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(Alliance News) - Stock prices in London are seen opening slightly higher on Monday after China's July manufacturing activity came in above expectations, though gains look to be tempered after HSBC's earnings missed estimates.
In early company news, drugmaker GlaxoSmithKline and French peer Sanofi made further strides in the fight against the coronavirus pandemic. UK power line operator National Grid submitted a rate filing for its upstate New York electricity business. Shopping centre operator Hammerson said it was considering a disposal and an equity raise.
IG futures indicate the FTSE 100 index is to open 15.24 points higher at 5,913.00. The blue-chip index closed down 92.23 points, or 1.5% at 5,897.76 Friday.
GlaxoSmithKline said it is in advanced discussions with the European Union to supply up to 300 million doses of Covid-19 vaccine, alongside its partner Sanofi.
Last week, the UK government signed a deal with GlaxoSmithKline and Sanofi for 60 million doses of the potential Covid-19 vaccine.
The vaccine candidate developed by Sanofi in partnership with Glaxo combines a protein-based technology used by Sanofi to produce an influenza vaccine with Glaxo's established adjuvant technology, Glaxo said.
The doses would be manufactured in European countries including France, Belgium, Germany and Italy. This marks a key milestone in protecting and serving the European population against Covid-19, the London-based drugmaker noted.
Sanofi is leading the clinical development and registration of the Covid-19 vaccine and expects a Phase 1/ 2 study to start in September, followed by a Phase 3 study by the end of 2020. If data are positive, regulatory approval could be achieved by the first half of 2021, Glaxo added.
Both companies are committed to making their vaccine affordable and available globally, according to Glaxo.
National Grid said it has filed a request with the New York Public Service Commission to update electric and gas distribution rates for its upstate New York distribution business Niagara Mohawk, which serves 2.2 million customers. New rates are expected to become effective in July 2021.
National Grid said the filing will fund programmes necessary to modernise the electric and gas networks, expand electric vehicle charging and promote economic growth. Further, it includes investment to support affordable decarbonized heating, including the expansion of renewable natural gas to help the state's environmental goals. It also maintains a focus on managing customer affordability in response to the economic downturn caused by Covid-19, the UK grid operator added.
Hammerson confirmed it is in advanced discussions on a possible disposal of its 50% interest in VIA Outlets to its joint venture partner APG. In addition, the shopping centre-owner is considering a possible equity raise by way of a rights issue to help weather the coronavirus storm.
Hammerson said it continues to take "pro-active measures" relating to the management of its cost base and cash-flow and in recent weeks it secured approval for the issuance of up to GBP300 million in debt under the Covid Corporate Finance Facility from the Bank of England.
Following the reopening of its flagship destinations across Europe, footfall and sales continue to improve and third-quarter rent collection in the UK - excluding monthly payments and deferrals - has increased to over 30%, Birmingham's Bullring shopping centre owner added.
Metro Bank said it has agreed to acquire RateSetter for GBP2.5 million as part of the high-street bank's ambition to enhance its unsecured lending capability. Metro Bank said it will operate RateSetter as an independent platform and originate loans under both the RateSetter and Metro Bank brands. In addition, Metro Bank said the acquisition brings a talented team, including co-founders Rhydian Lewis and Peter Behrens and Chief Financial Officer Harry Russell. Lewis will join Metro Bank's executive committee and report directly to Metro Bank Chief Executive Daniel Frumkin.
Earlier Monday, HSBC Holdings posted a first-half earnings slump and said its expected credit loss for 2020 could reach USD13 billion.
In the six months to June 30, revenue fell 8.8% year-on-year to USD26.75 billion from USD29.37 billion, the lender said. Pretax profit dropped 65% to USD4.32 billion from USD12.41 billion a year ago. The profit figure missed the consensus estimate of USD5.69 billion that HSBC had compiled from analysts.
During the half, HSBC booked USD6.86 billion in expected credit losses and other impairment charges, up sharply from USD1.14 billion a year ago.
The stock is down 4.0% in Hong Kong.
The Japanese Nikkei 225 index ended up 2.1%. In China, the Shanghai Composite is up 1.4%, while the Hang Seng index in Hong Kong is flat.
Factory activity in China edged upwards in July as the country's manufacturing sector gathered pace after a sharp coronavirus hit and demand gradually rebounded, according to official data published Friday.
China's purchasing managers' index, a key gauge of manufacturing activity, has bounced back after measures to curb the coronavirus caused a dramatic plunge starting in February and performed better than expected over the past month.
The PMI of the world's second-largest economy came in at 51.1 points in July, up from 50.9 the month before. Any figure above the 50-point mark represents growth rather than contraction.
"The stronger-than-expected China Caixin PMI has helped settle the market today with equities stabilizing, as iron ore rallied. The rally in iron ore is having a predictably positive knock-on effect in oil markets, which sees prices bouncing off session lows," said AxiCorp's Stephen Innes.
Elsewhere, Japan's economy contracted at an annualised rate of 2.2% in the first quarter, unchanged from a second preliminary reading, with corporate capital spending worse than initially estimated, the government said on Monday.
The revised gross domestic product reading in the January-to-March period was in almost in line with the 2.0% decline predicted by analysts surveyed by the Nikkei business daily and followed a 7.2% contraction in the last quarter of 2019.
Two straight quarters of negative growth means that Japan has entered a recession due to the coronavirus pandemic.
However, a July PMI reading made for better reading for Japan. Output and incoming new work both fell at much slower rates in July across the Japanese manufacturing sector than what was seen throughout the second quarter of the year, figures showed on Monday.
The headline au Jibun Bank Japan manufacturing PMI came in at 45.2 in July. This was up from 40.1 in June and the highest score since February. The latest reading remained below the neutral 50.0 value but was well above the 11-year low of 38.4 seen in April.
The pound was quoted at USD1.3087 early Monday, down from USD1.3125 at the London equities close Friday.
The euro was priced at USD1.1770, down from USD1.1820. Against the yen, the dollar was trading at JPY105.85, up from JPY105.77 in London.
Brent oil was quoted at USD43.35 a barrel Monday morning, up from USD42.94 late Friday. Gold was trading at USD1,975.20 an ounce, slightly up from USD1,973.70 at the London equities close Friday.
The economic events calendar on Monday has manufacturing PMI readings from France, Germany, the eurozone and the UK at 0850 BST, 0855 BST, 0900 BST and 0930 BST respectively.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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