London pre-open: Stocks seen lower as US stimulus hopes fade

London stocks were set to fall at the open on Thursday as hopes of further US stimulus before the election faded and amid ongoing concerns about the coronavirus pandemic.

The FTSE 100 was called to open 28 points lower at 5,748.

CMC Markets analyst Michael Hewson said: "We saw another day of losses for European and US markets yesterday as investor impatience with the phoney war going on between the Democrats and Republicans continued over the prospect of a stimulus plan before the 3rd November US election.

"This scepticism looks set to spill over into this morning as Asia stocks also fell sharply, though a sharp IMF downgrade for the region also didn’t help sentiment, and this negative tone looks set to continue this morning with markets in Europe also set to open lower.

"As far as a US stimulus package is concerned the penny appears to be finally dropping that there is unlikely to be a plan that will be able to get past the Republicans in the US Senate, even if Nancy Pelosi and Steve Mnuchin were able to put something down on paper, in their various short phone calls over the past few days."

On home shores, Chancellor Rishi Sunak was set to announce a fourth package of coronavirus support for businesses later in the day.

"Tier 2 regions receive much less generous support than those in tier 3, with a number warning that without help they may well not reopen," said Hewson.

"The Chancellor certainly needs to pull a rabbit out of his hat given how badly the government has handled the financial side of the ledger in the past two weeks, quibbling over sums in the region of £5m, at a time when public sector borrowing since March has seen over £200bn added to the national debt, with nary a murmur from the bond market."

In corporate news, consumer goods giant Unilever reported a better-than-expected 4.4% rise in third quarter sales as people continued to buy more hygiene and food products.

It added that turnover fell 2.4% to €12.9bn after a 7.7% hit from currency changes.

"Underlying sales growth accelerated compared to the second quarter. Elevated levels of growth for hand and home hygiene products continued, as well as for food consumed at home. Our food service and out of home ice cream businesses continued to decline, however at lower levels compared to the second quarter," Unilever said in a trading statement.

Rentokil Initial said it performed "very well" in the third quarter, growing group ongoing revenue by 9.8%, reflecting "exceptional" growth in its hygiene division from continued high demand for disinfection services, and a return to growth in pest control.

The FTSE 100 company said ongoing revenue in pest control was ahead 1.3% in the quarter, swinging from a decline of 5.9% in the second quarter, while hygiene grew by 53.3%, compared to 16.3%. Excluding revenue from disinfection, Rentokil said its core hygiene operations delivered a significant improvement on the prior quarter, declining by 1% versus a decline of 19.7% in the second quarter.