London pre-open: Stocks seen lower; Carillion warns on profits

London stocks were set to edge lower at the open on Friday despite a positive close on Wall Street.

The FTSE100 was expected to open 13 points lower at 7,373.

CMC Markets analyst Michael Hewson said: “The gains in the US were helped by reports that US politicians passed a bill in the House of Representatives aimed at cutting US company rates from 35% to 20%. As is normal the optics are more important than the actual reality, with the prospect of getting the bill into law by way of the Senate still slim in the short term.”

He pointed out that European markets snapped their five day losing streak on Thursday, as some cautious buyers returned to the fray after the worst run of daily losses so far this year.

“The big question remains as to whether this is merely a pause in the context of a wider correction or whether we’ll see a resumption of the uptrend that has been in place since the beginning of 2016. Having seen sharp declines last week it remains to be seen whether we’ll see two successive weekly declines for markets in Europe, as we head into the weekend.”

There are no major UK data releases due.

In corporate news, construction and maintenance group Kier made a smooth start to the year and said it is confident of delivering double-digit profit growth.

Average net debt increased and cash conversion remained strong in the four and a half months since 28 June, in line with management expectations and a target of keeping net debt no bigger than EBITDA.

Carillion warned that full-year profits will be “materially lower” than current market expectations and that it now expects to breach its covenants.

The contractor pointed to a combination of delays to certain PPP disposals, a slippage in the start date of a significant project in the Middle East and lower than expected margin improvements across a small number of UK Support Services contracts.

Ferrexpo has signed a new secured three year revolving credit facility of $195m that will be used for general corporate purposes.

The committed credit facility was arranged by BNP Paribas and includes a syndicate of six international lenders. It will amortise over eight quarters with final repayment on 31 December 2020.

Rentokil Initial has agreed the issue of a €400m 0.95% bond, it announced on Friday, due 22 November 2024. The pest control and hygiene giant said part of the proceeds would be swapped into dollars, in line with the company's hedging strategy.

It claimed the proceeds would be used for general corporate purposes, including the repayment of the company's £200m and €157m term loans that were due to mature in 2018.