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(Alliance News) - Stock prices in London are seen opening higher on Monday, shaking off Covid-19 concerns, with markets getting a boost from the prospect of fiscal stimulus in China.
IG futures indicate the FTSE 100 index will open 9.5 points, or 0.1%, higher at 7,301.28. The blue-chip index closed down 29.48 points, or 0.4%, at 7,291.78 on Friday.
"Risk sentiment is relatively strong this Monday on news that China will add fiscal stimulus in early 2022 to boost growth, and investor mood in the equities space is bullish after Friday's inflation data revealed that consumer prices in the US advanced to 6.8% in November, just a tick higher than the consensus of 6.7%," Swissquote analyst Ipek Ozkardeskaya commented.
"Activity on European futures hint at a positive start. The FTSE should continue benefiting from firm energy prices and cheaper sterling."
In early UK corporate news, miner BHP ended talks with rival Wyloo Metals in relation to an acquisition of a Canadian nickel firm. Sports Direct-owner Frasers has kicked off a new share buyback. A newly-acquired Keller Group unit has landed a USD160 million deal.
Asian equities were largely higher at the start of the week. In Tokyo, the Nikkei 225 index closed up 0.7%. The Shanghai Composite closed 0.4% higher, though the Hang Seng index has faced late selling pressure and is down 0.1% as the Hong Kong session draws to a close. The S&P/ASX 200 in Sydney closed up 0.4%.
Bloomberg late Sunday reported that economists are tipping China to add fiscal stimulus early next year. This was after key officials in the world's second-largest economy said their aim for 2022 is to counteract growth pressures.
Bloomberg said economists predict property industry curbs to remain in China, but there will be fewer instances of "sudden" regulatory moves, particularly in the technology and education sectors.
"The strategy to be used by Beijing in 2022 is likely to be mostly accommodative as the Chinese government is working to fuel the country's growth and stabilize its economy. Although regulatory crackdowns on Chinese businesses are expected to decline, regulations on real estate are likely to stay," Avatrade analyst Naeem Aslam added.
Meanwhile, markets will be focused on the major central banks this week, with policy decisions from the US Federal Reserve on Wednesday and the Bank of England and European Central Bank on Thursday.
The Fed's update comes after numbers on Friday showed the US consumer price inflation rate accelerated to 6.8% in November from 6.2% in October.
CMC Markets analyst Michael Hewson commented: "It's not just the Federal Reserve that has an inflation problem, so does the Bank of England, with CPI set to move close to 5% this week and RPI close to 7%, the central bank has the same problem when it comes to calls to start acting on inflation becoming embedded.
"Its own guidance in this regard has been woeful missing a golden opportunity in November to start the ball rolling on a rate rise, it would be a big surprise if they did anything other than nothing this week. This has been reflected in the recent weakness of the pound which has slipped back in recent days, firstly over economic concerns, due to the new restrictions, but also due to the receding likelihood of a rate rise."
The pound was quoted at USD1.3229 early Monday, down slightly from USD1.3235 at the London equities close on Friday. The euro was priced at USD1.1287, down from USD1.1314. Against the Japanese yen, the dollar was trading at JPY113.51, up from JPY113.28.
FTSE 100-listed BHP said Monday it has ended talks with Wyloo Metals. The duo had tried to find a way to cooperate on the acquisition of Canadian nickel group Noront Resources.
In a statement, BHP said the two companies have determined that they are unable to reach an agreement.
In a separate statement on Monday, Wyloo announced it had sweetened its offer for Noront to CAD1.10 per share, which is 47% above what BHP is proposing and nearly 60% above its original offer of CAD0.70. Wyloo said the Noront board supported the latest bid.
BHP is offering CAD0.75 per share for Noront.
Retailer Frasers Group announced it has kicked off a new share buyback worth GBP70.0 million. The programme begins on Monday and concludes on the last trading day before the company's financial year-end on April 24.
The maximum number of shares that can be purchased under the programme is 10.0 million.
It follows a previous GBP70.0 million buyback which was announced in October and concluded last week.
London-based geotechnical contractor Keller Group said it has won a USD160 million deal connected to the development of an energy site in the Gulf Coast region of the US.
"The contract is expected to mobilise in 2022 and conclude in 2023 and comprises ground preparation, primarily through soil stabilisation, for the construction of an energy facility," Keller said.
The pact was won by its Recon Services subsidiary. Keller bought Recon back in July for an initial USD23 million in cash from Oaktree Capital Management.
Once the Gulf Coast project mobilises, Keller will pay an additional earn-out for the Recon acquisition. In July, the company said the acquisition consideration could rise to up to USD38 million.
Brent oil was quoted at USD75.94 a barrel early Monday in London, up from USD74.64 late Friday. Gold stood at USD1,785.90 an ounce, largely flat from USD1,785.71.
By Eric Cunha; ericcunha@alliancenews.com
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