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(Alliance News) - Stock prices in London are seen opening lower on Monday as England prepares to begin a month-long lockdown in a bid to stem the spread of Covid-19.
Focus on Monday will also be on a raft of PMI data - with readings due from the eurozone and the UK this morning - and Tuesday's US presidential election.
IG futures indicate the FTSE 100 index is to open 17.7 points lower at 5,559.57. The blue-chip index closed 4.48 points lower at 5,577.27 on Friday.
The pound was quoted at USD1.2913 early Monday, down from USD1.2952 at the London equities close Friday.
AxiCorp analyst Stephen Innes predicted the market will "quickly look past" fresh lockdown restrictions in Europe and the UK.
"Rolling shutdowns are part of the pandemic 'new normal' and most people understand this will be a global feature until we get a vaccine or herd immunity," Innes said.
"Vaccine rollout is near for some large economies. The UK and Germany could be vaccinated this year, and the market usually embraces themes once they are around 6-8 weeks away."
Pubs, bars, restaurants and non-essential retail across England will close from Thursday, UK Prime Minister Boris Johnson announced on Saturday, and people will be told to stay at home unless they have a specific reason to leave, but schools, colleges and nurseries will remain open.
On the London Stock Exchange, Primark-owner Associated British Foods and Ladbrokes Coral operator GVC Holdings were among those forecasting how the latest UK lockdown will hit business. Online grocer Ocado upped its annual earnings guidance, and insurer Hiscox posted a rise in gross written premiums, keeping it prediction for Covid-19 related claims steady.
AB Foods predicted a GBP375 million hit due to closures of its estate in the UK and beyond.
"As of today, all Primark stores in the Republic of Ireland, France, Belgium, Wales, Catalonia in Spain and Slovenia are temporarily closed, which represent 19% of our total retail selling space," AB Foods said.
With England braced for restrictions starting from Thursday, AB Foods added that 57% of its total selling space will be shuttered from November 5.
"Our estimated loss of sales for these stores, including the stores in England, for the announced periods of closure is GBP375 million. Trading hours are also restricted in a number of other markets. Uncertainty about further temporary store closures in the short-term remains," the company added.
The short update on Monday comes just a day before the company's annual results on Tuesday.
High street betting shop operator GVC expects a GBP43 million hit to group earnings before interest, tax, depreciation and amortisation.
"Further restrictions have now been imposed in England, in addition to those already in place across our wider UK Retail and European Retail operations," GVC said.
The estimated earnings before interest, tax, depreciation and amortisation impact if all retail outlets were required to be closed for a whole month would be GBP43 million, GBP34 million down to its UK retail unit and GBP9 million from its European arm.
Crucially for GVC, football fixtures in England are set to continue, despite the new restrictions.
Ocado on the flip-side, raised Ebitda guidance, as its Marks & Spencer Group joint-venture grows in strength.
The online retailer expects annual Ebitda to be over GBP60 million, up from its previous forecast of GBP40 million.
"Trading at Ocado Retail Ltd, a joint venture between Ocado Group and Marks & Spencer Group, has remained strong through the fourth quarter of the current financial year. Ocado continues to see high demand as consumers migrate to online grocery in record numbers. Sales are in line with the trends reported in the third quarter although growth rates reflect the seasonality of the quarter," Ocado said.
The company also unveiled USD287 million worth of acquisitions. It reported the proposed acquisitions of Kindred Systems, a piece-picking robotics company, for USD262 million, and Haddington Dynamics, a robotic-arm designer and manufacturer for USD25 million.
Turning to mid-cap stocks, insurer Hiscox said its retail business has benefited from a shift to digital.
Group gross written premiums are 2% higher after the nine months to September 30 at USD3.26 billion from USD3.21 billion a year earlier.
"We are benefiting from the inexorable shift towards digital in our Retail businesses thanks to our on-going investment in technology, as well as the strongest pricing we have seen in the London Market and in reinsurance for more than five years," Chief Executive Officer Bronek Masojada said.
Hiscox said there was no change to its Covid-19 claims and potential exposure estimate, which is USD387 million net of reinsurance.
"This includes USD232 million reserved in the first half, including USD150 million for event cancellation and abandonment, with the balance across a variety of other lines. It also includes USD130 million for COVID-19 claims arising from business interruption across all divisions, with the majority coming from Hiscox UK, and USD25 million for event cancellation and abandonment, on the basis that current restrictions on travel and mass gatherings continue until the end of the year," Hiscox added.
Looking to 2021 however, Hiscox forecast it could face somewhere between an additional USD30 million and USD40 million in potential exposure related to events being cancelled due to the virus.
Elsewhere in London, budget carrier Ryanair posted a 78% drop in revenue in the first half ended September. Revenue came in at EUR1.18 billion from EUR5.39 billion and the airline swung to a pretax loss of EUR432.3 million from a EUR1.26 billion profit.
Customer numbers were 80% lower at 17.1 million, demonstrating the hit Ryanair has taken from Covid-19 travel restrictions.
"The group expects to carry approx. 38 million passengers in financial 2021, although this guidance could be further revised downwards if EU governments continue to mismanage air travel and impose more uncoordinated travel restrictions or lock downs this winter. The group expects to record higher losses in H2 than in H1," Ryanair said, looking ahead.
Against the dollar, the euro slipped to USD1.1639 early Monday from USD1.1649 at the European equities close Friday. Versus the Japanese yen, the dollar rose to JPY104.77 compared USD104.56
In Asia, Japan's Nikkei 225 closed 1.4% higher on Monday. In China, the Shanghai Composite closed marginally higher and the Hang Seng index in Hong Kong was up 1.5% in late trade.
Japan's manufacturing sector improved marginally in October but remained in contraction levels.
IHS Markit said the au Jibun Bank manufacturing purchasing managers' index reading was 48.7 points last month, up from 47.7 points in September. A reading above 50 signals expansion, while a reading below shows contraction.
China's manufacturing growth picked up pace in October, meanwhile, IHS Markit data showed.
"The PMI reading rose to 53.6 in October, from 53.0 in September. Supporting the higher PMI figure was a sharper increase in total new work during October. The latest upturn in overall sales was the sharpest since November 2010, with panellists widely commenting that market conditions continued to recover from the Covid-19 pandemic earlier in the year," IHS Markit said.
Iris Pang, ING's chief economist for Greater China, said the country's PMI data could see see a hit due to Covid-19 curbs in the US and Europe.
"Looking ahead, we expect external demand to remain weak due to the increases in Covid-19 cases in Europe and the US, which are leading to stricter social distancing measures and may affect China's exports in the coming months," Pang explained.
By Eric Cunha; ericcunha@alliancenews.com;
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