(Alliance News) - London stock prices began the week lower on Monday, amid rising concern that the coronavirus pandemic is going in the wrong direction in other parts of the world, even as the UK, Ireland and the US make great strides in bringing down cases.
The focus of the week ahead for the London market will be earnings in the UK and US.
Due to report in the UK are heavyweights such as BP and HSBC on Tuesday; GlaxoSmithKline, J Sainsbury, Reckitt Benckiser and Lloyds Banking on Wednesday; Royal Dutch Shell, NatWest and Unilever on Thursday; and Barclays and AstraZeneca on Friday.
In a similarly rich US corporate calendar, electric car maker Tesla reports on Monday followed by software firm Microsoft and Google-owner Alphabet on Tuesday, iPhone-maker Apple and social media platform Facebook on Wednesday, and e-commerce firm Amazon.com on Thursday. Ending the week are results from oil majors Exxon Mobil and Chevron on Friday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.3% at 6,919.10
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Hang Seng: down 0.4% at 28,959.47
Nikkei 225: closed up 0.4% at 29,126.23
DJIA: closed up 227.59 points, or 0.7%, at 34,043.49
S&P 500: closed up 1.1% at 4,180.17
Nasdaq Composite: closed up 1.4% to 14,016.81
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EUR: up at USD1.2103 (USD1.2062)
GBP: up at USD1.3910 (USD1.3847)
USD: down at JPY107.81 (JPY108.34)
GOLD: down at USD1,775.76 per ounce (USD1,776.95)
OIL (Brent): down at USD65.48 a barrel (USD66.09)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
1000 CEST Germany Ifo business climate index
0830 EDT US advance report on durable goods
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People aged 50 and under are being urged to get their Covid-19 vaccine so the UK can "continue on the path back to normality". The push for people to take up jab offers comes as restrictions ease in Wales and Scotland, and as Britain sends more than 600 pieces of urgently-needed medical equipment to India following a devastating surge in coronavirus cases. A UK government campaign – called "every vaccination gives us hope" – sees the launch of a TV advert which will showcase the health workers and volunteers involved in the vaccination rollout across the UK. The Department of Health and Social Care said the campaign will predominantly be aimed at people under the age of 50 who will be offered their first dose, as well as the over 50s who are booked in for their second dose, to encourage vaccine uptake.
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Ireland has hit the one million coronavirus vaccines milestone. Irish premier Micheal Martin congratulated all those involved in the rollout of the programme in a tweet on Sunday evening. "Just been informed by that we've reached 1 million first doses of the #CovidVaccine. Great work by all the vaccination teams and GPs across the country," he posted. Earlier the taoiseach, who is 60 years old, said he is looking forward to registering for an AstraZeneca vaccination when permitted according to his age this week.
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Candidates backed by opposition parties won all three parliamentary elections, the results showed on Monday, dealing with a severe blow to Prime Minister Yoshihide Suga. The outcomes of Sunday's races, the first since Suga was inaugurated in September, bode ill for his ruling Liberal Democratic Party as the country prepares for a general election that must be held by this autumn. The victories of the three candidates all supported by the main opposition Constitutional Democratic Party come amid Suga's much-criticized response to the Covid-19 pandemic and scandals in the LDP, which led to two of the three races.
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Japanese services producer prices increased on a monthly and annual basis in March, data from the Bank of Japan showed. Producer prices rose 0.7% month-on-month in March, after February's 0.2% rise. Annually, prices also grew 0.7% following February's flat reading and January's 0.4% annual fall.
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BROKER RATING CHANGES
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DEUTSCHE BANK RAISES TATE & LYLE PRICE TARGET TO 730 (700) PENCE - 'HOLD'
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SOCGEN RAISES PETROFAC TO 'BUY' ('HOLD') - TARGET 167 (107) PENCE
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COMPANIES - FTSE 100
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Educational publisher Pearson reported a good start to 2021 despite Covid-19 disruption. Total sales rose 5% on an underlying basis in the first quarter of the year, with Global Online Learning surging 25% - with strong growth in Virtual Schools - and North American Courseware sales growing 1%. Global Assessment sales and International sales both fell by 2%. "We are building pace and momentum. We are making good strategic progress in our ongoing shift to digital, we are in the advanced stages of preparation for the forthcoming launch of our new college app and our organisational redesign is on track," said Chief Executive Andy Bird. The company expects its full-year performance to be in line with previous guidance.
