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(Alliance News) - Stocks in London are seen posting a soft end to the week on Friday as the issues of a post-Brexit trade deal and a fiscal boost to the American economy remain unresolved.
In early UK company news, Halma has sold Fiberguide Industries for USD38 million, British Land has completed the drawdown of the 500-year headlease with Southwark Council, and Restaurant Group said the UK's tiering restrictions makes the outlook for the first quarter of 2021 "extremely challenging".
IG says futures indicate the FTSE 100 index of large-caps to open 17.86 points lower, or 0.3%, at 6,533.20 on Friday. The blue-chip index closed down 19.85 points, or 0.3%, at 6,551.06 on Thursday.
"With weekend Brexit and US stimulus clouds of uncertainly hanging over the market on what is likely the last liquid day of trading this year, some investors are throwing in the towel," said Stephen Innes at Axi. "And with market makers looking to shed rather than hold on to risk, passing that sellers hot potato are likely exaggerating the downswings in already holiday-thinned Asia market conditions."
Post-Brexit trade deal talks between the UK and EU will continue in Brussels after the two sides warned that major obstacles remain despite progress in the negotiations.
UK Prime Minister Boris Johnson told European Commission President Ursula von der Leyen in a call on Thursday evening that the EU must "significantly" shift its stance on fishing if there is to be an agreement.
Von der Leyen acknowledged that "big differences" remained between the two sides and stressed that "bridging them will be very challenging".
Time is running out to reach a deal with just a fortnight until the end of the transition period, and Johnson said the negotiations were now in a "serious situation".
Michael Hewson at CMC Markets commented: "With the European Parliament setting a deadline of this Sunday to be able to ratify the current text of a deal, it is possible that 2021 could well see various contingency plans swing into operation, before a final deal can be ratified."
In early UK data, retail sales fell in November, a month which saw many shops shuttered due to fresh virus restrictions.
Month-on-month, retail sales volumes fell 3.8%, reversing a 1.3% increase in October and ending six consecutive months of growth within the retail sector. The ONS did note that despite November's monthly fall, overall sales remain above pre-pandemic levels.
Non-essential shops in England were ordered to shut in November as the country entered a second national lockdown.
Clothing store sales saw a sharp fall in sales, down 19% month-on-month, while fuel sales fell 17%. Food stores, at 3.1%, and household goods stores, at 1.6%, were the only sectors to show monthly growth.
The pound was quoted at USD1.3553 early Friday, falling back significantly from USD1.3600 at the London equities close on Thursday. The euro traded at USD1.2252 early Friday, higher than USD1.2242 late Thursday.
Investors also waiting on political agreement in the US on an economic stimulus package. Republican Senate leader Mitch McConnell on Thursday was optimistic and repeated his pledge to keep lawmakers in Washington until there is an agreement.
"I am heartened by our discussions and our progress. I believe all sides are working in good faith toward our shared goal of getting an outcome," he said in a statement, noting that that the package would include direct payments to Americans.
Democratic leaders House Speaker Nancy Pelosi and Senator Chuck Schumer held talks with Treasury Secretary Steven Mnuchin late into the night Wednesday, and were due to speak again early Thursday, Pelosi's deputy chief of staff Drew Hammill said on Twitter.
In the US on Thursday, Wall Street ended in the green, with the Dow Jones Industrial Average ending up 0.5%, the S&P 500 up 0.6% and Nasdaq Composite closing 0.8% higher.
In early UK company news, Halma said it has sold Fiberguide Industries to Molex for a cash consideration of USD38 million.
Fiberguide, which was acquired by the London-listed hazard detection and life protection technologies manufacturer in 2008, is a manufacturer of fibre optic technology headquartered in the US state of Idaho. Molex is "closely aligned" to Fiberguide's core business, said Halma.
"We are confident that this will help Fiberguide better serve its customers, employees and suppliers while enabling Halma to continue to invest in high growth businesses that are closely aligned with our purpose," said Halma Chief Executive Andrew Williams.
British Land said it has completed the drawdown of the 500-year headlease with Southwark Council, a "significant milestone".
The headlease will combine the ownership of British Land's assets at Canada Water in south east London into a single 500-year headlease, with Southwark Council as the lessor.
"British Land's new 500-year headlease will allow comprehensive redevelopment and investment in the site with Southwark Council owning an initial 20% interest and with the ability to participate in the development, up to a maximum of 20% with returns and ownership pro-rated accordingly," the property developer said.
British Land added that it has signed signed its first pre-let at Canada Water with new higher education enterprise, TEDI-London. TEDI-London will take an initial 13,000 square feet of floorspace, with the option to expand up to 40,000 square feet.
Frankie & Benny's owner Restaurant Group said the UK's tiering restrictions makes the outlook for the first quarter of 2021 "extremely challenging", though it is encouraged by vaccine progress.
The casual dining chain owner said cashburn during the November national lockdown was minimised to GBP5.5 million for the month. Restaurant Group said it expects further"significant disruption" to trading whilst tiering restrictions remain in place.
"As per the latest tiering restrictions announced by the UK government, The Group will have approximately 145 sites which will trade for dine-in across the UK, 142 sites which will provide delivery and takeaway services only, with the remaining 103 sites closed," said Restaurant Group.
The tiering restrictions makes the outlook for the first quarter of 2021 "extremely challenging", but the board is encouraged by vaccine progress.
"The board believes the group is well positioned to benefit from a sustained removal of restrictions given its previous strong trading performance following the first lockdown. We therefore expect a strong recovery when there is a return to more normal levels of customer activity," the company said.
In Asia on Friday, the Nikkei 225 index in Tokyo closed down 0.2%. Against the yen, the dollar strengthened to JPY103.37 versus JPY103.10 following the Bank of Japan's latest policy decision.
The Bank of Japan extended an emergency virus-related lending programme but kept its monetary easing policy unchanged Friday, as the country faces a record spike in new Covid-19 cases.
In May, the central bank launched a new lending scheme aiming to channel funds to small and medium-sized businesses suffering from the economic fallout of the coronavirus pandemic. At a two-day policy meeting, the Bank of Japan extended the end-date for those measures by six months to September 2021.
In China, the Shanghai Composite ended down 0.3%, while the Hang Seng index in Hong Kong is down 1.0%. In Australia, the S&P ASX 200 closed down 1.2%.
Gold was quoted at USD1,881.29 an ounce early Friday, down from USD1,888.75 on Thursday. Brent oil was trading at USD51.25 a barrel, soft on USD51.45 late Thursday.
By Lucy Heming; lucyheming@alliancenews.com
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