(Alliance News) - Stocks in London were set to start the new week marginally lower, with financial markets unfazed by a failed revolt by a mercenary army in Russia over the weekend.
Wagner mercenaries headed back to their base on Sunday after Russian President Vladimir Putin agreed to allow their leader to avoid treason charges and accept exile in neighbouring Belarus.
The agreement halted an extraordinary crisis – a private army led by Putin's former close ally Yevgeny Prigozhin trying to storm Moscow – but analysts said Wagner's revolt had exposed Putin's rule as more fragile than previously thought.
"The Wagner incident will likely remain broadly ignored by investors, unless there are fresh developments that could change the course of the war in Ukraine. Until then, markets will be back to business as usual. There is nothing much on today's economic calendar, but the rest of the week will be busy with a series of inflation reports from Canada, Australia, Europe, the US, and Japan," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
In early UK company news on Monday, Associated British Foods said it now expects full-year adjusted operating profit to be "moderately" ahead of last year.
Aston Martin announced it entered into a supply agreement with Lucid Group to that will provide the luxury sports car maker with access to Lucid's technology for its battery electric vehicles, including electric powertrains and battery systems. Lucid also will become a shareholder.
Here is what you need to know at the London market open on Monday:
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MARKETS
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FTSE 100: called up 8.03 points, or 0.1%, at 7,469.90
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Hang Seng: down 0.4% at 18,812.85
Nikkei 225: closed down 0.3% at 32,698.81
S&P/ASX 200: closed down 0.3% at 7,078.70
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DJIA: closed down 219.28 points, or 0.7%, at 33,727.43
S&P 500: closed 33.56 points, or 0.8%, at 4,348.33
Nasdaq Composite: closed down 138.09 points, or 1.0%, at 13,492.52
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EUR: higher at USD1.0902 (USD1.0888)
GBP: higher at USD1.2720 (USD1.2709)
USD: lower at JPY143.47 (JPY143.73)
Gold: firm at USD1,922.77 per ounce (USD1,922.24)
(Brent): higher at USD74.43 a barrel (USD73.71)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
10:00 CEST Germany Ifo business climate index
11:00 BST UK CBI distributive trade survey
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The Russian capital Moscow on Monday lifted an "anti-terrorist" security regime it had imposed over the weekend when mutinous Wagner mercenaries threatened to storm the city. The city's mayor, Sergei Sobyanin, announced the decision on his Telegram account, thanking Muscovites for their "calm and understanding" during the crisis.
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The Russian government released footage of Defence Minister Sergei Shoigu for the first time since the armed uprising against his leadership. The 47-second video without sound, which shows Shoigu in consultations with other military officers, was recorded during a visit to the combat zone in Ukraine, the ministry said on Telegram on Monday. The minister had visited one of the forward command posts there, said the statement, which could not be independently verified. No information was given as to when the footage was taken. There was no trace of Shoigu in public after mercenary leader Yevgeny Prigozhin started an uprising on Friday night and temporarily occupied the southern Russian city of Rostov-on-Don. Russia's chief of the general staff, Valery Gerasimov, also did not comment during these chaotic hours.
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Germany's lack of suitable skilled labour continues to be one of the biggest brakes on economic growth, a study by the state development bank KfW revealed. The greatest shortage is in the service sector, KfW's biannual Skilled Workers Barometer for the first half of 2023 found. Overall, more than 42% of the companies surveyed in Europe's biggest economy complained of a dearth of skilled workers. Around three quarters of legal firms and tax consultants were affected. In general, the survey showed that large companies tend to be hit harder than smaller ones. Areas of eastern Germany have been particularly affected, while the situation is less drastic in the country's south-west.
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BROKER RATING CHANGES
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HSBC cuts M&G to 'hold' - price target 210 pence
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JPMorgan cuts Lloyds Banking to 'underweight' - price target 42 (56) pence
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RBC raises Cranswick to 'outperform' - price target 4,000 pence
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COMPANIES - FTSE 100
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GSK announced that the Committee for Medicinal Products for Human Use of the European Medicines Agency has issued a positive opinion recommending authorisation of daprodustat, an oral hypoxia-inducible factor prolyl hydroxylase inhibitor, for the treatment of symptomatic anaemia associated with chronic kidney disease in adults on chronic maintenance dialysis. The positive opinion is based on data from three global phase III trials in dialysis patients from the Ascend clinical trial programme. The pharmaceutical firm also announced that the Japanese Ministry of Health, Labour & Welfare has approved an updated indication for Shingrix for the prevention of shingles in adults aged 18 years and over who are at increased risk of the condition. The approval was granted based on data from six clinical trials.
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Associated British Foods said it now expects full-year adjusted operating profit to be "moderately" ahead of last year, following a strong third quarter. In the 12 weeks ended May 27, the fast-fashion retailer and food manufacturer reported revenue growth of 16% against the prior year at constant currency. AB Foods saw double-digit percentage revenue growth across all its business segments at constant currency, apart from Agriculture which saw 4% growth year-on-year, it said.
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COMPANIES - FTSE 250
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Aston Martin said it has entered into a supply agreement with the US's Lucid Group and amended a separate agreement with Mercedes-Benz. Aston Martin said agreement with Lucid will support its electrification strategy and long-term growth. Aston Martin and Lucid have agreed to enter into integration and supply agreements that would provide Aston Martin with access to Lucid's technology for its battery electric vehicle, including electric powertrains and battery systems. As a result of the agreement, Lucid will become a 3.7% shareholder in Aston Martin and also receive USD132 million in cash from the UK car maker. Aston Martin separately agreed to continue its cooperation with Germany's Mercedes-Benz. Under the agreement, Aston Martin will issue no additional shares to Mercedes-Benz in exchange for access to further technology. This is replaced with a restated commitment to the existing collaboration, allowing the companies to discuss future access to technology for cash. Mercedes will remain a 9.4% shareholder in Aston Martin and retain its board seat.
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OTHER COMPANIES
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Polar Capital Holdings reported a drop in assets under management as at the end of March amid a "difficult" period for the company. Assets under management at March 31 totalled GBP19.2 billion, down 13% from GBP22.1 billion at the same time a year prior. Pretax profit in the financial year that ended March 31 totalled GBP45.2 million, down 27% from GBP62.1 million. Looking forward, the asset manager said the year ahead remains "uncertain" and fund sales remain "difficult to predict". Nonetheless, Polar Capital said its forecast for the year "favours the positive". "Industry fund flows may remain under pressure, at least in the near-term, however, we believe we are well positioned to grow by taking market share," the company said.
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WANdisco announced a new two-year agreement with professional services company Accenture for the use of its WANdisco Data Migrator to support the data modernization programme for a "leading Australian bank". The contract is valued at USD113,125 and WANdisco expects to recognize revenue from the contract from the second quarter of 2023.
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DeepVerge shares were suspended from trading on AIM on Monday, pending clarification of its financial position. The company had been seeking to sell one or more of its business units in order to raise sufficient funds to allow it to continue to trade. However, the environmental and life sciences company failed to do so. As a result, DeepVerge said it is unlikely that sufficient funds will be raised in time to allow its business units to continue to trade. The company said it has taken the decision to no longer support the ongoing costs of these businesses. DeepVerge said it is now seeking to realise "whatever value is possible" through the sale of one or more of its Labskin, Modern Water and Glanaco business units. It expects this process will result in the sale, closure or administration of all its subsidiaries. Microsaic Systems said DeepVerge owes it GBP1.4 million in unpaid invoices, and it will need to raise additional working capital in the third quarter if these are not paid.
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By Heather Rydings, Alliance News senior economics reporter
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