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Publishing, business information, and exhibitions company Informa said it will combine its FBX business with Novantas, to create a "leading competitive intelligence and specialist data business serving the retail banking markets". FBX is part of the Financial Intelligence portfolio within Informa Intelligence and provides quantitative and qualitative competitive intelligence solutions for US retail banks, with a particular focus on the mortgage market. The agreement is structured as an acquisition of New York-based Novantas on a cash and debt free basis by Informa and mid-market private equity firm, Inflexion, with Informa contributing its FBX business as consideration. FBX assets have a fair value of USD243 million. Informa will own 57% of the combined business. The transaction involves no cash payment from Informa, nor any deferred or contingent consideration, it said.
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COMPANIES - FTSE 250
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Sweetener and food ingredients company Tate & Lyle confirmed it is exploring the sale of a controlling stake in its Primary Products business to a "new long-term financial partner". "Tate & Lyle continues to successfully execute its strategy and remains confident in the future growth prospects of the company. However, the board believes that if a transaction of this nature was completed it would enable Tate & Lyle and the new business to focus their respective strategies and capital allocation priorities and create the opportunity for enhanced shareholder value," the company said. The Sunday Telegraph had reported that Tate & Lyle has started a GBP1.2 billion auction for the Primary Products division. Tate & Lyle said talks are at an early stage, and stressed that there can be no certainty a transaction will be concluded.
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Specialist engineering firm IMI raised its guidance and unveiled a GBP200 million share buyback programme. IMI said momentum continued from 2020 into the start of 2021, with a strong first quarter performance. Revenue of GBP421 million was up 7.7% on a year ago and up 2.6% on the first quarter of 2019, a pre-pandemic period. Group margins improved "significantly" in the first quarter, with all divisions improving. Following the good start to the year, IMI raised its guidance for 2020 adjusted earnings per share to a range of 81 pence to 87p, from a prior range of 75p to 82p. "Given the accelerated progress against our strategy, including the identification of further opportunities for profitable growth, we now have confidence that IMI will become a sustainable 18% to 20% margin business over time," it added. Further, the company has decided that a GBP200 million share buyback is "appropriate" due to its performance and robust cash generation.
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COMPANIES - MAIN MARKET AND AIM
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Darktrace will cut the value of its initial public offering, Sky News reported, as the cybersecurity firm plans to avoid a repeat of Deliveroo's calamitous float. Sky News reported Darktrace and its advisers are eyeing a price range that would value the company between GBP2.4 billion and GBP2.7 billion. Earlier in April, Sky News reported the company believed it could achieve a valuation of around GBP3 billion.
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Semper Fortis Esports began trading on the Aquis Stock Exchange on Monday, having raised GBP2.5 million in its initial public offering. Semper Fortis is focused on establishing esports teams, forming brand and technology partnerships, and providing business-to-business advisory services. It sold 255.5 million shares at 1.0 pence each. It will have a GBP4.2 million market capitalisation at the IPO price and a 40% free float.
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COMPANIES - GLOBAL
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Nestle confirmed it is in talks to buy all or part of Bountiful Co from KKR & Co, following press reports. An acquisition could pre-empt a proposed initial public offering of Bountiful, Bloomberg reported on Friday, citing a person familiar with the matter. KKR had been planning to value Bountiful at more than USD6 billion, according to a Bloomberg report in January which cited a person with knowledge of the matter. Bountiful, the owner of the Nature's Bounty vitamins and other health brands, sells products through retailers such as Walmart and CVS, Bloomberg said. Demand for vitamin supplements and other health products has been increased by the pandemic.
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Exxon Mobil's strategy in the face of climate change poses an "existential business risk" to the company, according to an activist hedge fund that is a shareholder in the oil giant, a report in the Financial Times said. The company, which has been criticised over the last year for both its financial performance and its approach to renewable energy investment, "has no credible plan to protect value in an energy transition," hedge fund Engine No 1 said in an 80-page investor presentation. ExxonMobil has said its business would focus on carbon capture and storage technology as a means to counter the emissions that cause global warming. However, it also plans to continue pumping oil and expects to spend USD20 billion to USD25 billion per year between 2022 and 2025 to fuel its growth, mainly through new oil and gas exploration projects.
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Monday's Shareholder Meetings
Aggreko PLC - GM re takeover by Albion Acquisitions
Hostelworld Group PLC - GM re director remuneration policy
Polymetal International PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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