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LONDON MARKET EARLY CALL: Lower Call As US Boosts Sanctions On Huawei

Tue, 18th Aug 2020 06:55

(Alliance News) - Stock prices in London are seen opening lower on Tuesday after disappointing annual results from miner BHP Group, while US-China relations continued to sour.

IG futures indicate the FTSE 100 index is to open 10.04 points lower at 6,117.40. The blue-chip index closed up 37.40 points, or 0.6%, at 6,127.44 Monday.

In the latest salvo, the US expanded sanctions on China's Huawei Technologies to further limit the telecoms firm's access to computer chips and other products, with officials saying it was using subsidiaries to circumvent measures in place to prevent exports of US-based technology.

Beijing had already slammed Washington for using "digital gunboat diplomacy" after President Donald Trump ordered TikTok's Chinese owner ByteDance to sell its interest in the Musical.ly app that it had bought and merged with TikTok.

The Japanese Nikkei 225 index is down 0.3% on Tuesday. In China, the Shanghai Composite is up 0.3%, while the Hang Seng index in Hong Kong is flat.

"Equity markets in Asia are mixed as US-China tensions ticked up again. The US government will impose further restrictions on the Chinese telecommunications group Huawei - its access to commercially available chips will be reduced again. The Trump administration fears Huawei is essentially an arm of China's ruling communist party. European indices are expected to have a quiet start," said CMC Markets analyst David Madden.

Already out, BHP lowered its annual dividend, as profit and revenue declined on lower prices and an increase in the closure of mines and of rehabilitation provisions, as a result of Covid-19.

For the financial year to the end of June, pretax profit dropped by 10% to USD13.51 billion from USD15.05 billion the year before, as revenue declined by 4.3% to USD42.39 billion from USD44.29 billion.

The Anglo-Australian miner's revenue performance came in short of company-compiled expectations, which were for USD43.07 billion.

Profit from operations decreased by 11% to USD14.42 billion from USD16.11 billion the prior year, while underlying earnings before interest, taxes, depreciation and amortisation slipped by 5% to USD22.07 billion from USD23.16 billion.

BHP declared an annual dividend of 120 US cents, down 10% from 130 cents the year before, as net debt as at June 30 was USD12.04 billion, up 28% year-on-year from USD9.45 billion. Analysts expected BHP to declare an annual dividend of 123 US cents.

The pound was quoted at USD1.3137 early Tuesday, up from USD1.3096 at Monday's equities close in London.

The euro was priced at USD1.1893, up from USD1.1867. Against the yen, the dollar was quoted at JPY105.65 in London, down from JPY106.00.

Brent oil was trading at USD45.27 a barrel on Tuesday morning, up from USD45.04 at the London equities close Monday.

Gold was quoted at USD1,994.07 an ounce, up from USD1,984.00 an ounce at Monday's close in London.

In the US on Monday, Wall Street ended mostly higher, with the Dow Jones Industrial Average down 0.3%, S&P 500 up 0.3% and Nasdaq Composite up 1.0%.

The UK corporate calendar has housebuilder Persimmon, oilfield services firm John Wood Group and Kazakhstan-focused miner Kaz Minerals releasing half-year results.

A quiet economics calendar on Tuesday has US housing starts data at 1330 BST.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

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