Burberry buys out Chinese partner, GSK teams up with Google company

London open

The FTSE 100 is expected to open 39.5 points higher on Monday, after closing 0.05% in the green on Friday at 6,724.43.

Stocks to watch

Burberry has taken full control of its retail business in China, snapping up the final 15% it did not own for £54m. The FTSE 100 fashion group first acquired retail operations in the People's Republic in 2010 and on Monday confirmed the acquisition of 15% economic interest in its China business held by Sparkle Roll Holdings Limited, a non-group company.

GlaxoSmithKline announced a new agreement on Monday, with Verily Life Sciences - formerly Google Life Sciences, an Alphabet company - to form Galvani Bioelectronics. The FTSE 100 firm said the partnership would enable the research, development and commercialisation of bioelectronic medicines, with GSK holding a 55% equity interest in the new jointly owned company and Verily holding 45%. Galvani Bioelectronics will be headquartered in the UK, with the parent companies contributing existing intellectual property rights and an investment of up to £540m over seven years, subject to successful completion of various discovery and development milestones.

Barclays said its Tier 1 capital ratio fell to 7.3% from a 2015 year-end position of 11.4% under a stress test conducted by the European Banking Authority under the European Union's Capital Requirements Directive. The 2016 EU‐wide stress test does not contain a pass fail threshold, Barclays said. The adverse stress test scenario was set by the European Central Bank and European Systemic Risk Board and covers a three‐year time horizon (2016‐2018). “The stress test has been carried out applying a static balance sheet assumption as at December 2015, and therefore does not take into account subsequent or future business strategies and management actions. It is not a forecast of Barclays' profits,” Barclays said.

Newspaper round-up

Britain’s top bank bosses believe an interest rate cut this week is not the best way to boost the economy, arguing instead for alternative options such as investment incentives. Markets are almost certain that the Bank of England will cut its base rate from 0.5pc to 0.25pc this Thursday. The move would represent a new record low, after rates have been on hold since March 2009. - Telegraph

The Bank of England will this week downgrade its growth forecasts following the vote to leave the EU and explain what action it will take in response. Governor Mark Carney said before the referendum that a Leave vote could result in a “technical recession” — two quarters in a row of the economy shrinking — and Thursday’s announcements will reveal whether or not policymakers think this is the most likely outcome. Growth forecasts are expected to be cut close to, and perhaps below, zero. - Financial Times

Royal Bank of Scotland’s weak performance in European stress tests has delayed its chances of paying dividends, analysts believe. The state-controlled bank will this week unveil a loss for the past six months, dragging it into a ninth year of losses since the financial crisis. Investors were surprised that RBS came out poorly in the European Banking Authority’s tests, which were released late Friday. - The Times

Morrisons is to provide a post-referendum boost to shoppers by cutting the price of more than 1,000 products by an average of 18%. The reductions are the latest phase of the battle between Britain’s largest supermarkets to win back customers who have turned to the discounters Aldi and Lidl. - Guardian

US close

Wall Street's main market gauges closed out July on a mixed note but nonetheless at multi-month highs despite the release of a weaker-than-expected reading on headline gross domestic product.

The Dow Jones Industrial Average finished the session 0.13% or 24.11 points lower at 18,432.24, while the S&P 500 edged higher by 0.16% or 3.54 points to 2,173.60 and the Nasdaq tacked on another 0.14% or 7.15 points to 5,162.13.

Friday's performance meant the DJI closed higher for a sixth successive month, alongside a five-month streak of higher closes for the S&P 500.

US gross domestic product grew at an annual rate of 1.2% compared to 0.8% growth in the first quarter and expectations for a 2.6% increase, according to preliminary data released by the Commerce Department. First-quarter growth was revised down from a previous estimate of 1.1%.

However, personal consumption rose at a 4.2% clip in the second quarter, while spending on services was up 3%.