London pre-open: Stocks seen higher after record US close; Carillion in focus

London stocks were set for a positive open on Monday after US indices notched record closes on Friday following some well-received earnings.

The FTSE 100 was expected to open 15 points higher at 7,793.

CMC Markets analyst Michael Hewson said: “US markets continued to go from strength to strength last week, as they continued to build on the gains of 2017. The S&P500 in particular has put in its best start to the year since 2003, as corporate earnings and a strengthening US and global economy build optimism about the prospects for further profits growth.

"While US markets outperformed with new record highs, despite a long weekend for Martin Luther King Day, markets in Europe were more mixed with the German DAX and France CAC40 finishing the week lower over concerns that an appreciating euro could hit overseas earnings potential. No such concerns affected the FTSE100 which, helped by rising oil prices and rising yields also finished the week higher, posting its sixth successive weekly gain, also closing at a record high."

There are no major UK data releases due on Monday but on Tuesday investors will eye the release of the latest inflation figures.

In corporate news, construction group Carillion will be put into liquidation after crisis talks with the government and creditors collapsed early on Monday. While the government will provide funding to maintain public services run by Carillion, it would not offer the level of support the company needed to stay afloat.

Rolls-Royce has confirmed that it is mulling a potential sale of its L'Orange fuel-injection business, after reports the engine maker was looking for around $700m (£510m). The FTSE 100 company said on Monday that it was "reviewing its strategic options" for the Stuttgart-based arm, but assured that irrespective of the outcome of the review its plans to maintain close ties to L'Orange, either as an owner or as a key customer.

Plumbing and heating company Ferguson said recent US tax cuts would notes provide an beneficial impact on the group's after tax earnings.

The company said it expected an effective tax rate of around 25% for the current year to 31 July 2018, from previous guidance of 28%.

“On an ongoing basis we expect the group's effective tax rate to be in the range 21% to 22%,” Ferguson said.

Rolls Royce confirmed recent press speculation that it might be looking to hive-off its l'Orange unit, but clarified that the strategic review now under way would have no impact on the rest of its Power Systems arm.

On 12 January, Bloomberg reported that Rolls had opened that unit's financial books to potential buyers in December and, according to one person familiar with the matter, was closing in on a deal.

The company was reportedly aiming to raise as much as $700m via the sale of the unit, which specialised in the manufacture of fuel injectros for diesel and heavy fuel oil engines such as those used on ships and for industrial applications.

The potential for a transaction was first reported as far back as 19 November by the Sunday Times.