(Alliance News) - Stock prices in London are seen opening lower on Friday, tracking declines in US equity markets overnight after reports the Biden administration is planning additional tax hikes, while investor focus in Europe will be on a slew of PMI readings.
In early company news, drugmaker GlaxoSmithKline's dostarlimab treatment was approved in the US. Aerospace parts maker Senior said first-quarter trading was in line with expectations.
IG futures indicate the FTSE 100 index is to open 24.64 points lower at 6,913.60. The blue-chip index closed up 42.95 points, or 0.6%, at 6,938.24 Thursday.
Senior said trading in the three months to March 31 has been in line with expectations. In the Aerospace unit, sales were down 25% for the the first quarter last year, but up 2% from the fourth quarter. In the Flexonic unit, sales were down 4% from the first quarter last year but up 10% from the fourth quarter.
Senior said net debt at end of March GBP220.8 million, giving GBP140.6 million headroom on its facilities.
Senior said its 2021 market assumptions remain unchanged, and defence markets are anticipated to remain stable. However, civil aircraft production volumes look set to recover to pre-Covid level only by 2024-25, it said.
"Production volumes for civil aerospace will be lower in 2021 than 2020 based on the production rates that the aircraft and engine OEMs have announced. We also recognise that there are varying levels of inventory in different tiers of the supply chain," the company said.
GlaxoSmithKline said the US Food & Drug Administration has approved the drugmaker's Jemperli treatment for women with recurrent or advanced endometrial cancer.
The approval was for patients with cancer who had progressed on or after previous treatment with platinum-based chemotherapy and whose cancers have a deficient mismatch repair genetic anomaly.
"Unfortunately, as many as 60,000 women are diagnosed with endometrial cancer in the US each year and these women currently have limited treatment options if their disease progresses on or after first-line therapy. Today's approval of dostarlimab by the FDA has the potential to transform the treatment landscape for these women and demonstrates our continued commitment to helping patients with gynaecologic cancers," said Chief Scientific Officer Hal Barron.
In the US on Thursday, Wall Street ended lower, with the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite indices all down 0.9%.
US President Joe Biden is planning to almost double the capital gains tax rate for wealthy individuals to 39.6%, Bloomberg News reported Thursday evening.
This would be an increase from the current rate of 20%, and would apply to those earning USD1 million or more. For those high earners the new top rate, coupled with an existing surtax on investment income, means that federal tax rates could be as high as 43.4%.
A 3.8% tax on investment income that funds Obamacare would be kept in place, pushing the tax rate on returns on financial assets higher than rates on some wage and salary income, Bloomberg noted.
The proposal could reverse a long-standing provision of the tax code that taxes returns on investment lower than on labour. Biden campaigned on equalising the capital gains and income tax rates for wealthy individuals.
"Last night's reports are likely to be the opening salvo of a guerrilla war campaign between Democrats and Republicans on how to pay for the huge fiscal stimulus plan that has only just been unleashed as recently as a month ago. For the Democrats to then go ahead and torpedo the effects of that with a raft of tax hikes would be moronic in the extreme. This story is likely to run for quite a while yet," said CMC Markets analyst Michael Hewson.
"Even so European markets look set to open below where they closed last night as a result of last night's sell off," Hewson added.
The Japanese Nikkei 225 index closed down 0.6% on Friday. In China, the Shanghai Composite was down 0.1%, while the Hang Seng index in Hong Kong was up 0.7%. The S&P/ASX 200 in Sydney closed 0.1% lower.
Japan saw renewed expansion in private sector output in April with manufacturing leading the way, figures from au Jibun Bank showed.
The headline au Jibun Bank manufacturing purchasing managers' index rose to 53.3 points in April from 52.7 in March. Both output and new orders expanded at a solid pace, with growth for both the quickest since since the first half of 2018.
The flash manufacturing output index in April rose to 54.2 points, up from 53.3 in March. The flash services business activity index was flat, however, at 48.3 points, signalling a sustained deterioration in business activity in across the service sector.
Overall, the flash composite output index edged up to 50.2 points, up from 49.9 in April, and peaking its head just about the 50-mark neutral line, where anything above 50 denotes. This means Japan's private sector expanded for the first time since January 2020.
The pound was quoted at USD1.3857 early Friday, up from USD1.3838 at the London equities close Thursday.
The euro was priced at USD1.2027, up from USD1.2014. Against the yen, the dollar was quoted at JPY107.88, down from JPY108.11.
Brent oil was trading at USD65.80 a barrel Friday morning, up from USD65.58 at the London equities close Thursday. Gold was quoted at USD1,783.11 an ounce, little changed against USD1,782.29.
The economic calendar on Friday has a raft of purchasing managers' index readings, with Germany at 0830 BST, the eurozone at 0900 BST, the UK at 0930 BST and the US at 1445 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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Senior (SNR)
Glaxosmithkline (GSK)