London pre-open: Equities to slump following more Chinese currency action

City sources predict the FTSE 100 will open 52 points lower than Tuesday's close of 6,664.54.

European equities are set to slump following further action from the People’s Bank of China overnight, London Capital Group night dealer Jonathan Sudaria said.

“Speculation is that the politburo has seen the real extent of weakness in the Chinese economy and decided to head off further trouble by boosting the ailing export industry.

“However, the fear is that just like their stock market and shoddily built bridges, China’s economy is heading for a collapse,” Sudaria said.

In the UK, focus will be on the June labour market report.

Researchers from Danske Bank said most attention will be on earnings growth although the Bank of England’s main focus appears to have shifted back to inflation.

In the US, New York Federal Reserve president William Dudley was scheduled to speak at 1330 BST. While the main focus will be on the regional economy, Dudley is expected to answer questions on the yuan devaluation.

Stocks to watch

Pearson has agreed to sell its 50% stake in The Economist Group for £469m in cash. EXOR has agreed to purchase 27.8% of the group’s ordinary shares for a consideration of £227.5m and all of the B special shares for £59.5m. The remaining ordinary shares will be repurchased by the Economist Group for £182m. Proceeds from the transaction, which is expected to close in the fourth quarter of 2015, will be used by Pearson for general corporate purposes and investment in its global education strategy.

Thanks to solid growth from emerging markets, G4S increased first-half revenue from continuing operations 2.8%, though UK sales were down. After underlying earnings increased 10.5%, the board lifted the interim dividend 5% to 3.59p per share.

In the press

General Electric has taken another big step in unwinding its finance arm by agreeing an $8.5bn sale of its healthcare finance unit to Capital One bank. Capital One will pay a 6% premium to the value of the unit’s loans to acquire the business, in a move that will help the ambitious second-tier US bank become a bigger player in commercial lending. - The Financial Times

China’s decision to devalue the renminbi may be the start of a new, debilitating round of currency wars. Brazil, which coined the term in 2010 when China was last suppressing the exchange rate, immediately warned that Beijing’s move could hurt its exports, despite a 24% depreciation this year. - The Times

McDonald’s plans to shrink by 59 locations this year in the US, the first time in at least 45 years that the fast food restaurant has closed more US stores than it has opened, as the company cuts costs and tries to revive sales. The world’s biggest restaurant chain has not reduced the net number of its US stores since at least 1970. -The Telegraph