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London pre-open: Stocks seen lower on US Covid concerns

Mon, 29th Jun 2020 07:33

(Sharecast News) - London stocks were set to fall at the open on Monday amid growing concerns about rising coronavirus infections in the US.
The FTSE 100 was called to open 37 points lower at 6,122.

CMC Markets analyst Michael Hewson said: "Rising infection rates in the US, which saw some US states either postpone their reopening's or close back down again, saw equity markets slide lower on the week on Friday, over concerns that any economic recovery may well take longer to take hold. In spite of these concerns the losses that we saw turned out to be fairly modest when compared to previous sessions, as well as previous weeks.

"As we start a new week, as well as coming to the end of the month and Q2, these concerns about a much more prolonged recovery, as infection rates continue to rise in a number of US states, are likely to be more of a drag on US stocks in the short term, though they are also set to act as a drag elsewhere as well.

"These concerns look likely to overshadow some of the more positive sentiment elsewhere, as economic data continues to show further signs of improving in places like Asia and Europe, where second wave concerns aren't anywhere near as immediate for now, though new localised outbreaks in China and South Korea over the weekend, continue to act as reminders that the virus remains far from defeated."

In corporate news, Rio Tinto, Turquoise Hill Resources and the Mongolian government have agreed on a domestic power plan for Oyu Tolgoi that prepares the ground for the government to fund and build a state-owned power plant at the copper mine.

The agreement commits each party to work towards finalising a power purchase agreement by the end of March 2021. The proposed timetable says construction of a coal-fired plant will start no later than 1 July with commissioning four years later.

Avon Rubber said it had received a $16.3m mask order under its US Department of Defense M50 sustainment contract.

Deliveries under the order would start in the current financial year and contribute to our military revenues for the year, Avon.

Energean said it had agreed to exclude Edison E&P's Norwegian subsidiary from its takeover deal, and cut capital expenditure guidance as oil companies wrestle with a slump in prices amid the coronavirus crisis.

The deal, originally worth $750m, will now cost Energean a gross $284m after ditching Edison's Algerian assets in April.

Capex guidance was cut to $760m - $780m from $840 million. This decrease is despite the inclusion of $25m -$30m spending on UK North Sea assets and therefore reflected a further $85m - $110m cut to underlying guidance, Energean said.

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