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(Alliance News) - London stock prices are set for a lower open on Wednesday after US President Donald Trump rejected Congress's economic stimulus package, branding it "a disgrace".
In early UK company news, Sage has agreed to sell its Asia and Australia businesses for GBP95 million, British Land is to sell a 75% interest in a London West End property portfolio for GBP401 million, and Cairn Energy has been awarded USD1.2 billion in damages in a claim against the government of India.
IG says futures indicate the FTSE 100 index of large-caps to open 7.66 points, or 0.1%, lower at 6,445.50 on Wednesday. The FTSE 100 closed up 36.84 points, or 0.6%, at 6,453.16 on Tuesday.
Trump dropped the bombshell via a pre-recorded statement made in the White House and sent out on Twitter.
It came just a day after his Republicans and the Democrats finally agreed overwhelmingly to a USD900 billion bill meant to throw a lifeline to businesses and people struggling to keep heads above water. In his address, Trump said he would refuse to accept the bill as it is and demanded changes, notably a big increase in the proposed USD600 direct payments to less well-off Americans.
Trump has not yet received the bill and he did not explicitly say he would not sign. If he actually vetoed the package, Congress would almost certainly quickly override that, given the bipartisan support.
"Taking stock of the most recent developments around US stimulus, Brexit, and the super spreader Covid variant, we are still in a chaotic environment for risk in the coming days and right up until the final year-end bell," said Stephen Innes at Axi.
In the US on Tuesday, Wall Street ended on a mixed note, with the Dow Jones Industrial Average closing down 0.7% and the S&P 500 down 0.2% but the Nasdaq Composite up 0.5%.
Sterling was quoted at USD1.3429 early Wednesday, rallying from USD1.3330 at the London equities close on Tuesday as the pound's volatile week continued, having traded above USD1.36 last week but dropping over the weekend.
Europe on Wednesday began lifting travel bans on Britain put in place to contain a new fast-spreading Covid strain while WHO experts were set to meet on a response to it.
The new strain of the virus, which has also been detected in small numbers elsewhere, appears to spread more easily than other types but experts say there is no evidence it is more lethal or resistant to vaccines. The discovery unleashed panic that led to more than two dozen countries suspending UK flights, threatening travel chaos during the holiday season.
France was reopening cross-border travel with Britain on Wednesday but a negative Covid-19 test will be required. The ban on arrivals in France has led to long tailbacks of freight lorries in southern England and has disrupted passenger travel in the run-up to Christmas.
The euro traded at USD1.2190 early Wednesday, firming from USD1.2175 late Tuesday.
In early UK company news, Sage said it has agreed to sell its Asia and Australia businesses to Access Group for GBP95 million.
For the financial year to September 30, the businesses being sold recorded revenue of GBP48 million and operating profit of GBP6 million.
The consideration is payable in cash on completion. Sage is retaining its global products that are "core to its growth strategy", including Sage Intacct, Sage People and Sage X3.
The transaction, which is subject to approval by the Australian Foreign Investment Review Board, is expected to complete in the next six months.
British Land said it has agreed the sale of a 75% interest in a portfolio of three buildings in London's West End to Allianz Real Estate for GBP401 million.
The transaction represents a blended net initial yield of 4.3%, a premium to September book value and is expected to complete in January.
The FTSE 100-listed property investor and developer will form a new joint venture with Allianz, with British Land's interest at 25% and Allianz's at 75%. British Land will continue to manage all three buildings and will receive an asset management fee.
The sale brings total asset disposals to date in the current financial year to GBP1.1 billion.
"Having delivered outstanding office space and attracted high quality occupiers, we are thrilled to have secured Allianz Real Estate as our partner and crystallised significant value for shareholders. This transaction demonstrates that like us, investors remain confident in the long term prospects for high quality assets in prime London locations," said Chief Executive Simon Carter.
Cairn Energy said a tribunal established to rule on its claim against the Indian government has found in the company's favour, to the tune of USD1.2 billion.
Cairn's claim was brought under the terms of the UK-India Bilateral Investment Treaty.
The tribunal ruled unanimously that India had breached its obligations to Cairn under the treaty and has awarded Cairn damages of USD1.2 billion plus interest and costs, which now becomes payable.
The dispute between Cairn Energy and the Indian government stretches back to early 2014, when the Indian government froze Cairn Energy's 10% stake in Cairn India following the introduction of a retrospective tax legislation.
Marston's said it will take over the operation of SA Brain & Co's portfolio of 156 pubs in Wales, on a combination of leased and management contract arrangements.
Brains's business, founded in 1882, has been under "significant financial pressure" due to the pandemic, said Marston's.
"In order to address Brains' immediate funding requirements, Marston's entered into collaborative discussions with the company with a view to preserving the freehold capital value for its stakeholders, protecting Brains strong, heritage brand name and, importantly, safeguarding the jobs of the pub teams within the business," Marston's said.
The London-listed pub firm will continue to operate these pubs under the Brains' brand and will continue to offer Brains' beers.
Marston's will operate the 141 freehold pubs on a leasehold basis, with effect from February 2021, with rent chargeable from April 2021. In addition, Marston's will operate 15 short-leasehold sites on a management contract basis for a period of two years.
The transaction is expected to be earnings accretive in the first year after completion, and does not change Marston's plan to reduce borrowings to below GBP1 billion by the 2024 financial year.
In Asia on Wednesday, the Japanese Nikkei 225 index closed up 0.3%. Against the yen, the dollar was quoted at JPY103.44, down from JPY103.70.
In China, the Shanghai Composite closed up 0.8%, while the Hang Seng index in Hong Kong was up 0.7%. The S&P/ASX 200 in Sydney closed up 0.7%. Â
Gold was quoted at USD1,867.70 an ounce early Wednesday, slightly higher than USD1,862.00 on Tuesday. Brent oil was trading at USD49.48 a barrel early Wednesday, lower than USD50.22 late Tuesday.
The economic events calendar on Wednesday has US jobless claims at 1330 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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