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(Alliance News) - Stocks in London are set to sink at the open on Friday, after Asian markets tumbled on news of a heavily mutated Covid-19 variant.
In early corporate news in the UK, Diageo unveiled the next tranche of its return of capital programme. Synthomer poached Essentra's chief financial officer, as Essentra continues its move towards becoming a pure-play components business.
IG says futures indicate the FTSE 100 index of large-caps to open 145.47 points, or 2.0%, lower at 7,164.90 on Friday. The index closed up 24.05 points, or 0.3%, at 7,310.37 on Thursday.
CMC Markets analyst Michael Hewson noted Thursday's session was "fairly lacklustre" with US markets shut for Thanksgiving.
Wall Street reopens for a half day on Friday.
"This fairly subdued tone has been replaced in Asia trading this morning by a huge sell-off on concerns over a new more transmissible variant of the coronavirus identified in South Africa, and which has also been detected in Hong Kong," Hewson continued.
Sterling was quoted at USD1.3303 early Friday, lower than USD1.3321 at the London equities close on Thursday. The euro traded at USD1.1237 early Friday, higher on USD1.1211 late Thursday.
A UK travel ban is to be imposed on six African nations due to rising concerns over a new variant of the virus that causes Covid-19, which officials have dubbed "the worst one we've seen so far".
UK officials sounded the alarm on Thursday night over the B.1.1.529 variant, which has the potential to evade immunity built up by vaccination or prior infection.
Health Secretary Sajid Javid said the new variant identified in South Africa "may be more transmissible" than the Delta strain and "the vaccines that we currently have may be less effective".
He said that flights to England from South Africa, Namibia, Lesotho, Botswana, Eswatini and Zimbabwe will be suspended from midday Friday and all six countries will be added to the red list.
While no cases have been found in the UK, officials raised concern over a rapid rise in cases in South Africa.
Hewson said: "This variant which, it is understood, contains up to 30 identified mutations, has prompted WHO officials to call an emergency meeting to discuss what it means for vaccine efficacy as well as other treatments. The new strain has also prompted the UK government to implement flight bans from six African countries over concern as to what this might mean for infection rates, and other ripple out effects."
In response, South Africa on Friday said the decision seemed "rushed" and would try to persuade Westminster to reconsider.
Drinks maker Diageo will start on Friday the next tranche of its return of capital programme of up to GBP4.5 billion to shareholders by June 2024.
The first phase, completed in January 2020, saw over GBP1.25 billion returned to shareholders, with the second phase ending earlier in November and returning GBP450 million. Now, the third phase, Diageo is looking to buy back up to GBP550 million worth of shares by March 4, 2022.
Midcap chemicals firm Synthomer said it has hired Lily Liu, the chief financial officer of fellow FTSE 250 constituent Essentra, to run its own finances. Liu will take up her new role at Synthomer on July 1, 2022, replacing outgoing CFO Steve Bennett.
Essentra said it will look for a new finance chief to lead its Components business, as it continues its restructuring process.
The company, which manufactures plastic caps, workholding clamps, fasteners and knobs, has simplified its portfolio over the past few years. That continued Friday, saying it has launched a strategic review of its Packaging division.
This follows a similar move at the end of October when Essentra decided to review a full range of strategic options for the Filters business.
Both reviews are expected to end in the second quarter of 2022, with Essentra aiming to become a "pure play global components" business over time.
Turning to regulatory news, the UK Competition & Markets Authority said it has secured improved commitments from Alphabet's Google on proposals to remove third-party cookies and other functions from its Chrome browser.
In June, the UK competition regulator had said it would take up a role in the design and development of Google's Privacy Sandbox proposals to ensure they do not distort competition.
"It has been investigating Google's proposals since the start of the year due to concerns that, without the Competition & Markets Authority's involvement, Google's alternatives could be developed and implemented in ways that impede competition in digital advertising markets," the CMA said Friday.
The CMA said the proposals could cause advertising spending to become even more concentrated on Google.
"The CMA's intervention, and the improved commitments, are designed to ensure that Google's proposals can improve privacy without adversely affecting competition, which would be to the detriment of users," it said.
CMA Chief Executive Andrea Coscelli said: "If accepted, the commitments we have obtained from Google become legally binding, promoting competition in digital markets, helping to protect the ability of online publishers to raise money through advertising and safeguarding users' privacy."
In Asia, the Nikkei 225 in Tokyo closed 2.5% lower on Friday. The Shanghai Composite ended down 0.6%, while the Hang Seng index in Hong Kong was down 2.7% in late trade.
The S&P/ASX 200 in Sydney shed 1.7%.
Against the yen, the dollar was soft at JPY114.41 versus JPY115.34 late Thursday in London.
Hundreds of flights were cancelled, some schools shut and tour groups suspended on Friday after three coronavirus cases were reported in Shanghai, as China continues its strict zero-Covid policy.
In Europe, governments scrambled to regain control over a resurgent coronavirus as with people urged to get boosters in a sign of growing unease over a pandemic that has killed 1.5 million people on the continent.
Berlin, Paris and Lisbon were among capitals weighing tighter Covid restrictions and broader vaccination campaigns as surging cases and the encroaching winter threaten to undo hard-won gains against the virus over the summer.
Oanda analyst Jeffrey Halley said: "The one bull in the China shop that could truly derail the global recovery has always been a new strain of Covid-19 that swept the world and caused the reimposition of mass social retractions.
"All we know so far is the B.1.1.529 is heavily mutated but markets are taking no chances, equities are falling, haven currencies such as the US dollar, Japanese yen and Swiss franc are rallying, commodity currencies such as the CAD, AUD and NZD are being sold, US 10-year bond yields have moved sharply lower, and oil has slumped."
Gold was quoted at USD1,803.10 an ounce early Friday, sharply higher on USD1,789.81 on Thursday. Brent oil's fortunes were heading in the opposite direction, trading at USD79.72 a barrel, sharply down from USD81.92, amid concerns about travel restrictions.
After being shut on Thursday, US markets reopen for a half-day on Friday, closing at 1800 GMT.
By Paul McGowan; paulmcgowan@alliancenews.com
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