London pre-open: Stocks set for more losses

London stocks were set to drop sharply at the open on Monday following heavy losses at the end of last week, amid worries about Sino-US trade relations, Middle East tensions and further unrest in Hong Kong.

The FTSE 100 was called to open 92 points lower at 7,315.

CMC Markets analyst Michael Hewson said: "The falls in Asia this morning have also seen the Chinese currency slip through the 7 level for the first time in 11 years, with the People’s Bank of China blaming the escalation in trade tensions, while this morning’s session in Asia markets hasn’t been helped by further unrest in Hong Kong."

As far as Sino-US trade relations are concerned, he said: "Having spent the last few months fretting about the prospect of a possible escalation after talks broke down in acrimony in May, there was an expectation that now talks had restarted there would be a brief pause while both sides staked out their positions, and reassessed their respective strategies.

"As things turned out this proved rather complacent, as in the wake of the Federal Reserve’s Wednesday decision to cut rates by 25 basis points, but hold back on committing to further cuts, the US President decided to announce that he was going to implement 10% tariffs on the remaining $300bn worth of Chinese goods, arriving in the US after the 1st September.

"There had been an expectation that President Trump would keep this particular bullet in the chamber, holding it in reserve for later in the year, given the effect it might have on the US economy, which even now continues to outperform the rest of the world, though this could well change in the coming weeks as US consumers start to feel the chill winds of higher prices.

"Now the chamber has been emptied, any escalations are likely to come in the form of higher tariff rates, and that’s before we consider the effect of the likely Chinese response, of which we could hear more details this week."

On the UK data front, Markit's services PMI for July is due at 0930 BST.

In corporate news, HSBC said chief executive John Flint had stepped down as the bank believed a change was needed “to meet the challenges” it faces. The bank said in a statement that Flint had resigned “by mutual agreement with the board” as it revealed first-half pre-tax profit rose 15.9% and a further buyback of $1bn (£823m).Pre-tax profits were $12.41bn, up from $10.71bn a year ago.

AstraZeneca announced that the European Commission has approved an update to the marketing authorisation for ‘Forxiga’ (dapagliflozin) to include positive cardiovascular outcomes and renal data from the phase 3 ‘DECLARE-TIMI 58’ trial in adults with type-2 diabetes.

The pharmaceuticals giant said the trial enrolled a majority of patients with no existing cardiovascular disease. It said that in the trial, Forxiga achieved a statistically-significant reduction in the composite endpoint of hospitalisation for heart failure or cardiovascular death compared to placebo - one of the two primary efficacy endpoints.

BBA Aviation's interim results fell broadly in line with expectations, with revenue and operating profit growth aided by 23% revenue growth from the company's core Signature business as it outperformed the US business and general aviation market. However, profit before tax slipped 6% to $132m following changes to the company's debt structure.