(Alliance News) - Stocks in London are set for a lower open on Wednesday following a slump in the US overnight, with sentiment further dented by news that AstraZeneca's Covid-19 vaccine trial has been put on hold due to an unexplained illness.
In early UK company news, Kosmos Energy has agreed to farm down a portfolio of exploration assets to Royal Dutch Shell. Computacenter said it will buy Toronto-listed Pivot Technology Solutions as it posted interim profit growth. Sanne also reported a rise in interim profit.
IG says futures indicate the FTSE 100 index of large-caps to open 35.80 points lower at 5,894.50 on Wednesday. The FTSE 100 closed down 7.10 points, or 0.1%, at 5,930.30 on Tuesday.
Clinical trials of one of the most advanced experimental Covid-19 vaccines, which is being developed by pharmaceutical company AstraZeneca and Oxford University, were "paused" Tuesday after a volunteer developed an unexplained illness.
With billions of people around the world still suffering from the fallout of the pandemic and the global death toll nearing 900,000, a worldwide race for a vaccine is under way, with nine companies already in late-stage Phase 3 trials.
A spokesperson for the AstraZeneca vaccine said in a statement Tuesday that "we voluntarily paused vaccination to allow review of safety data by an independent committee.
"This is a routine action which has to happen whenever there is a potentially unexplained illness in one of the trials, while it is investigated, ensuring we maintain the integrity of the trials."
The company said that in large trials, illnesses will sometimes happen by chance but must be reviewed independently. AstraZeneca didn't offer further details, but medical news site Stat News, which first reported the volunteer's illness, quoted a source saying it had involved a "serious adverse reaction" to the vaccine.
"These setbacks are not unusual in trials, and standard review processes trigger pauses to investigate the data. Still, investors should closely follow the outcome of the investigation. But at the end of the day, the optimism balloon floated by vaccine hopes has sprung yet another sizable leak," said Stephen Innes, chief global markets strategist at AxiCorp.
In early UK company news, Kosmos Energy said it has entered an agreement with a Royal Dutch Shell subsidiary to farm down a portfolio of exploration assets for up to USD200 million.
Shell will acquire Kosmos's participating interest in blocks offshore Sao Tome & Principe, Suriname, Namibia and South Africa.
The consideration consists of an upfront cash payment of USD100 million, plus contingent payments of USD50 million payable upon each commercial discovery from the first four exploration wells drilled across the assets, capped at USD100 million in total. Three of the four wells are currently planned for 2021.
Computacenter reported profit growth for the first half and also said it has agreed to buy Pivot Technology Solutions.
Revenue for the first half of 2020 rose 1.5% to GBP2.46 billion from GBP2.43 billion year-on-year, while pretax profit grew by 43% to GBP72.4 million from GBP50.8 million.
The IT services firm said significant reductions in spend from industrial customers was offset by new business within the government and financial services sector.
"As previously stated, our business has performed well this year to date and proven to be flexible in these extraordinary times," said Chief Executive Mike Norris.
"While nothing can be taken for granted, it is the board's view that, based on current business activity levels, our adjusted profit before tax for the year is unlikely to be less than GBP180 million," Norris added. "We feel it is important to give specific guidance given the broad range of market expectations concerning our likely results."
Separately, Computacenter said it has agreed to buy Toronto Stock Exchange-listed Pivot Technology Solutions. Computacenter will pay CAD2.60 cash for each Pivot share, the deal worth CAD105.8 million - nearly USD80 million or GBP62 million - based on the firm's 40.7 million shares.
Pivot is an IT solutions provider which makes around 85% of its revenue from customers in the US and the remainder from customers in Canada.
"We are pleased with our progress in the US, including the acquisition of Fusionstorm in 2018. The acquisition of Pivot represents an opportunity to increase our scale, geographic footprint and capabilities in US. Additionally, Canada expands our total market opportunity and helps us meet the needs of international customers," said CEO Norris.
Waste management firm Biffa said its full-year expectations are unchanged even though trading has been "slightly ahead" of its base case scenario.
During August, revenue recovered to around 90% of prior year levels.
"As a result, underlying profit contribution is also continuing to steadily improve month on month and the Group expects to cease furloughing staff at the end of September," Biffa said.
Sanne posted profit growth and upped its interim payout.
Turnover for the six months to June rose 14% to GBP86.5 million from GBP76.0 million a year ago, with pretax profit shooting up to GBP11.6 million from GBP3.8 million.
The provider of alternative asset and corporate services said the business showed "good resilience" during the first half amid unprecedented conditions.
"Whilst economic uncertainty remains around the medium and longer term impact of Covid-19 and the Brexit process, the business model is robust in that revenues are long term, margins are healthy and the resulting cash flow generation is strong," the company said.
Signs of "market progress" have been seen during the third quarter and the pipeline of new business continues to grow, the firm added, giving Sanne confidence in delivering a full-year outturn in line with its expectations.
Sanne declared an interim dividend of 4.8 pence, up 2.1% on the 4.7p payout a year ago.
Sterling was quoted at USD1.2938 early Wednesday, lower than USD1.3030 at the London equities close on Tuesday.
The euro traded at USD1.1765 early Wednesday, down from USD1.1796 late Tuesday. Against the yen, the dollar was quoted at JPY105.84, soft versus JPY105.94.
Gold was priced at USD1,924.83 an ounce early Wednesday, slightly lower than USD1,926.32 on Tuesday. Brent oil was trading at USD39.69 a barrel early Wednesday, flat on USD39.54 late Tuesday.
Wall Street ended lower on Tuesday. The Dow Jones Industrial Average closed down 2.3%, the S&P 500 index down 2.8%, and the Nasdaq Composite down 4.1%.
"A three-day weekend did not lift the mood on Wall Street, with the only electricity available, being unplugged at the wall by investors, who continued dumping stocks, and technology in particular," said Jeffrey Halley at Oanda.
Tech stocks were amongst those worst hit as US markets reopened on Tuesday from Monday's Labor Day holiday, with Tesla shares crashing 21%, Apple shares closing down 6.7% and Facebook down 4.1%.
Asian stocks on Wednesday followed the tone set by the US. The Japanese Nikkei 225 index ended down 1.0%.
In China, the Shanghai Composite is down 1.4%, while the Hang Seng index in Hong Kong is down 1.1%.
Chinese inflation moderated in August, data showed overnight, as a slowdown in the surging price of pork tempered food costs.
The consumer price index hit 2.4%, in line with forecasts and below the previous month's reading, as pork prices saw their slowest increase in a year, while analysts said the easing could also be attributed to a high base comparison.
Dong Lijuan at the National Bureau of Statistics, which released the figures, said pork supplies had improved but noted that the cost of other meats also rose, "affected by factors such as rising feed costs, recovery in demand, and rising pork prices".
The PPI, which measures the cost of goods at the factory gate, fell 2.0% in August, largely in line with forecasts.
By Lucy Heming; lucyheming@alliancenews.com
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