Cobham issues profit warning, GSK submits shingles vaccine for approval

London open

The FTSE 100 is expected to open 33 points higher on Monday, after closing down 0.09% at 7,020.47 on Friday.

Stocks to watch

Softer conditions in the wireless and satellite communications markets has led to Cobham issuing a profit warning after trading in the third quarter was worse than it expected. Although management expects an improvement in the fourth quarter, its expectations for the full year and hence also its profit guidance is now lower than initial estimates.

Pharmaceutical behemoth GlaxoSmithKline announced it has submitted a shingles vaccine for US regulatory approval. Shingrix, a non-live recombinant vaccine which prevents herpes zoster, or shingles, in people aged 50 years or over, was submitted to the US Food and Drug Administration for approval for it to be given intramuscularly in two doses, with a two to six month interval.

Randgold Resources updated the market on exploration and operations at the Tongon gold mine in Côte d'Ivoire on Monday, with the company saying it was building a solid portfolio of targets and was still adding new exploration permits. The FTSE 100 firm said Tongon's performance was continuing to improve across the board and management was still targeting the revised annual guidance for the year, after a difficult first half which had been impacted by a long mill breakdown. It added that its Boundiali permit hosted some “very exciting” prospects, while it was also busy with near-mine exploration designed to extend Tongon's life by developing satellite deposits and converting the resource potential below the existing pits.

Newspaper round-up

Barclays is locked in negotiations with its African subsidiary about the details of their divorce, which analysts estimate could cost the British bank as much as £1bn. Having announced in March that it planned to sell down its controlling stake in its Johannesburg-listed African operation, Barclays now must agree the terms on which the two will split. - Financial Times

The European Union has given Belgium’s federal government until late on Monday to secure backing for an EU-Canada trade deal from the region of Wallonia or a planned summit to sign the pact will be cancelled. European Council president Donald Tusk, who chairs the collective body of the EU’s 28 national leaders, will speak to Belgian prime minister Charles Michel by late on Monday, an EU source told Reuters, so that Canadian prime minister Justin Trudeau can decide whether to fly to Brussels for the signing on Thursday. - Guardian

Big banks are expected to take another £2 billion hit on payment protection insurance this week because of the longer time allowed for new claims. Lenders will make the provisions with quarterly results that will be scrutinised for the impact of Brexit on the economy, while the weakening pound and heightened market activity will also have an affect on results. - The Times

A verdict by a California judge last week may have opened up a new multibillion-dollar litigation risk for Deutsche Bank, the German bank still in the grip of settlement talks over mortgage-backed securities with the US Department of Justice. The risk relates to claims from a group of institutional investors that Deutsche should have done a better job as the administrator of trusts that held residential mortgage-backed securities in the years after the crisis. Lawyers for the investors — led by BlackRock — claim that as those assets plummeted in value, Deutsche had a duty to return them to the originators, and order them to replace them with better loans. - Financial Times

BAE Systems is today identified as the employer that will struggle the most to honour pension promises in an analysis of retirement provision by British companies. The defence group heads two out of four measures of potential strain in an assessment by Hymans Robertson, consulting actuaries. - The Times

US close

Stocks finished on a mixed note on Friday, with generally upbeat corporate earnings and an unusual late-week flurry of M&A news helping the main market averages to recover from an initial drop at the start of trading.

Corporate giants McDonald’s and Honeywell International pleased investors with their latest updates, with GE sounding a discordant note after it cut its full-year sales view.

The Dow Jones Industrial Average drifted lower by 0.19% or 16.64 points to 18,145.71, the S&P 500 was off marginally, by -0.01% or 0.18 points at 2,141.16 while the Nasdaq Composite rose 0.30% to 5,257.40.

For the week as a whole the S&P 500 was up by 0.4%.

Connor Campbell, a financial analyst at Spreadex, said the Dow Jones Industrial Average dropped 100 points after the bell, due to the “increasing certainty that Hillary Clinton will be elected the next president of the United States come December and the subsequent strength this has leant the dollar, which took 0.3-0.5% off both the pound and the euro”.

Earnings at the 116 S&P 500 components which had reported thus far were up 3.8% year-on-year, leading analysts to revise their forecast for average earnings growth for the third quarter to flat, marking a break in the five-quarter long stretch of shrinking profits.

However, some market commentary highlighted how that was coming against a backdrop of unusually few companies willing to provide guidance.

Speaking to reporters, the president of the Federal Reserve Bank of San Francisco, John Williams, said "this year would be good" for a rate rise.