25th Apr 2022 07:50
(Alliance News) - Stock prices in Europe are seen opening lower on Monday, with a grim Covid-19 situation in China adding to a mountain of worries for equities investors, which included hawkish comments made by Federal Reserve Chair Jerome Powell late last week.
The blue-chip CAC 40 index in Paris was among the European benchmarks called lower, despite a decisive French presidential election victory by Emmanuel Macron. The euro also was having no joy.
IG futures indicate the FTSE 100 index will open 121.5 points, 1.3%, lower at 7,400.18 on Monday. The index closed down 106.27 points, or 1.4%, at 7,521.68 on Friday. It lost 0.8% overall last week.
In early UK corporate news, AstraZeneca said a liver cancer treatment has been accepted for priority review in the US. Property investor British Land has sold a large part of its stake in the Paddington Central development for GBP694 million. Miner Anglo American received a blow after a regulator in Chile deciding against recommending an extension at a mine.
Anglo American has been in engaged in an environmental assessment process at the Los Bronces integrated copper project in Chile since 2019.
The miner was eyeing a mine life extension at the asset by expanding the Los Bronces open pit to include "higher grade ore from a new underground section of the mine".
However, the Environmental Assessment Service of Chile, or SEA, rejected a permitting application for the Los Bronces extension.
"The SEA has confirmed that LBIP satisfies all relevant environmental regulation, but bases its adverse recommendation on an alleged lack of information during the evaluation process to fully remove any doubts about a potential risk to public health. The SEA's recommendation is despite the strong support for the project offered to date by 23 of the 25 technical services bodies and government ministries that form part of the assessment process," Anglo American said.
A firm decision on the extension will come next week, Anglo American added.
The miner said: "In the event of a negative decision from the SEA, the permitting process allows for further review to evaluate the full range of merits of the project alongside the technical permitting considerations. Anglo American is committed to following the established process and is working with the Chilean authorities to demonstrate that all potential impacts have been fully mitigated and to secure approval for the project."
British Land said it has sold a 75% interest in the majority of its Paddington Central mixed-use development in central London for GBP694 million to GIC, a Singaporean sovereign wealth fund.
The sale price is 1% below the September 2021 book value and represents a net initial yield of 4.5%.
The sale will hit earnings per share by 1.6 pence on a yearly basis, prior to any reinvestment of proceeds, the company said. Net tangible assets per share will fall "marginally", and the transaction will reduce leverage by 500 basis points, British Land said.
"This transaction delivers against one of our key strategic priorities of proactively recycling capital out of mature assets where we have created considerable value. Proceeds from the transaction will be invested into value accretive development opportunities we own across our portfolio as well as growth areas including development-led urban logistics in London and innovation campuses," the company said.
The sale establishes a joint-venture, with British Land owning a 25% interest.
Paddington Central was acquired in 2013 for GBP470 million. At the time, it consisted of three buildings, a retail and leisure area and two development sites.
Now, it also includes five office buildings, two residential buildings and a hotel.
AstraZeneca said its biologics license application for the tremelimumab drug has been backed for priority review in the US.
The drugmaker is eyeing approval for the drug to be used in tandem with Imfinzi to treat sufferers of unresectable hepatocellular carcinoma, a common type of liver cancer.
The US Food & Drug Administration has a set a date in the fourth quarter of 2022 to issue a regulatory decision on the drug combo.
Elsewhere in London, podcast producer Audioboom reported maiden annual profit, helped by revenue doubling.
In 2021, revenue jumped to USD60.3 million from USD26.8 million in 2020. Audioboom swung to a pretax profit of USD1.7 million from a USD3.3 million loss.
In addition, it said revenue for the first quarter of 2022 was a record USD19.7 million, more than doubled from USD9.5 million a year earlier.
Back in February, Sky News had reported both Amazon and Spotify were mulling takeover bods for Audioboom.
Audioboom Chief Executive Stuart Last said on Monday: "Our ambition is to build the world's leading podcasting business, and I am delighted with the start we have made in 2022 and look forward to the future with confidence."
The AIM listing has a market capitalisation of just under GBP338 million.
The CAC 40 stock index in Paris was called down 1.3% on Monday. The euro stood at USD1.0736 early Monday, down from USD1.0778 at the time of the European equities close on Friday. Neither were seeing any benefit from a decisive French presidential election win for Emmanuel Macron.
Macron has comfortably won re-election to a second term as French president.
The result triggered waves of relief among allies that the nuclear-armed nation will not abruptly shift course in the midst of the war in Ukraine from EU and NATO efforts to punish and contain Russia's expansionist military attacks.
The second five-year term for the 44-year-old centrist spared France and Europe from the upheaval of having populist Marine Le Pen at the helm. The presidential run-off challenger quickly conceded defeat, but achieved her best-ever electoral showing.
Macron won with 59% of the vote to Le Pen's 42% — significantly closer than when they first faced off in 2017.
The pound weakened to USD1.2767 early Monday in London, from USD1.2848 at the time of the London equities close on Friday. Against the yen, the dollar slipped to JPY128.46 from JPY128.87.
Sterling traded around its worst level since September 2020.
In Asia on Monday, the Japanese Nikkei 225 index closed down 1.9%. In China, the Shanghai Composite plunged 3.8%. Meanwhile, the Hang Seng index in Hong Kong was 3.3% lower. Financial markets in Sydney were closed on Monday to mark Anzac Day.
"Asia was always going to start the week on the back foot after a grim Friday session for US equities. Stock markets took fright at hawkish comments from Jerome Powell and fears of higher rates saw equities routed, even though US yields did not really move that much," Oanda analyst Jeffrey Halley commented.
"Today, China fears are adding to the downside momentum for Asian markets. China has tightened parts of the Shanghai lockdown, including erecting fences around apartment buildings with Covid-19 infected individuals."
Fears of a hard Covid-19 lockdown sparked panic buying in Beijing on Monday, as long queues for compulsory mass testing formed in a large central district of the Chinese capital.
China is already trying to contain a wave of infections in its largest city, Shanghai, which has been almost entirely locked down for weeks and reported 51 new Covid-19 deaths on Monday.
Shanghai has struggled to provide fresh food to those confined at home, while patients have reported trouble accessing non-Covid medical care – and the rising cases in the capital triggered fears of a similar lockdown.
China's Covid-19 worries hit oil prices. A barrel of Brent oil was quoted at USD102.30 early Monday, down from USD106.44 late Friday. Gold fell to US1,914.92 an ounce from USD1,929.57.
The economic events calendar on Monday has eurozone construction output at 1000 BST.
By Eric Cunha; [email protected]
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