LONDON MARKET PRE-OPEN: Lower Start Seen; Informa Posts Interim Loss

(Alliance News) - Stocks in London are set to open lower on Monday as worries over a second wave ...

Alliance News 21 September, 2020 | 7:50AM
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(Alliance News) - Stocks in London are set to open lower on Monday as worries over a second wave of Covid-19 infections grip markets.

Meanwhile, HSBC shares were down 3.7% in Hong Kong after two negative press reports. In other UK company news, Informa revealed a chunky half-year loss, while AstraZeneca reported positive developments for its Tagrisso and Lynparza treatments.

IG says futures indicate the FTSE 100 index of large-caps to open 61.25 points lower at 5,945.80 in London on Monday. The blue-chip index closed down 42.87 points, or 0.7%, at 6,007.05 on Friday.

"As we look to a new week, with investors absorbing the recent statements from central banks, and the prospect that further stimulus may not come immediately, concerns are rising that the summer recovery is probably as good as it gets when it comes to the recent rebound in economic activity," said Michael Hewson, chief market analyst at CMC Markets.

Hewson said: "This reality combined with the growing realisation that a vaccine remains many months away, despite President Trump's claims to the contrary, has made investors increasingly nervous, as we head into an autumn that could see lockdowns reimposed."

The UK government has refused to rule out a second lockdown as the country grapples with a resurgence in infections.

In a televised briefing on Monday, Chris Whitty, the chief medical officer for England, will say the country faces a "very challenging winter", with the current trend heading in "the wrong direction".

UK Prime Minister Boris Johnson spent the weekend with senior ministers and advisers discussing what action to take as the rise in the number of new cases showed no sign of slowing. It is thought Johnson could announce new measures in a press conference as early as Tuesday.

Ministers were reported to be split on how far any new restrictions should go, with UK Chancellor Rishi Sunak said to be resisting controls which could further damage the economy. During a series of broadcast interviews over the weekend, however, Health Secretary Matt Hancock refused to rule out a second national lockdown in England, if people fail to follow the social distancing rules.

Among the measures being considered by ministers is a temporary two-week "circuit break", with tighter restrictions across England in an attempt to break the chain of transmission.

Sterling was quoted at USD1.2945 early Monday, flat on USD1.2949 at the London equities close on Friday.

The euro traded at USD1.1858 early Monday, marginally lower than USD1.1863 late Friday. Against the yen, the dollar edged down to JPY104.35 versus JPY104.41.

In early UK company news, Informa swung to an interim loss but said it is seeing a recovery in its events business in China.

The business information publisher and events organiser reported revenue of GBP814.4 million for the first half of 2020, down 42% from GBP1.41 billion a year ago. Informa posted a pretax loss of GBP801.2 million, swinging from a profit of GBP232.8 million.

Chief Executive Stephen Carter said: "Despite the first-half disruption to physical Events businesses caused by the pandemic, we are seeing strong demand and resilience in our specialist Subscriptions, Data and Content, reflecting the power of our brands and depth of geographic reach and customer relationships. Encouragingly, we have also seen our physical Events business recover in mainland China."

Full-year revenue is now expected to be around GBP1.7 billion, which would be down 41% from GBP2.89 billion in 2019.

The FTSE 100 constituent said it has moved to the "next stage" of its Covid-19 action plan, which includes the delivery of over GBP600 million in cost savings to adjusted operating profit in 2020, with direct savings of around GBP400 million and more than GBP200 million annualised indirect savings by year-end.

Carter said: "The combination of our resilient Subscriptions-led businesses and the actions we are taking position Informa securely through to the end of 2021. We remain confident that Informa will emerge from the pandemic with Stability and Security, delivering long-term sustainable growth and shareholder value."

AstraZeneca reported positive updates for its Tagrisso and Lynparza treatments.

On Tagrisso, results from a prespecified exploratory analysis of the Adaura phase three trial showed AstraZeneca's drug demonstrated a clinically meaningful improvement in central nervous system disease-free survival in treating lung cancer.

Central nervous system recurrence, when cancer spreads to the brain, is a frequent complication of epidermal growth factor receptor-mutated non-small cell lung cancer. Tagrisso reduced the risk of disease recurrence in the brain by 82%, AstraZeneca said.

Meanwhile, the company said Lynparza has been recommended for marketing authorisation in the EU for the 1st-line maintenance treatment with bevacizumab of patients with homologous recombination deficient-positive advanced ovarian cancer. The same drug also has been recommended for EU authorisation for patients with metastatic castration-resistant prostate cancer.

