(Alliance News) - Stock prices in London were seen opening lower on Monday, with inflationary fears souring the mood ahead of UK Prime Minister Boris Johnson laying out a roadmap to exit lockdown in England.
IG futures indicate the FTSE 100 index in London was to open 60.3 points lower at 6,563.72. The blue-chip index closed up 6.87 points, or 0.1%, at 6,624.02 on Friday.
In early corporate news, International Consolidated Airlines Group said British Airways has secured two finance-support pacts worth GBP2.45 billion in total.
AstraZeneca announced the voluntary withdrawal of its Imfinzi drug in the US for bladder cancer treatment following a recent clinical trial blow.
Among London mid-caps, Mitchells & Butlers noted a sharp fall in sales in recent months as it launched an open offer to bolster the pub operator's finances. G4S suitor GardaWorld declared as final its increased takeover offer for the security services firm, which has already agreed a GBP3.8 billion buyout from Allied Universal.
Commenting on the European market open, AvaTrade analyst Naeem Aslam commented: "There are some concerns among investors that inflation could be getting out of control. Traders believe that if the sharp rise in inflation is not addressed, higher prices may actually hurt the economic recovery. The rise in inflation is primarily due to the two main factors: loose monetary policy adopted by central banks around the world such as the Fed, the BOE, the ECB, the BOJ, and the PBOC."
The Chinese central bank has now kept its benchmark interest rate at the same level for the tenth month in a row.
The one-year loan prime rate was held at 3.85% on Monday. The last time the rate was changed was back in April. The five-year rate also was unchanged at 4.65%.
Aslam added: "So far, central banks such as the Fed, the ECB, and the BOE haven't paid much attention to this issue as they feel that inflation is still within their level of tolerance, and they can smack the inflation numbers down whenever they want. The other factor which is pushing inflation up is the sharp increase in oil prices. There is no doubt oil prices had seen a remarkable recovery, and both Crude and Brent oil prices are becoming closer to levels which we saw before the pandemic surged."
Equities in China were lower on Monday. The Shanghai Composite ended down 1.5% and Hong Kong's Hang Seng was 1.1% lower in late trade.
Elsewhere in Asia, the Nikkei 225 in Tokyo closed up 0.5%, but the S&P/ASX 200 in Sydney ended down 0.2%.
Brent oil was quoted at USD63.52 a barrel, up slightly from USD63.47 at the London equities close Friday. Safe-haven gold was quoted at USD1,791.84 an ounce, up from USD1,786.45.
Pharmaceutical firm AstraZeneca withdrew its Imfinzi drug in the US, a decision made following a consultation with the Food & Drug Administration.
Back in May 2017, the drug secured accelerated approval based on promising tumour response rates from a Phase I/II trial.
"Continued approval was contingent on results from the DANUBE Phase III trial in the 1st-line metastatic bladder cancer setting, which did not meet its primary endpoints in 2020. The withdrawal is aligned with FDA guidance for evaluating indications with accelerated approvals that did not meet post-marketing requirements, as part of a broader industry-wide evaluation. This withdrawal does not impact the indication outside the US and does not impact other approved Imfinzi indications within or outside the US," Astra added.
Security company GardaWorld "stands firm" and its 235 pence per share offer for G4S is final. GardaWorld said early Monday the offer will not be revised.
"There can be no better owner for G4S than GardaWorld, but we are disciplined buyers and we will not overpay for a company with systemic ESG issues that continue to come to light," GardaWorld Chief Executive Stephan Cretier said.
The 235p offer values G4S at GBP3.68 billion.
Earlier in February, London's Takeover Panel stepped in to put in place an auction procedure to resolve an ongoing takeover saga.
Last month, G4S agreed to be taken over by Allied Universal in a GBP3.8 billion deal, but the cash offer has been extended and remains open for acceptances until March 6.
Mitchells & Butlers launched a GBP351 million open offer of shares to bolster its balance sheet as its "liquidity position has deteriorated significantly as a result of the impact of the Covid-19 pandemic".
The All Bar One owner said the extra cash will go towards reducing its unsecured debt. It also will support its secured debt financing.
As of mid-January, M&B had GBP113 million in cash balance with all its financing facilities drawn.
Its monthly cash burn during estate closures has been between GBP30 million and GBP35 million, and the company has GBP51 million in securitised debt servicing costs per quarter. The next quarterly payment is March 15.
CEO Phil Urban said: "M&B was a high performing business coming into the pandemic and with the support of our main stakeholders, including the equity injection from this Open Offer, we have every confidence that we can emerge in a strong competitive position once current restrictions are lifted.
"The hospitality industry has done everything that has been asked of it to date and, now that the vaccines are being rolled out and infections are dropping, we are hopeful that pubs and restaurants will soon be allowed to reopen safely."
Since the end of December, none of M&B's sites have been open. In the period between, September 27 and January 16, total managed sales were 70% lower annually.
Also getting new finance was IAG's British Airways. BA has secured a GBP2.0 billion UK Export Development Guarantee of GBP2.0 billion. The term-loan is for five years. British Airways also agreed a deferral of GBP450 million in pension deficit contributions to September.
Pubs, airlines and the wider travel & leisure industry will be in focus Monday as UK PM Johnson outlines how the Covid-19 curbs will be eased, paving the way for the first easing of restrictions since England's third national lockdown was announced on January 4.
All pupils in all years can go back to the classroom from March 8, with outdoor after-school sports and activities allowed to restart as well, Johnson is expected to say.
Socialising in parks and public spaces with one other person also will be permitted in a fortnight when the rules are relaxed to allow people to sit down for a drink or picnic.
However, Number 10 insisted that the "stay at home" message would remain in place despite the relaxation of some restrictions.
Sterling slipped below the USD1.40 mark as the dollar was higher across the board early Monday. The pound was quoted at USD1.3983, down slightly from USD1.4020 at the London equities close Friday.
The euro also lost ground on the dollar over the weekend. The single currency stood at USD1.2107 early Monday, down from USD1.2139 at the European equities close Friday. Against the yen, the dollar was trading at JPY105.75, improved from JPY105.53.
By Eric Cunha; ericcunha@alliancenews.com;
Copyright 2021 Alliance News Limited. All Rights Reserved.
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