London pre-open: Stocks seen lower on weak Asian cues

London stocks were set to fall at the open on Monday to below 7,000, following a weak session in Asia.

The FTSE 100 was called to open 52 points lower at 6,956.

CMC Markets analyst Michael Hewson noted that long-term yields have actually fallen in the last four weeks with the US 10-year 14 basis points lower, indicating that bond markets, either don’t share concerns about inflation, or that they are starting to price in a slowdown in the global economy.

"These concerns may well be behind last week’s decline in global markets, which, despite new record highs for the DAX, Stoxx 600, S&P500 and the Nasdaq, saw US markets post their first weekly decline in three weeks, with markets in Europe also sinking back to the bottom of their recent ranges.

"This weakness is expected to translate into a softer European open later this morning after Asia markets got the week off to a negative start on concern over rapidly rising global Delta variant cases, as well as a slowing economic outlook."

Hewson said another concern for markets appears to be the outlook for future earnings growth.

"Last week’s earnings reports have by and large been positive, but attention is now shifting to what comes next in terms of the outlook, as Covid cases rise, and here the economic picture is less clear," he said.

In corporate news, strong demand from defence markets helped Ultra Electronics deliver better-than-expected first-half profits.

The company said pre-tax profits for the six months rose 18% to £56.5m. Its order book rose 8.3% to £1.2bn, offsetting a 2% decline in revenue to £404m.

Elsewhere, Synthomer lifted its full-year earnings guidance as it said trading across the business has remained strong.

It now expects first-half EBITDA to be around £320 million and FY EBITDA to be in excess of £500m, up from previous guidance of in excess of £450m.