DCC said it has expanded its liquefied petroleum gas business in the US and the Netherlands.

For the US, DCC has bought NES Group, which markets, sells and delivers propane and other related products and services to customers in Connecticut, Rhode Island and Massachusetts. DCC LPG now has operations across 14 states in the US and is well positioned to continue to grow, the FTSE 100 firm said.

In the Netherlands, DCC LPG has agreed to buy Primagaz from SHV Energy, subject to competition authority approval. The business is "highly complementary" to DCC LPG's existing business in the Benelux region.

No financial details from either deal were given.

Superdry reported a fall in revenue and a deeper annual loss as Covid-19 hit its performance.

Revenue for the financial year that ended April 25 fell 19% to GBP704.4 million, with the firm's pretax loss deepening to GBP166.9 million from GBP89.3 million.

The sales fall reflected a planned move away from "persistent discounting", and also the hit from Covid-19 in the fourth quarter, with its entire store estate closed from March 22 to the financial year-end.

Current trading continues to be disrupted, the firm noted, but has improved from the end of the financial year. Superdry said 95% of its store estate and 98% of franchises now have re-opened since lockdown.

"While our underlying profit has been impacted by trading performance during the year, including Covid-19 related store closures, I am particularly pleased by how strongly e-commerce has performed, with FY21 first quarter revenues nearly doubling year-on-year. This has been complemented by our increased digital consumer engagement, which helped drive a stronger womenswear mix than we have ever seen before," said Julian Dunkerton, founder & chief executive.

In the US on Friday, Wall Street ended in the red, with the Dow Jones Industrial Average ending down 0.9%, the S&P 500 down 1.1% and Nasdaq Composite also shedding 1.1%.

In China, the Shanghai Composite is down 0.6%, while the Hang Seng index in Hong Kong is down 1.7%.

TikTok Global plans to hold a public listing, its Chinese parent company ByteDance said Monday, after announcing a deal over the weekend that would avert a shutdown of the popular app in the US.

The agreement, which has been approved by Donald Trump, sees Silicon Valley giant Oracle become the data partner for the video-sharing platform while Walmart becomes a commercial partner, creating a new US company called TikTok Global.

On Monday, ByteDance said in a statement on social media that TikTok Global plans to launch a "small round of pre-IPO financing", after which it would become an 80%-owned subsidiary of ByteDance. The company added that the board of directors of TikTok Global includes ByteDance founder Zhang Yiming, along with its current directors and the CEO of Walmart.

Oanda's Jeffery Halley commented: "Looking at the details of the Byte Dance deal, frankly, it looks terrible for the US, with Byte Dance retaining 80% of the international entity. It will raise questions as to why the US government bothered in the first place, with the answer likely being to score a win before the US election."

Shares in HSBC Holdings were down 3.6% to a 25-year low on Monday in Hong Kong on fears it could be added to a Chinese list of firms deemed a threat to national security and following news it had been accused of allowing fraudulent activity to go unpunished, AFP reported.

HSBC shares dropped to HKD29.60 at one point on Monday in Hong Kong – a level not seen since mid-1995 – as investors fret over its ability to continue doing business in China and Hong Kong, which make up a crucial portion of its growth.

The sell-off came after the Global Times, a state-run English tabloid in China, reported the bank could be one of the first firms to be named on Beijing's "unreliable entity list" as part of a tit-for-tat stand-off with several western countries.

The report pointed to HSBC's participation in Washington's investigation of Huawei and the arrest of its chief financial officer Meng Wanzhou in Canada.

Meanwhile, according to an international journalism investigation published Sunday, massive sums of allegedly dirty money have flowed for years through some of the world's largest banking institutions, including HSBC and Standard Chartered.

Standard Chartered was down 3.1% in Hong Kong.

Financial markets in Japan are closed Monday and Tuesday as the country celebrates Respect for the Aged Day.

Gold was quoted at USD1,950.40 an ounce early Monday, down against USD1,953.70 on Friday. Brent oil was trading at USD42.76 a barrel early Monday, lower than USD43.34 late Friday.

By Lucy Heming;

Copyright 2020 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Standard Chartered PLC 399.40 GBX 4.20
HSBC Holdings PLC 321.40 GBX 4.71
DCC PLC 5,028.00 GBX 0.44 -
AstraZeneca PLC 7,943.00 GBX -0.15
Informa PLC 449.00 GBX 2.91 -

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