Tesco mulling sale of south east Asia operations, Tullow Oil slashes 2020 production forecast
London open
The FTSE 100 is expected to open 19 points lower on Monday, having closed up 1.43% at 7,239.66 on Friday.
Stocks to watch
Tesco confirmed on Monday that it was considering a sale of its businesses in Thailand and Malaysia after “inbound interest”. “The evaluation of strategic options is at an early stage, no decisions concerning the future of Tesco Thailand or Malaysia have been taken, and there can be no assurance that any transaction will be concluded. A further announcement will be made if and when appropriate,” the company said in a statement.
Engineering group Senior confirmed it was considering a sale of its aerostructure unit after recent speculation. “It is Senior's policy to review its portfolio on an ongoing basis and evaluate all its operating businesses in terms of their strategic fit within the group,” the company said in a statement on Monday. “Senior can confirm that it has been reviewing all strategic options for its Aerostructures business, which includes an early stage assessment of a potential divestment of the division. There can be no certainty that this will lead to a transaction.” The aerostructure unit supplies parts for airplanes and is part of Senior’s aerospace business, which accounts for about 70% of overall revenue.
Provident Financial said it had appointed Neeraj Kapur as chief finance officer, starting on 1 April, succeeding Simon Thomas who in July said he was stepping down for health reasons. Kapur is chief financial officer of Secure Trust Bank , a UK retail and SME bank, Provident said.
Following performance issues this year, Tullow Oil has cut its 2020 production forecast to between 70,000 and 80,000 barrels of oil per day, while also warning that the following three years are now expected to average out at around 70,000 bopd. The FTSE 250-listed company said this is due to significantly reduced offtake of gas by the Ghana National Gas Company, increased water cut on some wells, lower facility uptime and mechanical issues on two new wells. Meanwhile, Tullow also announced that chief executive officer Paul McDade and exploration director Angus McCross have resigned from the board with immediate effect.
Newspaper round-up
Heavy rain heaped more pressure on UK shopkeepers in November, with high street retailers hit hardest by declining shopper numbers. The number of visitors to high streets fell by 4.3% in November compared with the same month last year, twice the rate of decline of retail parks, which fell by 1.8%, according to new figures from Springboard, a data company. – Guardian
The international energy treaty that threatens Labour’s energy nationalisation plans may also risk undermining the EU’s green new deal, according to Friends of the Earth. The environmental organisation is calling for parts of the energy charter treaty (ECT) to be scrapped to prevent fossil fuel companies from using the multilateral agreement to take governments to court over green policies. – Guardian
Greater Manchester Mayor Andy Burnham says there's “no need” to build Heathrow’s third runway, with the money better spent connecting the airport with the rest of the country. The Labour heavyweight urged whoever is in government after the general election to press ahead with the building of a High-Speed 2 rail link, which would negate the need for the controversial expansion at the country’s biggest airport. – Telegraph
Businesses remain relentlessly gloomy about Britain’s prospects, despite hopes that the election could clear up months of political uncertainty. The British Chambers of Commerce warned that corporate investment would shrink both this year and next as GDP growth slowed to its weakest rate since the 2009 financial crisis. BDO’s monthly business trends report also found that optimism was flagging. – The Times
Chinese exports have fallen for a fourth consecutive month as its acrimonious trade war with the United States takes its toll. Shipments from the world’s second largest economy slipped by 1.1 per cent in November, failing to meet economists’ expectations. The figures, released days before Washington is expected to intensify its dispute with Beijing, are likely to increase speculation that China’s government will take more steps to shore up growth. – The Times
US close
US stocks closed sharply higher on Friday following the release of a key monthly jobs report that easily topped expectations on the Street.
At the close, the Dow Jones Industrial Average was up 1.22% at 28,015.06, while the S&P 500 was 0.91% firmer at 3,145.91 and the Nasdaq Composite saw out the session 1.00% stronger at 8,656.53.
The Dow closed 337.27 points higher on Friday after financial markets shrugged off the latest concerns around US-China trade relations during the previous session, as well as ongoing impeachment proceedings against the President.
As far as Friday was concerned, market participants were largely focussed on data coming from the Department of Labor that revealed US non-farm payrolls had jumped by 266,000 in November alongside an unexpected drop in the rate of unemployment.
Economists had forecast 180,000 new jobs and that the jobless rate would be unchanged from the prior month level of 3.6%, instead it fell to 3.5%.
Average hourly earnings meanwhile increased at a year-on-year clip of 3.1%, while the length of the average workweek was flat versus October at 34.4 hours.
Markets.com analyst Neil Wilson said: "Forget Star Wars, this year's Christmas blockbuster is today's nonfarm payrolls report.
"A blowout jobs number sent equities higher along with the US dollar and Treasury yields as it shows the US economy is doing better than many corners of the market feared."