(Alliance News) - Stock prices in London are seen opening lower on Monday after US President Donald Trump stoked fear of a renewed trade war with China over its role in the coronavirus pandemic.
In early company news, car dealer Pendragon said potential merger discussions with peer Inchcape have ceased. Sweetener and food ingredients supplier Tate & Lyle said it expects to report annual results ahead of expectations. Contract-for-difference provider IG Group appointed a new finance head.
IG futures indicate the FTSE 100 index is to open 38.06 points lower at 5,725.00. The blue-chip index closed down 138.15 points, or 2.3%, at 5,763.06 Friday.
Tate & Lyle said it expected its results for the financial year to March 31 to be slightly ahead of its previous guidance.
The ingredients producer said that while trading in March showed little impact from the Covid-19 pandemic, lockdowns in April have led to changes in demand patterns for its products.
"Accordingly, we expect to announce results slightly ahead of our guidance coming into the year," the company said.
Further, Tate & Lyle said damage caused by lower product demand due to the virus outbreak was partially mitigated by actions taken in March to optimise cash and reduce costs as the pandemic unfolded. These measures included freezing salary increases and recruitment, stopping non-essential discretionary spending and reprioritising capital commitments, the company added.
Tate & Lyle will report annual results on May 21.
Pendragon confirmed press reports that it has held discussions with peer Lookers over a potential merger of the two car dealers, but discussions have now been terminated.
"Pendragon remains well-positioned having already taken significant steps to reshape the business and to cut costs both in advance, and as a result, of the recent events which have temporarily curtailed business activity. And, as previously announced, Pendragon continues to benefit from the support of its stakeholders during the current disruption," Pendragon said.
Over the weekend, Sky News reported that Pendragon had approached Lookers over the possibility of a tie-up, but Lookers had rebuffed its advances.
Lookers is in the midst of an investigation by the UK Financial Conduct Authority over fraudulent activity.
Pendragon, which owns the Evans Halshaw dealership, has been hit hard by the coronavirus outbreak, responding by cutting the pay of senior executives to preserve cash earlier this month.
Inchcape said it appointed former Fujitsu executive Duncan Tait as new chief executive with effect from June 1. Tait will assume the role in full on July 1 following a handover period with outgoing CEO Stefan Bomhard, who is leaving to join tobacco firm Imperial Brands.
Inchcape Chair Nigel Stein said: "Duncan has worked with numerous industries and governments around the world and also brings with him experience of the automotive industry having been Fujitsu's executive sponsor for Ford Motor Company. He was accountable for programmes with Volkswagen, Daimler and BMW, including work on autonomous vehicle and mobility projects. His almost ten-year experience of Japanese business and culture will also be valuable to our business."
IG Group has hired Charlie Rozes as its new chief financial officer. Rozes joins IG on June 1 as CFO, and current CFO Paul Mainwaring will retire after a month handover. Rozes is former finance director at insurer Jardine Lloyd Thompson.
Claims by the US president and Secretary of State Mike Pompeo that the disease started in a lab in Wuhan, and that those responsible would be held to account, overshadowed a further slowing of infections and deaths from Covid-19.
Trump, increasingly critical of China's management of the first outbreak in the city of Wuhan in December, claims to have proof it started in a Chinese laboratory. Scientists believe the virus jumped from animals to humans, after emerging in China, possibly from a market in Wuhan selling exotic animals for meat. China denies the US claims, and the US director of National Intelligence office has said analysts are still examining the exact origin of the outbreak.
Trump on Sunday expressed confidence the US will have a coronavirus vaccine by the end of this year.
AxiCorp's Stephen Innes said: "While the market is already factoring in a less globalised world during the initial phase of the post-pandemic recovery as economies internalise, rekindling a dormant US-China trade war will likely make any economic improvement exponentially more difficult. And ripping up the trade agreement will trigger a global equity market rout."
The Hang Seng index in Hong Kong is down 3.9% Monday. Financial markets in Japan are closed on Monday for the Nature Day holiday, while markets in Shanghai are closed for Labour Day.
The pound was quoted at USD1.2447 early Monday, down from USD1.2593 at the London equities close Friday.
European leaders are backing an initiative from Brussels to raise EUR7.5 billion to find a vaccine to curb the global coronavirus pandemic.
The president of the European Commission, Ursula von der Leyen, outlined the fund-raising plan for the scientific fight-back against Covid-19 on Friday.
An online pledging conference will take place on Monday to plug gaps in the financing of research.
Italian Prime Minister Giuseppe Conte, French President Emmanuel Macron, and German Chancellor Angela Merkel gave their support in an open letter published in weekend newspapers.
UK PM Boris Johnson will confirm Britain's pledge of GBP388 million for vaccine research, tests and treatments, which is part of a wider GBP744 million to the global effort against the virus.
The euro was quoted at USD1.0935, soft from USD1.0955. Against the yen, the dollar was quoted at JPY106.72, down from JPY107.16.
Brent oil was quoted at USD26.16 a barrel Monday morning, lower than USD26.68 late Friday. Gold was quoted at USD1,700.28 an ounce, up from USD1,685.70.
The economic events calendar on Monday has manufacturing PMI readings from Italy, France, Germany and the eurozone at 0845 BST, 0850 BST, 0855 BST and 0900 BST respectively.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
Tate & Lyle (TATE)
Inchcape (INCH)
IG (IGG)
