LONDON MARKET PRE-OPEN: UK competition regulator eyes Astra-Alexion

(Alliance News) - Stocks in London are set to extend gains at the open on Tuesday, bolstered by a ...

Alliance News 25 May, 2021 | 7:49AM
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(Alliance News) - Stocks in London are set to extend gains at the open on Tuesday, bolstered by a strong performance in New York overnight.

In early UK company news, the UK competition regulator is mulling over AstraZeneca's acquisition of Alexion Pharmaceuticals. Engineering firm Smiths Group named a new chief executive. London West End landlord Shaftesbury reported a widened interim loss but was encouraged by the recent easing of virus restrictions.

IG says futures indicate the FTSE 100 index of large-caps to open up 22.81 points, or 0.3%, at 7,074.40 on Tuesday. The FTSE 100 closed 33.54 points, or 0.5%, higher at 7,051.59 on Monday.

The positive open in London follows gains on Wall Street. The Dow Jones Industrial Average closed up 0.5% on Monday, the S&P 500 up 1.0% and the Nasdaq Composite up 1.4%.

"Equities were mostly higher in a very uneventful Monday session, and after finishing mostly lower last week. Growth was back in style, extending last week's outperformance. Small caps beat large caps and cyclicals outperformed defensives," commented Danske Bank, noting that China was leading gains in Asia overnight.

In Asia on Tuesday, the Japanese Nikkei 225 index ended up 0.7%. In China, the Shanghai Composite was up 2.4%, while the Hang Seng index in Hong Kong was up 1.6%. The S&P/ASX 200 in Sydney closed up 1.0%.

In early company news, the UK Competition & Markets Authority said it is considering whether AstraZeneca's takeover of Alexion Pharmaceuticals will reduce competition.

The regulator is inviting comments on the transaction to aid with its assessment. The deadline for its phase one decision is July 21.

Earlier this month, both Alexion and AstraZeneca's shareholders voted in favour of the deal.

Cambridge-based pharmaceutical and biotechnology company AstraZeneca agreed to a deal for Alexion in December for USD39 billion to boost its work on immunology. The takeover has already been given the go-ahead by the US Federal Trade Commission in mid-April after competition clearances in Canada, Brazil and Russia, but Astra is still waiting on approval in the UK, EU and Japan.

Software firm Aveva reported a dip in annual revenue as it saw an improved second half following pandemic disruption, while recently acquired OSIsoft performed well.

Revenue on a proforma basis slipped 1.4% to GBP1.20 billion for the financial year that ended March 31, but pretax profit shot up to GBP50.6 million from GBP19.0 million. On a statutory basis, which only includes 13 days trading from OSIsoft, revenue fell 1.6% to GBP820.4 million from GBP933.8 million, and pretax profit tumbled to GBP34.2 million from GBP92.0 million.

Aveva completed its USD5.0 billion acquisition of real-time industrial data software firm OSIsoft on March 19. OSIsoft performed well in the full year ended March 31, Aveva said, achieving 6.6% growth on a constant currency basis.

"During the first half of the year, revenue for the standalone Aveva Group was impacted by the disruptions of the Covid-19 pandemic, although performance improved significantly during the second half, resulting in broadly flat year-on-year revenue on an organic constant currency basis," the company commented.

Looking ahead, Aveva said trading conditions have largely normalised in its major markets following disruption at the start of the pandemic.

The firm proposed a 23.5 pence final dividend, up 1% on a year before after adjusting to reflect the bonus element of its recent rights issue.

Smiths Group said it has hired Paul Keel as its new chief executive, replacing Andy Reynolds Smith who will step down from his role and the board with immediate effect.

Keel has previously worked at 3M, within the US and UK, where in his time he led businesses including the Consumer Business Group.

Smiths added that it remains committed to the separation of its Smiths Medical division, saying it is "actively engaging with all options to maximise value for all stakeholders and to provide the company with an enhanced platform for future growth."

