(Alliance News) - Stock prices in London are seen opening higher on Monday, as major central banks promised economic support amid intensifying fears the global economy is under threat from the spread of the coronavirus.
In early company news, embattled private hospital operator NMC Health appointed high-profile financial, operational and legal advisors as it seeks to restore its reputation among investors and lenders. Accounting software provider Sage sold its Brazilian business, and aerospace parts maker Senior reported a drop in annual profit following the Boeing 737 MAX grounding.
IG futures indicate the FTSE 100 index is to open 92.79 points higher at 6,673.40. The blue-chip index closed down 215.79 points, or 3.2%, at 6,580.61 Monday, ending the week down 11%. It was the large-cap index's worst weekly performance since the 2008 financial crisis.
NMC Health said it has appointed Moelis & Co, PwC and Allen & Overy as independent financial adviser, operational adviser and legal adviser, respectively, with immediate effect.
NMC said Moelis will support and advise on NMC's discussions with its lenders, while PwC will assist on liquidity management and operational measures.
"NMC is currently fully focused on safeguarding operational liquidity to continue funding existing operations throughout its various subsidiaries. In this context, NMC is asking for continued support and an informal standstill in relation to existing facilities from its lenders to achieve an immediate stabilisation of the group's financing. The informal standstill includes a request to lenders not to exercise any rights and remedies that may arise from any current or future defaults under the group's finance documentation," the company said.
NMC Health, which has faced criticism for not being transparent over shareholdings, said it has been confirmed that its principal shareholders now hold, "directly or indirectly, legally or beneficially, less than 30% of NMC's issued share capital." This potentially could trigger a change of control clause in its lending facility, NMC said.
NMC shares remain suspended from trading in London. With a market value of GBP1.5 billion, the company looks almost certain to be demoted from the FTSE 100, when FTSE Russell announce the index review changes on Wednesday.
Sage Group said it has entered into an agreement for the sale of its Brazilian business to "local management". The sale is part of Sage's strategy to focus on subscription software solutions, it said.
The company said the sale consideration is GBP1 million payable on completion, plus deferred consideration of up to GBP9 million. Sage said it expects to report a statutory non-cash loss on disposal of GBP15 million on completion.
Sage said the transaction is expected to complete within the next two months.
FTSE 250-listed Senior said it delivered "robust" annual results, supported by a strong free cash flow performance.
Senior said its results were achieved against a difficult civil aerospace market backdrop due the grounding of the Boeing 737 MAX fleet following the fatal Lion Air and Ethiopian Airlines crashes. The Lion Air crash was in October 2018 and the Ethiopian Airlines plane was in March 2019, killing 346 people.
For 2019, revenue was up 3% to GBP1.11 billion from GBP1.08 billion in 2018, but pretax profit was down 55% at GBP28.7 million from GBP61.3 million.
Free cash flow was 53% higher at GBP58.3 million in 2019, from GBP45.3 million in 2018.
Senior raised its 2019 total dividend to 7.51 pence from 7.42p the year before.
"Senior delivered robust full year results for 2019 with adjusted earnings per share growth and a strong free cash flow performance. This result has been achieved in a period where the business has faced challenges caused by the grounding of the Boeing 737 MAX fleet. It is clear that our performance in 2020 will continue to be affected by the 737 MAX situation and the company is taking all necessary actions to mitigate the impact," said Chief Executive David Squires.
"We are closely monitoring the development of the coronavirus (COVID-19), including the potential impact of any macroeconomic disruption on our end markets, our supply chain and those of our customers," Squires added.
The global death toll from the new coronavirus epidemic surpassed 3,000 on Monday after dozens more died at its epicentre in China and cases soared around the world with a second fatality on US soil. The virus has now infected more than 88,000 people and spread to over 60 countries after first emerging in China late last year.
The Japanese Nikkei 225 index closed up 1.0%. In China, the Shanghai Composite ended up 3.2%, while the Hang Seng index in Hong Kong is up 0.9%.
In a rare statement, the Bank of Japan said it "will strive to provide ample liquidity and ensure stability in financial markets" to divert risks linked to instability in global markets caused by the spread of the disease.
The announcement came after Federal Reserve Chair Jerome Powell on Friday said the US central bank was following developments in the virus outbreak and said it "will use our tools and act as appropriate to support the economy".
In addition, the Reserve Bank of Australia is widely expected to cut interest rates at its monetary policy decision on Tuesday.
The pound was quoted at USD1.2842 early Monday, up from USD1.2753 at the London equities close Friday.
UK Prime Minister Boris Johnson has pledged to "drive a hard bargain" as the UK outlined its negotiating objectives for the upcoming trade talks with the US.
The first round of post-Brexit trade talks between the UK and EU are due to start on Monday, with the two sides well apart on a final agreement.
The UK government said it wants to open up opportunities for British businesses and investors while also ensuring the NHS is not for sale via the desired free trade agreement.
The government added it remains committed to keeping the NHS universal and free at the point of use, something which the Prime Minister was pushed on time after time during the general election.
The British team also wants to guarantee high standards and protections for British consumers and workers, including on animal welfare.
The PM said: "We have the best negotiators in the business and of course, we're going to drive a hard bargain to boost British industry."
The euro was quoted at USD1.1072 early Monday, down from USD1.1100 at the London equities close Friday. Against the yen, the dollar was trading at JPY108.24, firm from JPY108.12.
Gold was quoted at USD1,604.00 an ounce Monday morning, up sharply from USD1,585.25 late Friday.
Brent oil was quoted at USD51.32 a barrel at the equities close, higher than USD49.02 at the late Friday.
Production at Chinese factories declined at the fastest pace on record in February. with the coronavirus outbreak denting the manufacturing sector, numbers showed on Monday.
Caixin's manufacturing purchasing managers' index slumped to 40.3 points, a sharp fall from 51.1 in January, and also heavily below the 50.0 mark which separates growth from decline.
It was also weaker than the 40.9 recorded in November 2008, during the global financial crisis.
The economic events calendar on Monday has manufacturing PMI readings from France, Germany the eurozone, UK and the US at 0850 GMT, 0855 GMT, 0900 GMT, 0930 GMT and 1445 GMT, respectively.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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