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LONDON MARKET PRE-OPEN: Phoenix Group confirms talks for European sale

Tue, 18th May 2021 07:47

(Alliance News) - Stocks in London are set for a higher open on Tuesday following strength in Asia overnight, while the pound built on early gains after a better-than-expected UK jobs print.

The unemployment rate was 4.8% for the three months to March, easing from 4.9% in the three months to February. Consensus, according to FXStreet, had seen the March reading holding steady at 4.9%.

"The latest figures suggest that the jobs market has been broadly stable in recent months, with some early signs of recovery," the ONS said.

This coincides with the easing of lockdown restrictions in the UK. In March, schools in England reopened, followed by the lifting of shutters in April for outdoor hospitality, such as beer gardens, alongside non-essential retail and hairdressers.

The number of payroll employees increased for a fifth consecutive month in April, though does still remain 772,000 below pre-pandemic levels. The largest falls in jobs since February 2020 have been in the hospitality sector, among those aged under 25 years, and those living in London.

Sterling advanced further after the data, quoted at USD1.4183 early Tuesday compared to USD1.4119 at the London equities close on Monday.

Among London listings early Tuesday, Vodafone reported a slip in full-year earnings but held its dividend steady, Phoenix Group confirmed it is in talks to sell its European businesses, and Oxford Biomedica raised guidance on its AstraZeneca vaccine manufacturing deal.

IG says futures indicate the FTSE 100 index of large-caps to open 70.65 points higher, or up 1.0%, at 7,103.50 on Tuesday. The FTSE 100 closed down 10.76 points, or 0.2%, at 7,032.85 on Monday.

The higher start in Europe comes after a subdued session on Wall Street but a brighter mood in Asia overnight.

In the US on Monday, the Dow Jones Industrial Average ended down 0.2%, the S&P 500 down 0.3% and the Nasdaq Composite down 0.4%.

In Asia on Tuesday, however, the Japanese Nikkei 225 index ended up 2.1%. In China, the Shanghai Composite was up 0.1%, while the Hang Seng index in Hong Kong was up 1.3%. The S&P/ASX 200 in Sydney was up 0.6%.

"Asia's performance should set up Europe for a positive start later today. With the worst performers in Asia being the best ones by a country mile today, the lesson here is that an ocean of money still waits on the side-lines to buy equities on material pullbacks, Covid-19 be damned," said Jeffery Halley, a senior market analyst at Oanda.

In early UK company news, telecommunications firm Vodafone posted a "resilient" performance for its recently ended financial year.

Revenue for the financial year to March 31 was EUR43.81 billion, down 2.6% from EUR44.97 billion the year before. Pretax profit jumped to EUR4.40 billion, however, from just EUR795 million the year before, after financing costs fell to EUR1.03 billion from EUR3.55 billion.

Adjusted earnings before interest, tax, depreciation and amortisation fell 3.3% - or declining 1.2% on an organic basis - to EUR14.39 billion from EUR14.88 billion.

Vodafone kept its dividend for the year steady at 9.0 cents.

"I am pleased that we achieved full-year results in line with our guidance and we exited the year with accelerating service revenue growth across the business, with a particularly good performance in our largest market, Germany," said Chief Executive Nick Read.

For the year ahead, Vodafone expects adjusted Ebitda between EUR15.0 billion to EUR15.4 billion, and adjusted free cash flow of at least EUR5.2 billion.

Phoenix Group Holdings, noting press reports, confirmed it is in advanced talks over a potential sale of its European businesses.

"A sale of the European businesses will only be considered if it maximises value for shareholders. Discussions are on-going and there can be no certainty that any transaction will be agreed," the FTSE 100-listed long-term savings and retirement business said.

On Monday, Sky News reported that Phoenix is close to agreeing a GBP550 million deal to sell its European operations.

Oxford Biomedica raised its guidance after pharmaceutical firm AstraZeneca committed to an increase in the number of Covid-19 vaccines needed from the gene and cell therapy company in the second half of 2021.

The two signed an 18-month supply agreement in September under a three-year master supply and development agreement for the large-scale commercial manufacture of the Oxford-AstraZeneca vaccine.

As a result of Astra's commitment, Oxford Biomedica raised its revenue guidance for expected cumulative revenue from Astra by the end of 2021 to in excess of GBP100 million, from in excess of GBP50 million previously, and as such expects "significant growth" in operating Ebitda this year.

In economic data on Tuesday, Japan's economy contracted 1.3% in the three months to March after the government reimposed coronavirus restrictions in major cities as infections surged.

The quarter-on-quarter fall came after the world's third-largest economy grew for two quarters to December, but the expansion was stopped in its tracks by a winter increase in coronavirus cases.

The government imposed new virus states of emergency in January in response, urging people to stay at home and calling for restaurants to close earlier. The economic contraction was largely in line with economists' expectations.

The Japanese yen traded higher after the figures. Against the yen, the dollar slipped to JPY109.09 early Tuesday versus JPY109.20 late Monday.

The euro changed hands at USD1.2183, higher than USD1.2146.

Gold was quoted at USD1,869.76 an ounce early Tuesday, higher than USD1,865.60 on Monday. Brent oil was trading at USD69.68 a barrel, rising from USD69.24 late Monday.

In the economic calendar on Tuesday, besides UK jobs, there is eurozone employment and GDP at 1000 BST and US housing starts at 1330 BST.

Amazon.com is in discussions to acquire the MGM film studio for about USD9 billion, the Financial Times reported Tuesday, citing "people familiar with the matter". MGM's biggest shareholder is hedge fund Anchorage Capital, the newspaper noted. Anchorage started buying the studio's debt in 2010.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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