(Alliance News) - Stock prices in London are seen opening higher on Monday, reversing some of Friday's losses at the start of a new trading week that will see central banks in focus once more.
In early UK corporate news, Evraz posted a slight fall in annual steel sales and output. Shell confirmed Monday will be the first day it trades under a single line of shares. Elsewhere, Pearson, XP Power and Cranswick all announced M&A moves, and car dealer Lookers welcomed a new significant shareholder.
IG futures indicate the FTSE 100 index is to open 57.5 points, 0.8%, higher at 7,523.57 on Monday. The blue-chip index closed down 88.24 points, or 1.2%, at 7,466.07 on Friday.
"The volatility we witnessed in stock markets last week was because of the Fed’s indication that it is likely to raise interest rates aggressively in coming months to curb inflation from rising any further. We now expect the Fed to raise interest rates by a quarter-percentage point five times this year. As a result, stock markets are likely to remain volatile in the short-term as investors get accustomed to the transition in the Fed’s stance and the American economy proves that it can sustain itself without additional support from authorities," AvaTrade analyst Naeem Aslam commented.
Central banks will remain in focus this week, with interest rate decisions due from the Bank of England and European Central Bank, both on Thursday.
"According to Goldman Sachs, the BoE is expected to raise its interest rates three times in 2022 to make it clear to markets that it is actively working towards keeping inflation in check," Aslam noted.
"On the other hand, the ECB is expected to stick to its dovish monetary policy, attempting to protect markets from global market fluctuations, and it is unlikely to raise interest rates before the second half of 2023."
FTSE 100-listed Evraz said total crude steel output fell 0.6% to 3.38 million tonnes in the fourth quarter of 2021 from 3.40 million in the third quarter. There was, however, a 7.0% quarter-on-quarter hike in iron-ore products output and a 34% rise in total raw coking coal mined.
For the whole of 2021, crude steel output was 0.4% lower, while iron ore production and raw coking coal mined were 1.4% and 13% higher, respectively.
Export duty in Russia hurt steel output, Evraz noted. It also hit sales, the company explained.
Total steel product sales were 4.5% lower at 12.5 million tonnes in 2021, despite a 7.0% rise to 3.2 million tonnes in the fourth quarter from the third.
"Total sales of steel products dropped by 4.5% YoY. This was partly because of the impact that the export duty introduced in Russia in 2021 had on the output of semi-finished products for export, and partly because of a high-base effect following the fulfilment of a contract with the key customer in 2020 in North America," Evraz said.
Oil major Shell confirmed the combination of its A and B stock has occurred, meaning it will trade under a single share line from Monday. It was a move the company announced back in December in a bid to simplify its share structure. The company also recently dropped 'Royal Dutch' from its name.
Also among London blue-chips, educational publisher Pearson said it has taken sole ownership of its Credly investee, which provides workforce digital credentials and certifications.
Pearson previously had a 20% stake in Credly.
"It further expands Pearson's digital footprint and accelerates Pearson's focus on growth," the company said.
"The acquisition comes at a time of increasing demand for digital credentials to recognise skills and certifications in a global talent market valued at around USD400 billion. Over the last year, Credly has added nearly 1,000 new organisations to its network, expanded its density of skill coverage in key segments of the labour market and maintained net renewal rates of well over 100%."
Including Pearson's existing stake, the deal to buy Credly values the company at USD200 million.
Yorkshire-based meat producer Cranswick said it bought Grove Pet Foods, a producer of dry dog food for an unspecified sum.
"The business operates predominantly from a purpose-built freehold facility in Lincolnshire and employs a total workforce of approximately 100. John Walgate, managing director, who has a wealth of experience in this attractive category, will remain with and continue to lead the business," the FTSE 250 listing said.
XP Power said it has made two "complementary" acquisitions of German businesses for a total of EUR39.0 million.
XP Power is a Singapore-based maker of power controllers, which convert power from the electricity grid into the form needed by industrial equipment.
It has purchased FuG Elektronik and Guth High Voltage from Dr Simon Consulting. The deals bolster XP's presence in Germany, Europe's largest market for power solutions, the company noted.
"FuG and Guth's product portfolio is highly complementary to XP Power's existing high-voltage offering, bringing new technology and technical capability to the group and accelerating its strategy in this fast growing market," XP said.
Elsewhere in London, Lookers said Constellation Automotive has snapped up just shy of a 20% stake in the car dealer. Constellation Automotive owns digital vehicle marketplace WeBuyAnyCar, as well as Cinch, a platform which also allows for the buying and selling of vehicles online.
A regulatory filing noted the stake was acquired on Thursday. Constellation purchased 78 million shares at 102 pence each, GBP79.6 million in total, from Tony Bramall. Bramall had stepped down as a non-executive from Lookers back in December 2020.
"Constellation has been in contact with Lookers about its investment in the group and has indicated its support for the group's recently outlined strategy and senior leadership," Lookers said.
In Asia on Monday, stocks were largely higher. The Nikkei 225 in Tokyo closed up 1.1%, though the S&P/ASX 200 in Sydney fell 0.2%. The Hang Seng Index rose 1.1% in an abbreviated trading session on Monday ahead of the Chinese New Year holiday. Financial markets in Shanghai are closed all week.
The latest coronavirus wave weighed on Chinese manufacturing activity at the start of 2022, according to survey results released on Sunday.
The Caixin purchasing managers' index fell to 49.1 points in January from 50.9 December. Any figure above the no-change mark of 50.0 indicates expansion and one below signals contraction, indicating growth slipped into reverse in January after a modest rise in December.
The reading signalled the second deterioration in overall business conditions in the past three months, Caixin noted.
The economic calendar on Monday has eurozone gross domestic product at 1000 GMT and German inflation at 1300 GMT. Manufacturing PMIs across Europe and the US are released on Tuesday.
The dollar was stronger on Monday.
The pound fetched USD1.3418 early Monday, down from USD1.3422 late Friday. The euro stood at USD1.1161, soft on USD1.1163. Against the yen, the dollar was trading at JPY115.45, up from JPY115.18.
Brent oil was quoted at USD91.22 a barrel early Monday, up from USD90.59 at the London equities close on Friday. Gold was trading at USD1,788.41 an ounce, up from USD1,784.78.
By Eric Cunha; ericcunha@alliancenews.com
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