11th Jun 2018 07:40
LONDON (Alliance News) - Stocks in London are set to open higher on Monday, despite a deepening divide between the US and its G7 allies, as Rolls-Royce said further durability issues found in its engine products which will lead to higher costs for 2018.IG says futures indicate the FTSE 100 index of large-caps to open 21.33 points up 7,702.40 on Monday. The FTSE 100 index closed down 0.3% at 7,681.07 on Friday.In early corporate news, Rolls-Royce said it expects to incur costs for in 2018 from durability issues on a number of high life Package B jet engines, and telecommunications company Vodafone Group said its holding in African subsidiary Vodacom Group will be reduced to 61% from 65%.Meanwhile, Old Mutual set the price range for the global offer of up to 9.6% of shares in UK wealth-management arm Quilter, and BCA Marketplace noted that Apax Partners is considering a takeover offer for the FTSE 250-listed used car sales platform.However, politics continued to dominate market attention, following the weekend's G7 summit in Canada and Tuesday's US-North Korea meeting on Tuesday in Singapore."With trade at the top of the agenda, expectations for a smooth running G7 summit were low even before the meeting started. A twitter spat between Trump and Macron and Trump and Trudeau set the scene for the souring relations that were to follow. Trump leaving the summit early, back tracking from the painstakingly negotiated G7 communique and threatening further trade tariffs on the US's closest allies ensured a risk off start to trading as the new week began," said Jasper Lawler, head of Research at London Capital.US President Trump withdrew his endorsement of the joint communique at the end of the G7 summit - after calling Canadian Prime Minister Justin Trudeau "dishonest and weak".The summit in Canada was marked by the US president's controversial trade policy which has put him at odds with the rest of the G7 leaders.In the US on Friday, Wall Street ended higher, with the Dow Jones Industrial Average ending up 0.3%, the S&P 500 up 0.3% and Nasdaq Composite closing 0.1% higher.In Asia on Monday, the Japanese Nikkei 225 index closed up 0.5%. In China, the Shanghai Composite is down 0.8%, while the Hang Seng index in Hong Kong is up 0.2%.On the London Stock Exchange, aerospace and engineering firm Rolls-Royce said that it has identified a durability issue affecting the intermediate pressure compressor on a number of high life Package B Trent 1000 engines.This is in addition to a durability issue affecting the Intermediate Pressure Compressor in certain Trent 1000 engines dubbed Package C reported in April. Rolls Royce has agreed with Boeing and regulatory authorities to carry out an inspection of the Package B fleet, which is expected to incur added cost for 2018.However, free cash flow guidance for 2018 has been kept to around GBP450 million, plus or minus GBP100.0 million.Monday's announcement came as The Sunday Times reported that Rolls-Royce is set to cut 4,000 jobs in a bid to slash costs and increase profit.According to the newspaper, the jet engine maker is expected to announce the cutting of middle managers and back-office staff positions at an analyst briefing on Friday. Chief Executive Officer Warren East had previously argued that the company is suffering from unnecessary costs and duplication of roles.City analysts expect Rolls-Royce to axe 10% of its current staff of 50,000, although the total is expected to be lower, the newspaper reported. Vodafone said that as a result of Vodacom's black economic empowerment ownership moving from Vodacom South Africa to Vodacom Group, Vodafone's holding in its subsidiary will decrease to 60.5% from 64.5%.Dual-listed financial services firm Old Mutual has named the price range for the global offer of Quilter shares, with 165.0 million shares, reflecting a 9.6% stake in Quilter to be sold in the price range of 125 pence to 155p per share.In late May, Anglo-South African Old Mutual said it would proceed with the listing of its asset management business Quilter following shareholder approval for the managed separation. Old Mutual shareholders overwhelmingly approved the deal which would see it list Quilter - formerly Old Mutual Wealth - in London and Johannesburg. In the FTSE 250, used car sales platform BCA Marketplace noted the announcement by private equity investment group Apax Partners which confirmed it was in the early stages of considering an offer for BCA.BCA confirmed that an all-cash offer had already been made by Apax in May, to acquire the company at a price of 200 pence per BCA share. However the offer was rejected, and no further bid was made since. Sterling was quoted at USD1.3423 early Monday ahead of the PMI reading, higher than USD1.3394 at the London equities close on Friday."The key focus of the week will be the protracted debate on Tuesday and Wednesday on the Brexit bill. There is a risk that the government could lose one or more of the votes on the 15 amendments to the bill that were inserted when it was debated in the House of Lords. This could further weaken May's position. It is also a bumper week for data. We expect stronger construction output which will fuel hopes of a strong 2Q GDP bounce, raising expectations of an August rate hike," said Societe Generale analyst Brian Hilliard.The EU (Withdrawal) Bill returns to the Commons with crunch votes on the customs union, single market and Parliament's say on the final Brexit deal.The economic events calendar on Monday has Italy industrial output at 0900 BST.Also this week, there are interest-rate decisions from major central banks. The US Federal Reserve decides on Wednesday, while the European Central Bank follows on Thursday and Bank of Japan on Friday.Related Shares:
Old Mutual PLCVodafoneBCARolls-Royce