(Alliance News) - Stocks in London are set to dip on Monday, with a rise in coronavirus cases in India and a stronger pound expected to drag on the blue-chip FTSE 100.
In early UK company news, Pearson reported a good start to 2021, while IMI raised its full-year guidance and revealed plans for a GBP200 million share buyback.
Informa unveiled plans to combine its FBX business with Novantas. Tate & Lyle confirmed it is exploring the sale of a controlling stake in its Primary Products business.
IG says futures indicate the FTSE 100 index of large-cap stocks to open 8.76 points, or 0.1%, lower at 6,929.80 on Monday. The index closed just 0.32 of a point higher at 6,938.56 on Friday.
An increase in coronavirus cases across Asia is weighing on sentiment, said Jeffrey Halley, senior market analyst at Oanda.
India's daily Covid death toll hit a new high Saturday, with hospitals facing oxygen shortages and crematoriums pushed to capacity.
India has become the new pandemic hotspot. Queues of Covid-19 patients and their fearful relatives have built up outside hospitals in major cities as another 2,624 deaths, a daily record, were reported in 24 hours.
Mounting cases also have forced Japan to declare a state of emergency in some areas just three months before the Olympics are due to open. The country's minister for virus response, Yasutoshi Nishimura, has warned of a "strong sense of crisis", saying current restrictions were not sufficient.
In a fresh blow to trans-Tasman travel, New Zealand on Friday paused arrivals from Western Australia, temporarily excluding the state's travellers from a quarantine-free bubble due to a fresh Covid-19 outbreak.
It is the first major snag since the two countries opened their bubble on April 18, almost 400 days after both closed their international borders due to the pandemic.
Oanda's Halley said: "India's situation dominated the weekend press, but across Japan, South Korea and Thailand and others in between, Covid-19 is undermining confidence in cyclical recovery that many, including the author, has priced into their H2 2021 outlooks."
In Asia on Monday, the Japanese Nikkei 225 index closed up 0.4%. Against the yen, the dollar was quoted at JPY107.82, down from JPY108.34 late Friday in London.
In China, the Shanghai Composite was down 0.7%, while the Hang Seng index in Hong Kong was down 0.2%. The S&P/ASX 200 in Sydney closed down 0.1%.
In the US on Friday, Wall Street ended in the green, with the Dow Jones Industrial Average up 0.7%, the S&P 500 up 1.1%, and Nasdaq Composite up 1.4%.
In early UK company news, 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.
Bird said: "We continue to expect to deliver revenue and profit growth in 2021 and for our performance to be in line with our 2021 outlook as we benefit from improving trading conditions as Covid-19 restrictions ease. We are focused on executing our new strategy and believe that it will create sustainable and significant value for all of Pearson's stakeholders."
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.
The deal is expected to complete by the end of June.
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.
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. This will allow for a more efficient balance sheet while still leaving ample capacity to continue investing in growth, it said.
"We are pleased with the progress that the business has continued to make through the first quarter of 2021 as we accelerated our strategy to deliver sustainable profitable growth. Our increased focus on adding value for our customers by solving key industry problems, along with initiatives to reduce complexity and accelerate growth, are delivering tangible benefits," said Chief Executive Roy Twite.
The dollar was lower at the start of the week.
Sterling was quoted at USD1.3901 early Monday, higher than USD1.3847 at the London equities close on Friday. The euro traded at USD1.2106 on Monday, up from USD1.2062 late Friday.
"Ahead of an acceleration in the global data calendar and heavyweight US earnings releases this week, the US dollar will remain on the back foot throughout today as US yields remain benignly becalmed," said Oanda's Halley.
In the US corporate calendar this week, 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.
Gold was quoted at USD1,777.92 an ounce early Monday, nudging up from USD1,776.95 on Friday. Brent oil was trading at USD65.47 a barrel, lower than USD66.09 late Friday.
The economic calendar on Monday has the Ifo's German business climate at 0900 BST and US durable goods orders at 1330 BST.
By Lucy Heming; lucyheming@alliancenews.com
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Pearson (PSON)
Tate & Lyle (TATE)
Informa (INF)
IMI (IMI)