxiTrader's Stephen Innes said: "So much for the thought that 'risk-on' is trying to emerge from its 24 hours Hong Kong bill-imposed cocoon as the markets remain very much in a defensive mode ahead of the weekend. There are far too many combinations of headline risk to navigate, which for today's session, is bringing about a bit of randomness amid sparse liquidity as traders appear to be flattening out long risk positions.
"Traders are probably getting a tad jittery about turning the page on November without a trade talk venue as December 15 and the possible imposition of 15% tariffs on USD160 billion of Chinese goods looms ominously.
Turning to the London Stock Exchange, Ocado said its Smart Platform will now be used in Japan by Aeon. The Japanese company has 21,000 food stores across 14 countries but will be opening a new online business, with help from Ocado.
The agreement will see the development of a national fulfilment network to serve the whole of the Japanese market, with expected sales capacity of around JPY600 billion by 2030, growing to approximately JPY1 trillion by 2035. The service is expected to go live in 2023.
Aeon will pay Ocado upfront fees upon signing and during the development phase, then ongoing fees linked to both sales achieved and installed capacity within each customer fulfilment centres and service criteria.
Pharma giant AstraZeneca received good news. The US Food & Drug Administration has granted the company's Imfinzi small cell lung cancer treatment a priority review.
The FDA has accepted a supplemental biologics licence application for the drug, based on positive results from phase III of the Caspian trial - which showed Imfinzi, in combination with standard-of-care chemotherapy, demonstrated a "statistically significant and clinically meaningful improvement in overall survival versus standard of care".
Reach said its trading in in the past five months has been in line with management views.
Like-for-like sales were down 4.4% in the period to November 24, but this is improved upon the 6.6% decline seen in the same period the year prior.
Like-for-like print revenue in the five month period was down 7.3%, compared to down 8.2% a year before, but digital grew by 14%, versus 9.3% a year prior.
Reach said it is confident its 2019 performance will meet expectations.
Student accommodation provider Unite Group has completed the acquisition of Liberty Living Group, a wholly owned subsidiary of the Canada Pension Plan Investment Board. Unite has issued 72.6 million shares at 25 pence each to Liberty Living to complete the deal. Unite will have 363.5 million shares in issue following the deal.
Investec updated the market on its planned demerger and planned listing of its asset management business, which is to be renamed Ninety One Ltd.
Ninety One will be dual listed, in London and Johannesburg, and is expected to be complete in March 2020.
Transferring Investec Asset Management's assets into Ninety One is expected to have a positive impact on Investec's resulting CET1 ratio, of about 1.3% to 12.0%.
The banking group is expecting to incur a GBP56 million cost for the demerger but Investec "strongly" believes the move will simplify its business and improve its long term prospects. Investec has committed to RoE between 12% and 16% for its Bank & Wealth business through 2022.
Estate agent Countrywide has sold commercial real estate consultancy firm Lambert Smith Hampton for GBP38 million in cash. Countrywide said the business was non-core, and the funds will be used for its business turnaround. It also has agreed an amended credit facility with its lenders.
Countrywide additionally announced on a share consolidation, but this first requires shareholder approval at its upcoming annual general meeting.
Countrywide is proposing a 50 for 1 consolidation. The company currently has 1.64 billion shares in issue. Countrywide said the consolidation will improve its market liquidity, and reduce volatility and spread.
"The group continues to make operational progress in its turnaround and confirms that it remains on course to deliver a full year result in line with the board's expectations," Countrywide added.
In currencies, sterling was quoted at USD1.2913 early Friday, down from USD1.2951 at the London equities close on Thursday.
The euro was quoted at USD1.1010 early Friday, up on USD1.1002 late Thursday. Against the yen, the dollar was quoted at JPY109.50, flat versus JPY109.50.
Back in the UK, a row has erupted between the Conservative Party and Channel 4, with the Tories saying the broadcaster "conspired" with Jeremy Corbyn to block them from a TV leaders' debate.
The party has made a formal complaint to Ofcom's election committee as an ice sculpture was used in Boris Johnson's place in the Channel 4 News debate on climate change.
The UK prime minister was again accused of "running scared" when he did not join the other party leaders, with Michael Gove instead turning up and asking if he could stand in for Johnson, before being turned away because he is not a party leader.
In commodities, gold was quoted at USD1,457.50 early Friday, higher on USD1,455.02 at the London equities close on Thursday.
Brent oil was quoted at USD63.12 early Friday, higher compared to USD62.72 at the London equities close on Thursday.
The economic events calendar on Friday has Germany unemployment data at 0855 GMT, UK mortgage approvals at 0930 GMT and eurozone inflation and jobless figures at 1000 GMT.
By Paul McGowan; paulmcgowan@alliancenews.com
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