LONDON MARKET PRE-OPEN: Unilever Sets November Unification Date

(Alliance News) - Stock prices in London are seen opening higher on Monday shrugging off fears over deteriorating US-China relations and the inability of Congress to agree on a new US stimulus package.

In early company news, Unilever confirmed the date for the unification of its corporate structure under Unilever PLC. Transport operators Go-Ahead and FirstGroup welcomed the UK government's decision to extend the funding of bus services. Clarkson reinstated its dividend after reporting robust interim results. Outsourcer Capita extended its contract with Transport for London.

IG futures indicate the FTSE 100 index is to open 37.82 points higher at 6,070.00. The blue-chip index closed up 5.24 points, or 0.1%, at 6,032.18 on Friday.

Unilever said that it expects the unification of legal entities under Unilever PLC to complete over the weekend of November 21 to 22. This means the expected last day of trading in Unilever NV shares would be November 20. It called extraordinary general meetings for September 21 in Rotterdam and October 12 in London to approve the the new structure.

In June, the consumer goods firm announced plans to unify its Anglo-Dutch duo legal structure under a single London-headquartered parent company, Unilever PLC.

Go-Ahead said it welcomes the announcement from the Department for Transport regarding extended funding of bus services in England, to be provided by the UK government.

Over the weekend, the UK government announced emergency Covid-19 funding for bus and tram operators in England is being extended ahead of expected increases in demand next month.

Some GBP218.4 million will be available for bus services over the coming eight weeks. This will be followed by investment worth up to GBP27.3 million per week "until a time when the funding is no longer needed".

"As communities return to work, services reopen and people begin travelling again, we are seeing customers returning to public transport. However, passenger numbers are still below 50% of pre-Covid levels across our networks. While social distancing is in place and sections of society remain closed, we welcome the government's continued support to keeping these critical services running," said Go-Ahead Chief Executive David Brown.

FirstGroup also welcomed the decision, saying the UK government commitment demonstrates the value placed on bus services to support the restart of local economies, get people back to work and children back to school from September.

FirstGroup said its First Bus operations across England have increased operated mileage from 40% to almost 90% of pre-pandemic levels, with passenger volumes increasing from 10% to 40% since the low point.

"The further funding packages confirmed by the UK and Scottish governments enable us to keep people travelling safely on our essential services, allowing social distancing to be maintained on our vehicles. Bus networks are vitally important to local economies, both now as people return to education and workplaces, and in the future as they offer a sustainable transport alternative to the car," said FirstGroup CEO Matthew Gregory.

Clarkson said it saw a robust first-half performance in 2020, despite the "unprecedented challenges" faced by the shipping industry.

For the half-year ended June 30, revenue was up 7.5% at GBP180.4 million from GBP167.8 million the year before, and pretax profit was up 9.0% at GBP20.9 million from GBP19.2 million.

The shipping services provider said it has a robust balance sheet, with GBP88.8 million of free cash resources.

In light of the strong cash position, Clarkson has decided to pay the equivalent of the deferred 2019 final dividend of 53 pence per share as an interim dividend. The company also declared a further interim dividend for 2020 of 25p per share, unchanged from last year.

"While stimulus packages are being rolled out around the world, the impact on the speed and shape of global trade recovery is still to be determined. This, together with macroeconomic and geopolitical sensitivities and ever-changing exchange rates, means that the board believes guidance should currently remain withdrawn for the full year. We remain confident in the fundamentals of the global shipping industry and that Clarksons will continue to benefit from its leading market position and diverse offering across all aspects of broking and the shipping world," CEO Andi Case said.

Capita said that it has secured a GBP355 million extension to its contract with Transport for London to continue to manage London's congestion charge, low and ultra-low emission zones.

The outsourcer said the contract comprises both an extension to its existing work, from October 2021 to October 2026, and new work expanding the low and ultra-low emission zones and direct vision standards, set to last until October 2026.

UK stocks look set to open higher, despite US lawmakers' inability to find common ground on a much-needed, new stimulus for the world's top economy.

Responding to collapsed talks, US President Donald Trump signed four executive orders on the economy on Saturday, following through on a threat to act on his own if Congress did not pass a new stimulus bill.

One order provides enhanced unemployment benefits while a second would give relief on student loan repayments. A third order is a federal ban on housing evictions. The fourth suspends certain taxes on salaries.

Top Democrats Nancy Pelosi and Chuck Schumer slammed Trump's announcement, calling the measures "unworkable, weak and narrow."

In Asia, the Shanghai Composite index is up 0.9%, while the Hang Seng index in Hong Kong is down 0.1%. Financial markets in Japan are closed for a holiday.

China's consumer inflation edged up in July, official data showed Monday, partly because of rising food prices from flood-related disruptions and as the country recovers from the coronavirus outbreak.

The consumer price index, a key gauge of retail inflation, had been pushed up over the past year by livestock prices after China's pig herds were ravaged by African swine fever, with the Covid-19 outbreak later hitting supply chains.

Consumer inflation has been easing since January but ticked up again in recent months, with the CPI annual growth rate hitting 2.7% last month, accelerating from 2.5% in June, according to the National Bureau of Statistics.

CMC Markets analyst Michael Hewson said: "President Donald Trump's decision at the end of last week to ban Chinese apps like TikTok and WeChat from US app stores is yet another decision that could prompt a counter-response and possible escalation from Beijing, with US companies operating in Hong Kong and China, particularly vulnerable. The US president also announced sanctions against a number of Chinese officials including Hong Kong leader Carrie Lam at the end of last week.

"Against this backdrop, markets in Asia have started the week rather mixed, as well as a little subdued in the absence of Japanese markets due to a public holiday, while markets here in Europe look set to take their cues from the positive finish in the US on Friday, with a modestly higher open."

The pound was quoted at USD1.3070 early Monday, up from USD1.3050 at the London equities close on Friday.

The euro was priced at USD1.1794, flat from USD1.1789. Against the yen, the dollar was trading at JPY105.77 in London, soft from JPY105.86 late Friday.

Brent oil was trading at USD44.88 a barrel Monday morning, up from USD44.60 at the London equities close Friday. Gold was quoted at USD2,030.02 an ounce, soft from USD2,032.40.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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