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(Alliance News) - Equities in London are set to open flat on Monday as markets eye a quiet start to the week with the US sat out for a holiday.
"Trading volume in the market is expected to remain on the low side as the US stock market is closed for a public holiday. Investors in Europe are likely to pay more attention to the on going trend in the equity market which has been very much to the upside," commented Naeem Aslam, chief market analyst at AvaTrade.
In early UK company news, Apollo Global Management said Monday it is considering making a takeover offer for Wm Morrison Supermarkets after the grocer at the weekend agreed to a GBP6.3 billion buyout by a group including Softbank. Ultra Electronics said it is reviewing full-year guidance after a strong interim performance, and Glencore has chosen a new chair.
IG says futures indicate the FTSE 100 index of London large-caps to open just 0.27 of a point lower at 7,123.00 on Monday. The FTSE 100 closed down 1.89 points at 7,123.27 on Friday.
London will be following fresh closing highs in New York on Friday - though with the US shut on Monday for the Independence Day holiday, volumes in Europe are expected to be muted.
The Dow Jones Industrial Average on Friday ended up 0.4%, the S&P 500 up 0.8% and Nasdaq Composite closing 0.8% higher.
Stocks in New York got a boost after a monthly jobs report included a better-than-expected nonfarm payrolls figure but an unexpected rise in the unemployment rate.
"The Nasdaq was propelled higher in Friday's trading session by the Goldilocks jobs report, indicating that investors are returning to growth stocks, which had lagged earlier in 2021 as investors focused on value stocks, which are more correlated to economic recovery and business cycles," said AvaTrade's Aslam.
In early UK company news, Apollo Global Management on Monday confirmed that it is in the preliminary stages of considering a takeover offer for Wm Morrison Supermarkets.
"No approach has been made to the board of Morrisons. There can be no certainty that any offer will be made, nor as to the terms on which any such offer might be made," the private equity firm said.
This comes after Morrisons on Saturday accepted a takeover offer from a consortium of investment groups following its rejection of a private equity bid last month.
Under the GBP6.3 billion deal, the group of investors comprising Softbank Group Corp-owned Fortress, Canada Pension Plan Investment Board and Koch Real Estate Investments will pay 252 pence per share plus a 2p special dividend. The stock closed at 239.80p on Friday in London.
According to the announcement, the deal also includes GBP3.2 billion in debt, which makes the total operation worth GBP9.5 billion with debt recovery.
The takeover of the supermarket based in Bradford, West Yorkshire follows the rejection of a GBP5.5 billion offer in June from Clayton Dubilier & Rice that sent the chain's share prices soaring – but which Morrisons ultimately said was too low.
In other news, Glencore said Kalidas Madhavpeddi will take over as chair on July 30.
He will succeed Tony Hayward, who was appointed to the board at the time of the miner's IPO in 2011 and was chosen as chair in 2013.
"Following consultation with the company's largest institutional shareholders it was agreed that he would retire as chairman within the year after our last AGM, following a second extension of his tenure beyond 9 years on the board," Glencore said.
Madhavpeddi has been on the Glencore board since February 2020 and has over 40 years of experience in the international mining industry. He is currently a non-executive director of Novagold Resources, Trilogy Metals and Dundee Precious Metals, which are listed on the Toronto Stock Exchange.
"As the world transitions to cleaner forms of energy and mobility, our portfolio of commodities will allow Glencore to play a key role in helping us achieve the goals of Paris and play a key role in the ongoing energy and mobility transition," said Madhavpeddi.
Ultra Electronics said it is reviewing its full-year guidance following strong recent trading.
Since updating on its first quarter performance, the firm - which serves the defence, security, critical detection & control markets - said underlying trading in the first half has been strong and ahead of internal expectations. The order book continues to grow and is significant ahead of last year, and orders for the full year are expected to be "well ahead" of 2020.
"Group revenue growth in H1 2021 has been robust despite the previously announced mainly Covid-19 driven operational inefficiencies experienced in the Maritime SBU in Q1 2021 which are now broadly resolved," the firm said.
It added it is confident the One Ultra strategy will deliver "improved and sustainable" long-term value.
As a result of the strong first half trading, the firm is reviewing its guidance. It expects to provide, as part of the publication of its interim results, an update on outlook for the full year.
"We are increasingly confident in our ability to deliver exceptional value for all our stakeholders and further demonstrating the truly unique opportunity at Ultra," said Chief Executive Simon Pryce.
Late last month, Ultra Electronics said it had terminated talks regarding a possible combination with Cobham. Former FTSE 250 constituent Cobham, which now is controlled by Advent International, earlier had said it was mulling a potential takeover offer for Ultra, with a view to create a "global defence electronics champion".
Hipgnosis Songs Fund said operative net asset value per share was USD1.6829 at the end of March, up 11% from USD1.5114 a year ago. The like-for-like valuation uplift across the portfolio was 10% during the year.
The musical intellectual property rights investor acquired 84 catalogues in the year for USD1.09 billion, taking the total portfolio to USD2 billion, invested across 138 catalogues.
"Having delivered another strong, and index beating, set of results, having advocated for songwriters at the highest level including the DCMS hearings taking place in UK Parliament and having increased our synch income through Song Management, as a percentage of total revenue, I'm delighted to say our ambitions are turning into reality," said founder Merck Mercuriadis.
In Asia on Monday, the Japanese Nikkei 225 index ended down 0.6%. In China, the Shanghai Composite was up 0.2%, while the Hang Seng index in Hong Kong was down 0.6%. Â
Growth in China's private sector continued to weaken in June at the fastest rate in 14 months, driven by a slowdown in output from the manufacturing and services sectors, data from Caixin and IHS Markit showed.
The Caixin China General Services purchasing managers index dropped considerably to 50.3 index points from 55.1 in May, but this still represented the fourteenth consecutive month of growth. The print was well below the consensus expectation of 55.7, according to FXStreet.
Business confidence remained upbeat over the next 12-months, however the new surge in virus cases hindered overall optimism in June, falling to a nine-month low.
Gold was quoted at USD1,786.33 an ounce early Monday, higher than USD1,783.83 on Friday.
Brent oil was trading at USD76.28 a barrel, up from USD75.97 late Friday.
The 23 members of the OPEC+ group of oil producers will try again Monday to reach agreement on how much crude to put on the market.
Since May, the group has raised oil output little by little, after slashing it more than a year ago when the coronavirus pandemic crushed demand. The current proposal is to increase output each month from August to December by 400,000 barrels per day, providing oil markets with an additional two million bpd by the end of the year.
But it is the suggestion of extending the agreement on incremental increases until the end of 2022 that has caused a hitch. The hold-out is the United Arab Emirates, which on Sunday criticised that extension as unjust.
The dollar was weaker early Monday. Sterling was quoted at USD1.3835, higher than USD1.3791 at the London equities close on Friday.
The euro traded at USD1.1858 early Monday, up from USD1.1845 late Friday. Against the yen, the dollar was quoted at JPY111.08, down versus JPY111.31.
The economic calendar on Monday has services PMIs from Germany, the eurozone and the UK at 0855 BST, 0900 BST and 0930 BST respectively. Outside of this is eurozone investor confidence at 0930 BST.
By Lucy Heming; lucyheming@alliancenews.com
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