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(Alliance News) - Stocks in London are called for a higher start to the week, but sentiment may not stay positive for long, with protests breaking out in several European countries following the reintroduction of tighter restrictions to help battle another wave of Covid infections.
In early UK company news, Diploma boasted of an "outstanding" year, Hochschild Mining noted its Peruvian mine licenses may be in peril, and Polar Capital's assets have grown in the first half.
IG says futures indicate the FTSE 100 index of large-caps to open 18.63 points, or 0.3%, higher at 7,242.20 on Monday. The stock index ended down 32.39 points, or 0.5%, at 7,223.57 on Friday.
"European stocks may well have finished last week higher, and still within touching distance of their record highs, but the declines seen on Friday, which wiped out the gains of the previous three days suggest that markets are acutely vulnerable to sudden shifts in sentiment," CMC Markets analyst Michael Hewson said.
"The imposition of another lockdown in Austria, following on from the reintroduction of tighter restrictions in the Netherlands, as well as in Germany, has punctured the optimism that the vaccines could offer a clear way out of the pandemic and a resumption of normal life, as we head towards the Christmas period," Hewson added.
The euro traded at USD1.1266 early Monday, down sharply on USD1.1320 late Friday.
UK Health Secretary Sajid Javid has said mandatory coronavirus vaccination is not something the government would "ever look at".
Javid said the UK is "fortunate" to have less hesitancy around vaccines than other countries.
Speaking on the BBC's Andrew Marr Show, he said: "It is up to Austria, other countries, to decide what they need to do. We are fortunate that in this country, although we have vaccine hesitancy, it is a lot lower than we are seeing in other places."
Sterling was quoted at USD1.3433 early Monday, lower than USD1.3460 at the London equities close on Friday.
Against the yen, the dollar rose to JPY114.25 from JPY113.86.
BHP finalised the merger of its oil and gas arm with Sydney-listed Woodside. The all-stock merger will see Woodside shareholders have 52% of the new company and BHP shareholders 48%.
Completion of the deal is targeted in the second quarter of 2022. The combined entity will be the largest energy company listed on the ASX exchange in Sydney, Woodside said.
In addition, the Scarborough liquefied natural gas project Pluto Train 2 developments were approved, Woodside said.
In announcing a final investment decision, Woodside said USD12.0 billion will be spent on the projects.
BHP shares closed up 0.4% in Sydney on Monday, while Woodside ended down 1.9%.
In other company news early Monday, FTSE 250-listed seal and cables maker Diploma recorded strong annual profit growth driven, it said, by organic growth initiatives and better demand.
For the financial year that ended September 30, pretax profit jumped 45% to GBP96.6 million from GBP66.7 million the year before. Operating profit was up 49% to GBP104.3 million from GBP69.8 million.
Revenue increased 46% to GBP787.4 million from GBP538.4 million.
Chief Executive Johnny Thomson said: "We have delivered strong results, including underlying growth and margin well ahead of our financial model. We have made significant strategic progress, including a record year for acquisitions, as we continue to develop high-quality scalable businesses for organic growth."
Diploma declared an annual dividend of 42.6 pence, up 42% from 30.0p the year before.
"Despite market uncertainties, I remain confident in our ability to deliver attractive long-term growth at sustainably high margins," Thomson added.
Hochschild Mining said it is aware of the Peruvian head of Cabinet potentially looking to close certain mining projects in southern Ayacucho, including the company's Pallancata and Inmaculada mines, due to "alleged environmental complaints".
"The company has not received any formal communication from the government regarding this matter," the miner said. It learnt through various media outlets of the minutes of the meeting, which say that a commission has been constituted to negotiate the closure of mines. The head of Cabinet subsequently indicated that approves will no longer be granted for additional mining or exploration activities, Hochschild said.
"The company believes this conduct by the Peruvian head of Cabinet is not in accordance with Peruvian law and is wholly without merit," it said. "Accordingly, Hochschild will vigorously defend its position and take all action necessary to ensure that the rights of the company and its wholly-owned subsidiaries under Peruvian and international law are respected."
The miner said it "operates under the highest environmental standards and applies industry best practice".
"As such, Hochschild categorically rejects any inference with regard to environmental pollution. The company's sustainable operations are strictly regulated and supervised by several Peruvian regulatory bodies and our activities remain in compliance with their requirements," it added.
Polar Capital's assets under management saw strong growth in the first half of its financial year, hitting GBP23.4 billion at the end of September versus GBP20.9 billion on March 31.
"Our diverse and differentiated range of sector, thematic and regional fund strategies and our performance led culture where 74%, 93% and 99% of our AuM is in the top two quartiles against peers over three years, five years and since inception respectively together with significant remaining capacity provides confidence that momentum will continue," Chief Executive Gavin Rochussen said.
The asset manager recorded pretax profit of GBP31.7 million in the first half, up from GBP27.0 million a year earlier. Core operating profit surged to GBP36.3 million from GBP22.0 million.
Net management fees increased to GBP92.9 million from GBP61.8 million.
"The six months to end September 2021 saw the style pendulum swing back from value to growth, consistent with lower market interest rates. Those Polar strategies with greater value orientation, such as North America and European ex UK Income underperformed over the period, although strategies which combine value and quality, such as UK Value and Phaeacian International Value, outperformed their benchmarks," the company explained.
Polar Capital declared an interim dividend of 14.0p, up 56% from 9.0p a year before.
Stock markets were mixed in Asia on Monday.
In China, the central bank left interest rates unchanged again as expected. The one-year loan prime rate was held at 3.85% in November, the last time the rate was changed was back in April 2020. The five-year rate also was unmoved at 4.65%.
The Shanghai Composite closed up 0.6% on Monday, while the Hang Seng index in Hong Kong was down 0.3% in late trading.
Tokyo's Nikkei 225 index closed 0.1% higher on Monday. The S&P/ASX 200 in Sydney lost 0.6%.
Gold was quoted at USD1,842.30 an ounce early Monday, lower than USD1,859.72 on Friday. Brent oil was trading at USD78.68 a barrel, down from USD79.05 late Friday.
Oil prices slumped thanks to the prospect of new lockdowns and tighter restrictions over the winter.
In the US on Friday, Wall Street ended mostly lower. The Dow Jones Industrial Average closed down 0.8%, ending the week down 1.4%. The S&P 500 ended down 0.1%, gaining 1.1% over the course of the week. Bucking the trend, the Nasdaq Composite set a fresh record high finishing up 0.4%, ending the week up 2.3%.
Looking ahead this week, AvaTrade's Naeem Aslam said market volatility in the US will be driven by the nomination for the next chair of the US Federal Reserve.
"The two major candidates for the crucial seat are Jerome Powell, the current chair, and Governor Lael Brainard. The nomination is important for stock markets because it would set the tone of how tapering is likely to be executed in coming months. If Brainard is nominated, we anticipate a more dovish stance, which would imply a longer timeline for raising interest rates and tightening of policies. Moreover, a new chairman will mean volatility in stock markets as investors test and get comfortable with the new leadership," he said.
The economic events calendar on Monday has eurozone consumer confidence reading at 1500 GMT.
By Paul McGowan; paulmcgowan@alliancenews.com
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