London pre-open: Stocks to rise on positive Asian cues; Brexit in focus
London stocks were set to edge up at the open on Monday, taking their cue from an upbeat session in Asia, but investors were likely to remain cautious amid concerns about Brexit, rising interest rates and Italy.
The FTSE 100 was called to open four points higher at 7,053.
CMC Markets analyst Michael Hewson said it’s likely to be another week of ups and downs for the pound with respect to any Brexit talks, after last week’s failure to reach an agreement on the Irish border. He pointed to rising rumblings over the leadership of Prime Minister Theresa May, with some suggestions that she might be on the verge of facing a leadership challenge from disgruntled MPs unhappy at her negotiating strategy with the EU.
"On Wednesday there is a meeting of the Conservative party’s 1922 committee where this unhappiness could be given further oxygen with reports that as many as 46 Tory MPs have written letters demanding the Prime Minister be replaced. That is two short of the 48 needed, however the question of who might replace her remains an open one as any new candidate will need the support of over 159 MPs to win any final ballot."
Investors will also be keeping an eye on Italy after Moody’s downgraded the country’s credit rating on Friday to Baa3, one notch above "junk". The Italian government is due to give its response later on Monday to the EU’s rejection of its budget plan to lift the deficit to 2.4% of domestic output next year from 1.8% in 2018.
In UK corporate news, defence company QinetiQ said it had agreed buy 85% of Inzpire Group, with an agreement to acquire the rest after two years, for a total of £23.5m.
Inzpire, which provides operational training and mission systems for military customers in the UK and internationally, is expected to deliver £13.3m revenue and £2m of adjusted EBITDA in the financial year to 31 August 2018.
After perking up in the second half of the year, NMC Health provided an improved set of revenue and earning guidance for this year and next.
The Gulf region hospital operator said it now expects revenue to grow 24% this year and earnings before interest, tax, depreciation and amortisation to swell 36% to $480m.
AstraZeneca, alongside its partner Merck & Co, announced detailed results from the Phase III SOLO-1 trial testing ‘Lynparza’ (olaparib) tablets as a maintenance treatment for patients with newly-diagnosed, advanced BRCA-mutated ovarian cancer who were in complete or partial response following first-line standard platinum-based chemotherapy.
The company said the results of the trial confirmed the “statistically-significant and clinically-meaningful” improvement in progression-free survival for Lynparza compared to placebo, reducing the risk of disease progression or death by 70%.