London pre-open: Stocks set for slight dip, BoJ pleases, China PMI weak

Stocks are set for a dip at the start of trading on the back of another round of heavy losses in the technology space in the States on Monday.

Weakness in a key report on manufacturing sector conditions in China is also weighing on sentiment, although gains in government bonds in Japan and the US in the wake of the Bank of Japan's decision to lower its inflation forecasts appear to be acting as a partial offset on the last trading day of July.

To take note of, share prices sometimes derive a degree of support at month-end, helped by window dressing on the part of fund managers.

Against that backdrop, the FTSE 100 is expected to begin the day down by 11 points to 7,689.

Commenting on the weakness in US tech stocks overnight, Jasper Lawler at LCG Research said: "The selloff of big tech stocks and more specifically the FAANG’s continued overnight. Facebook Netflix and Alphabet came under pressure as investors look nervously towards Apple’s earnings which will be released after the closing bell later today. The Nasdaq closed down 1.4% overnight as the selloff spread across the broader tech sector. The NYSE FAANG + Index entered correction territory on Monday down over 10% since its recent intraday high, on June 21."

As expected, rate-setters in Japan did tweak the framework for their asset purchase programme, announcing their decision to shift purchases of ETFs towards those of shares listed on the Topix index, for example.

Significantly however, they also pledged to keep policy rates at "extremely" low levels "for an extended period of time" and cut their medium-term projections for inflation.

The response in Japanese 10-year bonds was immediate, with their yield retreating by five basis points to 0.05% and that on similarly-dated US Treasuries off by another four points to 2.94% - retracing the prior day's gains.

In China meanwhile, the 'official' factory sector purchasing managers' index for July printed at 51.2, which was down from a reading of 51.5 for the month before.

A gauge of export orders included in the survey was steady, likely showing that weakness in the Chinese currency, the yuan, was compensating for the impact of US tariffs; however, thus revealing that domestic headwinds were acting as the main drag on activity.

Dividend payout raised at BP

BP reported second-quarter profit four times higher than a year earlier as the oil company increased its dividend for the first time in almost four years. Underlying replacement cost profit for the three months to the end of June surged to $2.8bn (£2.1bn) from $684m the year before. BP increased its quarterly dividend 2.5% to 10.25 cents a share – the first rise since the third quarter of 2014.

Just Eat reported a slight slowing of revenue and order growth and a 3% fall in pre-tax profits for the first half of the year as the online food ordering website increased investment to keep the top line growing. The FTSE 100 group kept its guidance for full-year underlying profits unchanged at £165-185m but raised its revenue guidance to £740-770m.

Rentokil Initial posted a decent set of first half results, with revenue and profit in excess of its medium-term financial targets. The pest control and hygiene firm said ongoing revenue was up 14.2% at constant exchange rates to £1.17bn, while ongoing operating profit grew 13.1% to £134.5m. The interim dividend was increased 15% to 1.311p per share.