(Alliance News) - Stock prices in London are set to start Monday on a soft note, extending last week's decline on a murky near-term outlook due to the virus pandemic.
Trading activity is likely to be reduced by the Martin Luther King Jr Day holiday, for which US markets will be closed.
In early UK company news, Spirent Communications said it expects another year of earnings growth, and both Genus and Devro lifted full-year guidance.
IG says futures indicate the FTSE 100 index of London large-caps to open 14.81 points, or 0.2%, lower at 6,720.90 on Monday. The FTSE 100 closed down 66.25 points or 1.0%, at 6,735.71 on Friday - closing the week 2.0% lower.
"After the early week exuberance of the first week of 2021, investor appetite for risk has taken a little bit of a knock in the last week or so, largely down to concerns that the recovery story being priced in may well be a little premature," said Michael Hewson at CMC Markets.
"These concerns over a delay to the global recovery have also translated into a mixed start for Asia markets this morning, with the Nikkei 225 lower, with markets here in Europe also look set to open on the back foot. In the absence of US markets for Martin Luther King Day volumes are likely to be on the low side with trading activity likely to diminish as the day progresses."
The coronavirus pandemic is showing no signs of slowing down, with infections surging past 94 million and more than two million deaths, and Europe among the hardest-hit parts of the world.
Worries have grown that delays in the delivery of Pfizer-BioNTech shots could hamper a European vaccine rollout which has already faced heavy criticism across the continent. Work is ongoing at the Pfizer plant in Belgium to increase capacity, and the firm and its German partner BioNTech said Saturday it would allow them to "significantly" scale up vaccine production in the second quarter.
Despite the rollout of vaccines, countries still have few options but to rely on movement and distancing restrictions to control the spread of the virus. Curbs will be tightened in Italy and Switzerland from Monday, while Britain will require testing of all international arrivals.
The number of infections in the US – the worst-hit country – soared to more than 23.7 million on Saturday, with close to 400,000 deaths, according to a Johns Hopkins University tally.
In economic data on Monday, figures showed China's economy grew at the slowest pace in more than four decades last year despite a rebound after the country's coronavirus outbreak.
The 2.3% expansion is the lowest figure since the Chinese economy embarked on major reforms in the 1970s. The figure was a marked slowdown from 2019 growth of 6.1% – itself already the lowest in decades – with the country hit by weak domestic demand and trade tensions. But it is better than that forecast by an AFP poll of analysts from 13 financial institutions, who predicted a 2.0% expansion.
According to the latest data, industrial production grew 2.8% on-year for 2020, slowing further from previous years. Retail sales, whose recovery has lagged behind that of industrial activity, shrank 3.9% for the full year with consumers wary of spending as the pandemic lingered.
"If the market was looking for a convincing game changer, they won't find it here as there are too many holes to be poked in this data set for traders to run with it," said Stephen Innes at Axi.
Even so, in China, the Shanghai Composite closed up 0.8% on Monday, while the Hang Seng index in Hong Kong was up 0.9%. Â
The Japanese Nikkei 225 index closed down 1.0%. Against the yen, the dollar edged down to JPY103.74 versus JPY103.79.
The S&P/ASX 200 in Sydney closed down 0.8%.
In early UK company news, Spirent Communications said it expects profit for 2020 in line with market forecasts.
The automated testing and assurance solutions provider said it delivered good momentum in the final quarter of the year, despite the challenges posed by Covid-19. For the full-year, revenue grew by 4% to USD522 million, and Spirent expects an adjusted operating profit in line with market consensus of USD101.5 million, which would be up from USD92.9 million in 2019.
Spirent also expects a stronger adjusted operating margin of "almost" 20% from 18% in 2019.
"We delivered another year of revenue and earnings growth and, although we experienced some softness in the latter half of the year due to timing of expenditure by global service providers, the 5G-driven momentum in our Lifecycle Service Assurance business continues to be strong," said Chief Executive Eric Updyke.
Updyke added that the firm has started the new year "well placed", though growth is expected to be second-half weighted due to the impact of Covid-19 on customer spending habits.
Centrica said Chief Financial Officer Johnathan Ford will step down with immediate effect due to personal reasons and leave the company at the end of the month.
The British Gas parent has appointed Kate Ringrose, financial controller, as its new CFO. Ringrose has been with Centrica since 2005.
"I am very sorry to see Johnathan leave and would like to thank him for his contribution to the company and wish him and his family well for the future. However, I am delighted that we have a very capable internal successor in Kate," said Chief Executive Chris O'Shea.
Genus said strong recent trading has continued, and it expects to beat previous profit estimates.
The animal genetics company said adjusted pretax profit is now expected to be within a range of GBP47.0 million and GBP49.0 million for its first half, being the six months to December 31, which would be up on GBP36.6 million a year ago. Revenue for the period is expected to come in between GBP285.0 million and GBP287.0 million, also up from GBP270.7 million year-on-year.
"High growth in volumes, revenue and adjusted operating profit were achieved across the groups' operations by both PIC and ABS. Business trends are consistent with those previously announced at the time of the [November] AGM, including further strong growth achieved in particular by PIC in China and by ABS in Brazil, Russia, India and China," said Genus.
PIC focuses on pork and ABS on beef and dairy.
Based on the strong first-half performance, Genus anticipates beating its previous profit growth expectations for the financial year ending June 30, though growth in the second half is likely to be lower than that seen in the first six months of the year.
Equiniti confirmed it is in talks to sell a "key part" of Equiniti Financial Services, namely EQi's direct-to-consumer customer book, predominantly the Selftrade business. Negotiations are ongoing and there is no certainty a transaction will take place, the financial administration outsourcer cautioned.
Devro said trading in the final months of 2020 was better than expected, and it now expects to deliver a full-year profit at the upper end of market forecasts.
The maker of collagen products for the food industry said the trading was driven by higher volumes and margins, and noted that company-compiled consensus for operating profit ranges between GBP38.0 million and GBP40.5 million.
Sterling was quoted at USD1.3561 early Monday, lower than USD1.3597 at the London equities close on Friday. The euro traded at USD1.2080 early Monday, falling from USD1.2098 late Friday.
In the US on Friday, Wall Street ended in the red, with the Dow Jones Industrial Average ending down 0.6%, the S&P 500 down 0.7% and Nasdaq Composite closing 0.9% lower. Markets in the US will be shut on Monday for Martin Luther King Jr Day.
Safe-haven gold was quoted at USD1,837.31 an ounce amid Monday's caution, higher than USD1,832.20 on Friday. Brent oil was trading at USD54.86 a barrel, flat against USD54.87 late Friday.
By Lucy Heming; lucyheming@alliancenews.com
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