(Alliance News) - Stock prices in London are set to open lower on Monday as a new Covid-19 variant led to further restrictions in the UK and travel bans from Europe.
In early UK company news, retailer Frasers Group withdrew its guidance in the wake of fresh restrictions in London and the south east of England, Vodafone said discussions with Saudi Telecom Co over its stake in Vodaphone Egypt have ended, and Signature Aviation said it is minded to recommend a takeover offer from Blackstone.
IG says futures indicate the FTSE 100 index of large-caps to open 109.78 points lower, or 1.7%, at 6,419.40 on Monday. The FTSE 100 closed down 21.88 points, or 0.3%, at 6,529.18 on Friday.
The lower open in London comes as things have gone from "bad to worse" in terms of virus restrictions in the UK, said CMC Markets's David Madden.
"London and large swathes of south east England have entered Tier 4. The Scottish government is advising people not to enter the country, while Wales has heightened restrictions too. Rising case numbers because of the new Covid-19 strain brought about the new measures," said Madden.
He added: "Even though yesterday was originally cited as the deadline for UK-EU trade talks, it is understood that differences still remain and that discussions will continue today. Given how things have gone so far, it was hardly a surprise. This comes at a time when many countries in mainland Europe are also struggling to keep a lid on their own situation – a number of countries have extended their lockdowns into mid-January. The airline sector is likely to be in focus today for all the wrong reasons."
Several European countries are imposing bans on flights from the UK in an attempt to make sure that a new strain of coronavirus sweeping parts of southern England does not reach their shores.
UK Prime Minister Boris Johnson said a fast-moving new variant of the virus that is 70% more transmissible than existing strains appears to be driving the rapid spread of new infections in London and southern England.
"There's no evidence to suggest it is more lethal or causes more severe illness," the prime minister stressed, or that vaccines will be less effective against it.
Countries including France, Germany, Italy, the Netherlands, Belgium, Poland, Austria, Denmark, Ireland, and Bulgaria have announced restrictions on UK travel in the wake of the news of the new strain.
With France suspending all traffic from the UK for 48 hours, it raised fears that trade flows could be severely disrupted while passengers across Europe could be left stranded in the final run-up to Christmas.
The new variant of the virus also led to Johnson effectively cancelling Christmas for almost 18 million people in London, south-eastern and eastern England as the region was put into a new two-week lockdown from Sunday. Under the new Tier 4 rules non-essential shops – as well as gyms, cinemas, casinos and hairdressers – have to stay shut and people are limited to meeting one other person from another household in an outdoor public space.
Sterling was quoted at USD1.3338 early Monday, down almost 1% from USD1.3482 at the London equities close on Friday.
The euro traded at USD1.2190 early Monday, down from USD1.2235 late Friday. Against the yen, the dollar was quoted at JPY103.45 versus JPY103.40.
In early UK company news, Vodafone said discussions with Saudi Telecom Co over the sale of the London-listed telecommunication firm's 55% stake in Vodafone Egypt have been terminated.
Vodafone gave no reason for ending the talks. However, Chief Executive Nick Read said: "We believe that the Egyptian government is committed to an optimal framework for the telecoms sector, which will enable Vodafone Egypt to deliver on the country's vision of digitization and financial inclusion and create a technology hub to support our growth in the African region."
GlaxoSmithKline said it has received marketing authorisation from the European Commission for ViiV Healthcare's Vocabria to be used with Janssen's Rekambys and Edurant.
"This authorisation represents the first time people living with HIV in Europe may be able to receive a long-acting injectable treatment that removes the need to take daily oral tablets, following the oral initiation phase," said Glaxo.
ViiV Healthcare is a specialist HIV company majority owned by Glaxo, with Pfizer and Shionogi as shareholders. Janssen is part of Johnson & Johnson.
NatWest said it has agreed to buy a GBP3.0 billion portfolio of prime UK mortgages from Metro Bank.
The portfolio consists of owner occupied residential mortgages with a weighted average current loan to value of 60%. The purchase price of GBP3.1 billion represents a 2.7% premium on gross book value.
"Growing our mortgage book is an important strategic priority as we build a bank that delivers sustainable returns for shareholders. The addition of this loan book will supplement the strong organic growth that we continue to achieve," said NatWest Chief Executive Alison Rose.
Signature Aviation said it is minded to recommend a USD5.17-per-share firm takeover offer from Blackstone.
The offer - equating to around 386p - represents a 44% premium to Signature's closing price on December 16, the last business day before the offer period began. The stock closed on Friday at 368.90p but had closed at 269.20p on Wednesday before the offer was announced on Thursday afternoon.
"Discussions between the parties remain ongoing. A further announcement will be made as and when appropriate. There can be no certainty that any offer will be made nor as to the terms of any offer. Shareholders are advised to take no action with regard to the matters described in this announcement," said Signature.
Frasers Group said it can no longer "commit" to achieving guidance of a 20% to 30% improvement in underlying earnings before interest, tax, depreciation and amortisation during its current financial year following further UK virus restrictions.
The Sports Direct and House of Fraser owner said the UK government's closure of non-essential retail in London, the south east and east of England with "no warning" over the weekend has led to "virtually all" of the company's stores closing in these areas.
"Given this is a peak trading period, and combined with the high likelihood of further rolling lockdowns nationwide over the following months at least, such is the uncertainty of when stores can and cannot open that the board of Frasers Group can no longer commit to Frasers Group achieving its publicised guidance," said Frasers.
Card Factory said it has appointed Darcy Willson-Rymer as chief executive officer.
Willson-Rymer will join Card Factory from Costcutter Supermarkets, where he has served as CEO for the last eight years. Card Factory noted that, in his time there, he steered the nationwide multi-site owned and franchised convenience retail business through a "period of significant change".
Prior to this, he was CEO of greeting cards retailer Clinton Cards. He will join Card Factory on March 8.
In the US on Friday, Wall Street ended on a note soft, with the Dow Jones Industrial Average ending down 0.4%, the S&P 500 down 0.4% and Nasdaq Composite closing 0.1% lower.
US lawmakers agreed on a nearly USD900 billion Covid-19 relief package for millions of Americans on Sunday, in a deal that follows months of wrangling and comes as the nation battles the world's largest coronavirus outbreak.
The package includes aid for vaccine distribution and logistics, extra jobless benefits of USD300 per week, and a new round of USD600 stimulus checks – half the amount provided in checks distributed in March under the CARES Act.
Months of partisan debate and finger-pointing, as well as last-minute negotiations, culminated in a deal lawmakers said they hoped to formally approve on Monday.
In Asia on Monday, the Japanese Nikkei 225 index closed down 0.2%. In China, the Shanghai Composite closed up 0.8%, while the Hang Seng index in Hong Kong is down 0.7%. Â
Gold was quoted at USD1,902.00 an ounce early Monday, higher than USD1,885.75 on Friday. Brent oil fell to USD50.52 a barrel from USD52.16 late Friday.
The economic events calendar on Monday has eurozone consumer confidence at 1500 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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