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(Alliance News) - Stock prices in London are set for a positive start to December on Tuesday after some profit-taking at the end of a strong November.
In early UK company news, Lloyds Chief Executive Antonio Horta-Osorio will step down earlier than expected next year to take up the role of chair at Credit Suisse. AstraZeneca has agreed to sell the rights to Crestor in a number of European countries for up to USD350 million. Events firm Hyve swung to a sharp annual loss.
IG says futures indicate the FTSE 100 index of large-caps to open up 29.51 points, or 0.5%, at 6,295.70 on Tuesday. The FTSE 100 closed down 101.39 points, or 1.6%, at 6,266.19 on Monday - though ended up 12% for the month of November.
"US equities were weaker Monday, S&P down [a half percent] heading into the close. The main narrative underpinning sentiment over the past 24 hours appears to confluence month-end portfolio rebalancing and weaker economic data expectations in December as Covid concerns flare up again," said Stephen Innes, chief global markets strategist at Axi.
In the US on Monday, Wall Street ended with mild losses, with the Dow Jones Industrial Average ending down 0.1%, the S&P 500 down 0.5% and the Nasdaq Composite 0.1% lower.
Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell offered mirror images of the state of the US economy as it navigates the Covid-19 downturn in testimony released Monday ahead of appearances before Congress.
Mnuchin, serving his final weeks on the job before President-Elect Joe Biden's administration takes office in January, hailed the country's recovery thus far, but Powell warned of continued uncertainty. Both noted progress on job gains, and Powell pointed to hopeful news about new vaccines that could be coming soon, but added a note of caution.
Axi's Innes continued, however: "Flashing green lights at the end of the tunnel suggest investors should look through the immediate Covid-19 concerns and focus on the future, which seems incredibly bright and bullish. So, with month-end selling pressure mostly out of the way, it could allow investors to focus on those flashing green sectoral lights at the end of the Covid tunnel."
In more strong economic data from China, manufacturers signalled the strongest improvement in operating conditions for a decade in November, as growth of both output and new orders accelerated to ten-year highs.
The Caixin China headline seasonally adjusted purchasing managers' index increased to 54.9 in November from 53.6 in October, to signal the sharpest improvement in conditions since November 2010 and well clear of the neutral mark of 50.
Firms surveyed frequently attributed the increase to greater new order volumes, IHS Markit said, as well as a further recovery from the Covid-19 related disruptions seen earlier in the year. Underlying data suggested that the upturn continued to be led by firmer domestic demand, as growth in new export work was not as marked as that seen for total new orders.
In China on Tuesday, the Shanghai Composite ended up 1.8%, while the Hang Seng index in Hong Kong is up 1.0%.
In Tokyo, the Nikkei 225 index closed up 1.3%. Against the yen, the dollar rose to JPY104.34 versus JPY104.27 late Monday.
On the vaccine front, Moderna on Monday filed requests for emergency authorization of its Covid-19 vaccine in the US and Europe, after full results confirmed a high efficacy estimated at 94.1%.
"We believe that our vaccine will provide a new and powerful tool that may change the course of this pandemic and help prevent severe disease, hospitalizations and death," said Moderna CEO Stephane Bancel.
If the US Food & Drug Administration agrees it is safe and effective, the first of the drug's two doses could be injected into the arms of millions of Americans by the middle of December.
American pharmaceutical Pfizer and Germany's BioNTech applied for similar approvals last week, and their vaccine could be greenlit in the US shortly after December 10.
David Madden at CMC Markets commented on the Moderna news: "From a health point of view it was very encouraging but it failed to boost sentiment in stocks [on Monday], probably because dealers were more than happy to bank some profits from the previous month's gains."
In early UK company news, Lloyds said Chief Executive Antonio Horta-Osorio will step down at the end of April 2021 to take up the role of chair at Credit Suisse.
Horta-Osorio - whose departure from Lloyds after 10 years at the helm was announced in June -will succeed Urs Rohner as chair of the Swiss bank's board of directors. Rohner became full-time chair in 2009 and will step down in 2021 once he has reached his statutory 12-year term.
Lloyds said it has agreed for Horta-Osorio to depart the UK bank on April 30, so that he can take up the chair of Credit Suisse on May 1. Previously, he was intending to leave Lloyds by the end of June 2021.
On Monday, Lloyds said it had appointed HSBC's Wealth & Personal Banking head Charlie Nunn to be its new CEO.
Lloyds had said that Nunn's start date depends on agreement with HSBC. It noted that Nunn's contract calls for a six-month notice period and up to six months post-termination restrictions. The bank said that if Horta-Osorio steps down before Nunn's arrival, then Chief Financial Officer William Chalmers will be acting CEO.
