London pre-open: Stocks set for higher start as pound drops and BP beats

Stocks are set for a higher start as the pound continues to reel under the pressure of the new government's plans for Brexit.

As of 0825 BST, the FTSE 100 was being called to open 28 points higher at 7,714, with the pound trading down by 0.57% to 1.0901 against the single currency and by 0.60% to 1.2146 versus the US dollar.

Commenting on Sterling's woes, Michael Hewson, chief market analyst at CMC Markets UK said: "The pound hasn’t exactly been flavour of the month in recent weeks anyway, but these losses have accelerated further since the weekend, after Prime Minister Boris Johnson said he had no intention of meeting EU leaders in person until they showed a willingness to change their position on the Irish backstop, and withdrawal agreement.

"This hard line, so late in the day, appears to have prompted a sudden realisation that a no deal Brexit has suddenly become a much more likely event."

In the background, the spotlight on Tuesday was expected to fall squarely on the second round of trade talks between US and Chinese officials since the trade truce reached by the countries' two leaders, Donald Trump and Xi Jinping, on 28 June.

Nevertheless, expectations for a resolution of the trade spat were quite low.

Against that backdrop, the US Commerce Department was scheduled to release personal income and spending figures covering the month of June. at 1330 BST.

In particular, traders were expected to focus on the inflation gauges contained within that same report, including the Federal Reserve's preferred measure, the price deflator for personal consumption expenditures.

The US Federal Reserve's two day policy meeting was also set to get under way later on Tuesday.

And in Japan, overnight the Bank of Japan lowered its GDP and inflation forecasts for the current financial year and the next and said that it would "not hesitate to take additional easing measures" if warranted.

BP beats as output increases

Oil major BP posted better than expected results for the three-month stretch to the end of June on the back of higher oil output, despite a decline in crude prices versus a year ago. In the second quarter, underlying replacement cost profit pringted at $2.8bn, which was "similar" to the year ago level but ahead of the $2.562bn anticipated by analysts at UBS and ahead of even the highest analyst estimate as compiled by Bloomberg. On a reported basis, average oil and gas output increased by approximately 4.0% verus a year earlier to reach 3.8m barrels a day of oil equivalent.

Lower volumes and prices have hit half year results at gold and silver miner Fresnillo, with core profits down 45.7%, the company said on Tuesday. Earnings before interest, tax, depreciation and amortisation fell to $307.9m in the six months to June 30 on a 10% fall in revenues to $1bn. The average realised silver price fell 7.5% to $15.2 per ounce during the period while the average realised gold price remained flat at $1,320.7 .

Centrica announced that its chief executive Iain Conn will step down as chief executive and retire next year as the British Gas owner more than halved its interim dividend following an "exceptionally challenging" first half of the year. The company reiterated full year guidance but swung from an interim operating profit of £704m to a loss of £446m as it said the new energy price cap and increased pensions contributions took their toll.

Reckitt Benckiser reported 2% growth in its half-year net revenue from continuing operations on Tuesday, to £6.24bn, with its reported operating profit rising 9% to £1.41bn for the same period. The FTSE 100 consumer products giant said its adjusted operating margin was down 10 basis points to 23.6%. It declared an interim dividend of 73p, up 4% on the distribution it paid at the half-year last year.