(Alliance News) - Stock prices in London are set to recover some of Friday's sharp losses early Monday as markets continue to grapple with a troubling new coronavirus variant.
In early UK company news, Hammerson confirmed talks over the possible sale of the Silverburn shopping centre in Glasgow. There is competition regulator trouble for Babcock International and Grafton Group. Amigo Holdings swung to an interim profit but warned on its outlook, with a redress scheme for customer complaints still needing approval. AG Barr raised its profit outlook.
IG says futures indicate the FTSE 100 index of large-caps to open up 96.87 points, or 1.4%, at 7,140.90 on Monday. The FTSE 100 closed down 266.34 points, or 3.6%, at 7,044.03 on Friday.
Global stock markets tanked on Friday, with Asia extending losses into the new week, after a new Covid-19 strain now known as Omicron cast doubt on global efforts to fight the pandemic, due to fears that it is highly infectious and could potentially evade vaccines.
Several countries have announced plans to restrict travel from southern Africa, where it was first detected, including key travel hub Qatar, the US, Britain, Saudi Arabia, Kuwait and the Netherlands.
But the virus strain has already slipped through the net and has now been found everywhere from the Netherlands to Hong Kong. In Australia, authorities on Sunday said they had detected it for the first time in two passengers from southern Africa who were tested after flying into Sydney.
The UK has tightened up its internal virus rules in response, with face coverings becoming mandatory on public transport and in shops and other settings, including banks, post offices and hairdressers, from Tuesday morning. Isolation rules also then will return for international arrivals until they receive a negative PCR test for Covid-19.
Despite the reintroduction of rules, UK Health Secretary Sajid Javid told families they should plan for a great Christmas "as normal" and insisted it was "nowhere near" time to reintroduce social distancing rules and work-from-home guidance.
Sparking some hope were comments from a South African doctor who raised the alarm over Omicron, who said dozens of her patients suspected of having the new variant had only shown mild symptoms and recovered fully without hospitalisation.
"This could help explain why markets in Europe look set for a rebound this morning," said Michael Hewson, chief market analyst at CMC Markets.
"We certainly can't say it wasn't overdue given how markets have behaved this year, and with governments reaching for the travel ban and restrictions playbook once again we could well see renewed pressure on the likes of the travel and leisure sector, as well as hospitality, and perhaps that also helps explain why markets reacted the way they did."
In early UK company news, Hammerson confirmed it is in talks over the possible disposal of its Silverburn joint venture for GBP140 million.
The Silverburn shopping centre in Glasgow is held in a 50-50 joint venture with the Canada Pension Plan Investment Board.
"There can be no certainty that a transaction will take place, but the company confirms the pricing under discussion is GBP140 million, which would represent a class 2 transaction. The company will provide a further update in due course, if appropriate," said Hammerson. A class 2 transaction is large enough to require shareholder approval under UK listing rules.
The UK Competition & Markets Authority said it will be referring CHC Group's acquisition of Babcock's oil & gas aviation unit to a phase two probe.
The CMA decided earlier in November that the merger may reduce competition, and so the regulator gave CHC until Thursday last week to submit proposals for how to remedy its concerns. CHC informed the CMA that no undertakings would be forthcoming, so the regulator has referred the merger for a phase two investigation.
Separately, the CMA raised concerns over Grafton's sale of its merchanting business in the UK to builders merchant Huws Gray.
For the Grafton deal, the CMA will refer it for a phase two probe unless the companies offer undertakings to address competition concerns. They have until next Monday to quell the regulator's concerns, otherwise the CMA will progress the probe.
AG Barr lifted its outlook, reporting a strong performance in the face of supply chain disruption. The Irn-Bru maker said sales have grown ahead of expectations, with its performance in both 'on-the-go' and hospitality sectors particularly strong.
As a result, the soft drinks maker now expects full-year revenue and pretax profit to be ahead of current market expectations. It expects revenue of around GBP264 million and pretax profit around GBP41 million. Revenue for 2020 was GBP227.0 million and pretax profit, before exceptional items, was GBP32.8 million.
"The fast-moving situation in relation to the Covid-19 pandemic remains a risk; however we expect our revenue momentum to continue into 2022," AG Barr added.
Amigo Holdings swung to an interim profit, but warned that the sanction of a new scheme to address historic complaints "is increasingly urgent".
The guarantor loans provider reported revenue of GBP56.5 million for the half-year to September 30, down 39% from GBP92.3 million a year ago. However, it swung to a pretax profit of GBP2.1 million from a loss of GBP62.6 million year-on-year. This was as total operating expenses reduced to GBP18.8 million from GBP116.2 million.
Amigo noted that it remains unable to restart new lending, leading to a 42% decline in customer numbers and a 54% drop in the net loan book. However, underlying collection levels have continued to be better than modelled.
Commenting on its scheme to address customer complaints, Amigo said approval remains subject to key milestones such as a second successful creditor vote and approval by the High Court at a sanction hearing.
"At this point, the board does not consider there to be enough certainty to account for claims redress on the basis that a scheme will be sanctioned," the company warned, adding it will be proposing an equity raise alongside the scheme to support the future business.
Sterling was quoted at USD1.3324 early Monday, firm on USD1.3322 at the London equities close on Friday. The euro traded at USD1.1268, lower than USD1.1315 late Friday.
In a half-day session on Friday, Wall Street dived, with the Dow Jones Industrial Average ending down 2.5%, the S&P 500 down 2.3%, and the Nasdaq Composite down 2.2%
The downbeat mood persisted in Asia on Monday, with the Nikkei 225 index in Tokyo ending down 1.6%. Japan will reinstate tough border measures, barring all new foreign arrivals over the Omicron Covid variant, Prime Minister Fumio Kishida announced Monday, just weeks after a softening of strict entry rules.
Against the yen, the dollar rose to JPY113.43 versus JPY113.24.
In China, the Shanghai Composite ended flat, while the Hang Seng index in Hong Kong was down 0.8%. The S&P/ASX 200 in Sydney closed down 0.5%.
Oil prices staged a minor recovery after getting hammered last week over worries that the new variant will spark lockdowns across the world, hitting fuel demand. Brent oil was trading at USD75.53 a barrel early Monday, higher than USD73.54 late Friday.
Safe-haven asset gold eased. Gold was quoted at USD1,796.08 an ounce early Monday, soft against USD1,799.30 on Friday.
Monday's economic calendar has eurozone consumer confidence at 1000 GMT and German inflation at 1330 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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