Lloyds Chair Blackwell, who himself will be stepping down in the new year, said: "On behalf of the board I would like to congratulate Antonio on this new role as he moves on after 10 years as group Chief Executive Officer of Lloyds Banking group. During his tenure he has transformed the group's fortunes and established a solid operational and strategic base from which it can continue to build a successful future."
AstraZeneca said it has agreed to sell the rights to Crestor in over 30 countries in Europe, except the UK and Spain, to Grunenthal.
Crestor is a statin approved for the treatment of dyslipidaemia and hypercholesterolaemia.
AstraZeneca said the deal is set to close in the first quarter of 2021, at which point Grunenthal will make an upfront payment of USD320 million for Crestor and may also make future milestone payments of up to USD30 million.
The London-listed pharmaceutical firm said the Crestor sale will not impact its financial guidance for 2020.
Ruud Dobber, executive vice president at AstraZeneca's BioPharmaceuticals Business Unit, said: "This agreement supports the management of our mature medicines to enable reinvestment into the pipeline and bringing new, innovative treatments to patients. Grunenthal previously acquired the rights to several established AstraZeneca medicines and is well placed to ensure continued access to Crestor for patients across Europe."
AstraZeneca will continue to sell the medicine in other countries, including North America, Japan, China and other emerging markets.
Weir Group said it has won a GBP95 million order to provide aftermarket components and service to the Iron Bridge magnetite project in Western Australia.
The Iron Bridge magnetite project is a USD2.6 billion joint venture between Fortescue Metals Group's subsidiary FMG Magnetite and Formosa Steel IB, and is located in the Pilbara region.
The order will start in 2022, in line with the project's initial production.
Pets at Home said it has sold its five specialist referral practices for up to GBP100 million in cash to Linnaeus Group.
The Specialist Group comprises the assets and operations of Dick White Referrals in Cambridgeshire, Anderson Moores in Hampshire, both Northwest Veterinary Specialists and Eye Vet in Cheshire, and Veterinary Specialists Scotland in Livingston, Scotland.
"Pets at Home's strategy as the UK's leading pet care business is unchanged, with this disposal being part of the continuing focus of group resources on customer-facing activities across our omnichannel retailing and First Opinion veterinary operations," Pets at Home said.
The London-listed pet products and services provider said it will receive GBP80 million on completion and deferred cash consideration of GBP20 million, contingent on achieving financial milestones.
Hyve swung sharply to annual loss as the events industry was battered by Covid-19.
Revenue for the financial year ended September 30 more than halved to GBP105.1 million from GBP220.7 million the year prior, with the London-based exhibitions and conferences organiser swinging to a hefty pretax loss of GBP312.9 million from a GBP8.7 million profit.
Impairment charges of GBP263.0 million were recognised in respect of "a number" of business units, the company said.
"The pandemic has had a severe impact not just on Hyve, but the event industry as a whole," Hyve said.
Despite starting to see signs of optimism, underpinned by vaccine progress, the company expects continued disruption to its event schedule and a "gradual" return of customer participation.
Hyve said it has created two trading scenarios for the 2021 financial year.
"The first, our 'Recovery' scenario, assumes that events in China, Russia, Ukraine and Turkey are able to go ahead. However, they will be smaller than in previous years driven by a largely domestic customer base. This scenario assumes that events in western markets will take place during the second half of the financial year. The second, our 'East-West' scenario, assumes that no western events take place throughout the financial year," said Hyve.
The company is "hopeful" of returning to a normalised schedule of events in the 2022 financial year.
Sterling was quoted at USD1.3381 early Tuesday, higher than USD1.3343 at the London equities close on Monday. The euro traded at USD1.1970, rising from USD1.1948 late Monday.
Gold was quoted at USD1,788.30 an ounce early Tuesday, higher than USD1,772.60 on Monday.
Brent oil was trading at USD47.54 a barrel, softer than USD47.75 late Monday.
The OPEC oil producers' club will hold a second day of talks on Tuesday, as they attempt to reach agreement on extending production cuts introduced as the coronavirus pandemic weighs on global demand.
"2020 continues to be a year of immense challenges caused by the Covid-19 pandemic," said Abdelmadjid Attar, who currently holds the rotating presidency of the Organisation of the Petroleum Exporting Countries. Attar, who is also Algeria's energy minister, was speaking in a live broadcast at the beginning of the group's videoconference meeting.
In April, OPEC members agreed to cut production by 7.7 million barrels per day, which was meant to be eased to 5.8 million barrels in January 2021. However, most observers expect the cut instead to be extended by three to six months to take into account the ongoing effects of the virus.
Monday's talks were adjourned with no decision and Tuesday's discussions "won't be easy", said Iran's oil minister Bijan Namdar Zanganeh.
Elsewhere, Tuesday's economic events calendar has manufacturing PMI readings from Germany, the eurozone, the UK and the US at 0855 GMT, 0900 GMT, 0930 GMT and 1445 GMT respectively.
By Lucy Heming; lucyheming@alliancenews.com
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