Ocado and Morrisons renew deal, AstraZeneca flags drug trial failure

London open

The FTSE 100 is expected to open 2.2 points higher on Tuesday morning, having closed up 0.23% at 6,809.13 on Monday.

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Pharmaceutical giant AstraZeneca announced results from the Phase III SELECT-1 trial of the MEK 1/2 inhibitor, selumetinib on Tuesday, in combination with docetaxel chemotherapy, as second-line treatment in patients with KRAS mutation-positive locally-advanced or metastatic non-small cell lung cancer. The FTSE 100 firm said the results showed that the trial did not meet its primary endpoint of progression-free survival, and selumetinib did not have a significant effect on overall survival. AstraZeneca said the adverse event profiles for selumetinib and docetaxel were consistent with those seen previously. “A randomised Phase II trial showed promising activity of selumetinib in combination with docetaxel in patients with KRAS mutation-positive lung cancer,” said Sean Bohen, chief medical officer at AstraZeneca. “It is disappointing for patients that these results have not been confirmed in Phase III."

Morrison's and Ocado have agreed a new deal, ending their profit-sharing agreement but with the grocer taking roughly 30% capacity of the online specialist's new Customer Fulfilment Centre ("CFC") in Erith and increasing its Morrisons.com non-food range. A previous restriction on store pick has been lifted, with Ocado abandoning its core centralised philosophy and developing a technological solution that will enable Morrisons to fulfil online orders via its stores all over Britain.

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China has issued its sternest warning yet to the UK that bilateral ties stand at a “crucial historical juncture” over London’s deferral of an £18bn nuclear power project. Liu Xiaoming, China’s ambassador to the UK, drew a clear link between Beijing’s desire to see an early go-ahead for the controversial Hinkley Point power project and the future of the UK-China relationship. - Financial Times

British shoppers have shrugged off fears that Brexit would hamper consumer spending after fresh figures showed retailers enjoyed the strongest sales growth since January. The upbeat research comes despite fears by the highly-respected KPMG – Ipsos Retail Think Tank that the political uncertainty would lead to a dampening of consumer confidence which would hurt the retail sector’s fortunes. - Telegraph

EDF’s decision to press ahead with the construction of an £18 billion nuclear power station at Hinkley Point was invalid after crucial information was withheld from some board members, French unions said yesterday. Three unions representing 80 per cent of EDF employees claimed that Jean-Bernard Levy, the chairman, knew the British government would delay its decision on Hinkley before the French utility’s board gave final approval to the investment. - The Times

The UK could strike a trade deal with the European Union within two years but will struggle to win concessions on free movement of labour, according to one of Britain’s most experienced trade negotiators. Roderick Abbott, a former EU ambassador to the World Trade Organisation, thinks the UK might conclude a trade deal with Brussels in 24 months – a faster timetable than estimated by some European leaders, who have warned of talks stretching on for five years or more. - Guardian

The cost to the taxpayer of the bungled contract to clean up some of Britain’s oldest nuclear power plants may grow further as a new batch of companies considers suing the government body ruled to have mishandled the tender, including possibly the consortia that included Serco, Amec, Atkins and Rolls-Royce. A High Court judge ruled on July 29 that the Nuclear Decommissioning Authority (NDA) handed the £7 billion contract to decommission 12 nuclear sites to the wrong company, leaving it exposed to a claim for damages estimated at £200 million. - The Times

US close

US stocks ended a touch lower on Monday as investors weighed last week’s stronger-than-expected jobs report and disappointing Chinese trade data, with weakness in the healthcare sector offset by strength in energy shares.

The Dow Jones Industrial Average and the S&P 500 ended down 0.1%, while the Nasdaq slipped 0.2%.

Oil prices settled higher. West Texas Intermediate was up 2.6% to $42.89 a barrel and Brent crude was 2.1% higher at $45.21.

Traders continued to cheer Friday’s strong non-farm payrolls report, which showed the US economy added 255,000 jobs last months versus expectations of a 180,000 gain, boosting expectations of a rate hike by the Federal Reserve this year.

CMC Markets’ Michael Hewson said: “Certainly the odds have gone up that we could get a move, which suggests that this month’s Jackson Hole Symposium on 26 August is likely to be a key bellwether for the Fed’s appetite for a move higher, or whether the lack of inflation could stay there hand.”

However, the non-farm payrolls figures were offset by lacklustre Chinese trade figures on Monday. Chinese exports fell 4.4% in July, more than the 3.5% dip that was estimated. Imports declined 12.5%, exceeding the forecast for a 7% decrease.