Shaftesbury reported a widened interim loss as lockdowns crippled activity in London's West End, but the firm's outlook was upbeat following the easing of restrictions.

Net property income fell 43% to GBP26.5 million in the six months to March 31 due to occupier support, reduced rent collections, and increased vacancy in the period, with rental income down 19% on a like-for-like basis. Shaftesbury's pretax loss widened to GBP338.5 million from GBP287.6 million.

Shaftesbury is a real estate investment trust focused on London's West End shopping and theatre district.

EPRA net tangible assets per share was GBP5.83 at the period-end, down from GBP7.43 at the end of September and GBP8.78 at the end of March a year ago.

However, Shaftesbury said that, following 15 months of disruption, the phased lifting of virus restrictions is already resulting in a return of confidence and activity. Footfall and spending are recovering, it said, while hospitality and retail businesses have reopened.

"Since the start of re-opening on 12 April, we are seeing an encouraging increase in demand for space and lettings and a return of footfall and spending across our locations. Forecasts point to a sharp rebound in the UK economy but there remains the risk that the recovery could encounter delays and setbacks in the period ahead," said Chief Executive Brian Bickell.

Shaftesbury declared an interim dividend of 2.4p, versus nothing a year ago.

"While macro uncertainty persists, and our operating cash inflows are reduced, we will continue to prioritise the preservation of liquidity. However, our intention is to resume dividend payments as soon as we consider prudent, in line with our policy of sustainable dividend growth over the long term," the firm said.

Hill & Smith said it has made a "good start to the year" with revenue for the four months to the end of April up 10% on last year and ahead of 2019 levels.

"We are also pleased to report a strong recovery in operating profit in comparison to the same period last year which was impacted by Covid-19 related disruption from the middle of March 2020," the infrastructure construction company said.

It expects to see a recovery in trading in 2021, and full-year expectations remain unchanged.

In foreign exchange, the dollar edged down to JPY108.72 early Tuesday from JPY108.75 in London late Monday. The US warned its citizens Monday not to travel to Olympic host Japan, citing the growing risk of the Covid-19 pandemic in the Asian nation just two months before the Games begin.

The warning came in a travel advisory issued by the State Department as Japan, which has been criticized for its slow inoculation rate, opened its first mass vaccination centres in a push ahead of the Olympics, which were postponed last year due to the pandemic. Just 2% of Japan's population of 125 million has been fully vaccinated so far.

Japan has seen a relatively small coronavirus outbreak, with around 12,000 deaths overall, but a recent surge in infections has put hospitals under strain. Tokyo, Osaka and eight other regions are under a state of emergency curbing commercial activity until the end of May, with reports saying the measures could be extended for another three weeks.

Meanwhile, the UK government is under growing pressure to provide clarity on travel restrictions in eight areas of England worst affected by the Indian variant of coronavirus.

Guidance on the government's website says the public should avoid travelling in and out of areas where the variant is growing fastest, including Bolton, Blackburn and Darwen, Kirklees and Leicester, "unless it is essential".

The change to the guidance appears to have been made on Friday without an official announcement, prompting criticism from members of Parliament.

Sterling was quoted at USD1.4187 early Tuesday, higher than USD1.4157 at the London equities close on Monday.

The euro traded at USD1.2231, firm on USD1.2222 late Monday.

Gold was quoted at USD1,877.76 an ounce early Tuesday, lower than USD1,884.66 late Monday. Brent oil was trading at USD68.67 a barrel, up from USD68.00.

At 0800 BST, Kantar releases its latest UK grocery market share figures for the 12 weeks that ended May 16.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Hill & Smith Holdings PLC 1,600.00 GBX 2.30 -
AVEVA Group PLC 3,998.00 GBX 1.39 -
AstraZeneca PLC 8,480.00 GBX 0.25
Smiths Group PLC 1,591.00 GBX 1.53
Shaftesbury PLC 585.50 GBX 0.34 -
Alexion Pharmaceuticals Inc

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