London pre-open: Stocks seen up but Covid woes to cap gains
London stocks were set to rise at the open on Monday following losses at the end of last week, but gains were expected to be muted amid concerns about rising Covid cases in Europe.
The FTSE 100 was called to open 12 points higher at 7,235
CMC Markets analyst Michael Hewson said: "European stocks may well have finished last week higher, and still within touching distance of their record highs, but the declines seen on Friday, which wiped out the gains of the previous three days suggest that markets are acutely vulnerable to sudden shifts in sentiment.
"The imposition of another lockdown in Austria, following on from the reintroduction of tighter restrictions in the Netherlands, as well as in Germany, has punctured the optimism that the vaccines could offer a clear way out of the pandemic and a resumption of normal life, as we head towards the Christmas period.
"The realisation that a number of countries could see another disrupted Christmas hasn’t gone down well in a number of European countries with civil disorder breaking out in a number of countries across the region, with Dutch police firing on demonstrators in Rotterdam, while in Austria protests broke out in Vienna over the governments mandating compulsory vaccination from 1st February next year.
"There’s also been protests in Belgium, Croatia and Italy over the modest tightening of restrictions there as a number of European countries run the risk of losing control of the virus."
In corporate news, Australia’s BHP Group and Woodside Petroleum have signed their AUD$40bn petroleum merger DEAL, which will see Woodside acquire BHP’s petroleum assets in return for a 48% in the combined company.
Woodside will pay close to $20bn for the assets, and issue scrip to BHP which will be passed on to its own shareholders. The merger ratio is 52% of the combined group for Woodside and 48% for BHP’s shareholders.
Elsewhere, Diploma reported a jump in full-year pre-tax profit amid improved demand, as it backed its outlook for FY22.
In the year ended 30 September, adjusted pre-tax profit rose 68% to £141.9m, while underlying revenue grew 12% year-on-year, "driven by organic growth initiatives and better demand".