London pre-open: Stocks to drop on downbeat US and Asian cues

London stocks were set to drop at the open on Thursday, taking their cue from downbeat sessions in the US and Asia as worries about Brexit and Sino-US trade relations continued to weigh on investors’ minds.

The FTSE 100 was called to open 29 points lower at 7,305.

On home shores, European election voting began across the UK amid growing pressure for Prime Minister Theresa May to resign and after Commons leader Andrea Leadsom quit.

CMC Markets analyst David Madden said the European election results might strengthen further the case for May to resign, with the Tories tipped to have a “dreadful” performance.

“The Brexit Party is on track to top the poll, and that might ramp up chatter about a no-deal Brexit, but then again, it might fall on Westminster’s deaf ears,” he said.

Investors were also mulling the latest minutes from the Federal Reserve released overnight.

“The US central bank are pleased with the economic growth and the state of the labour market, but at the same time, because of the ‘muted’ inflationary pressure, rates are likely to remain on hold for some time,” said Madden. “It is worth noting, these are the minutes from a meeting that took place before US-China trade tensions took a turn for the worst, so the Fed are less likely to make a move in either direction until the China situation has stabilised. The major US indices finished in the red last night as the Fed update failed to inspire the buyers.”

In corporate news, United Utilities' annual profit rose as the water company's revenue increased in line with regulatory changes. Underlying operating profit for the year to the end of March rose to £684.8m from £645.1m as revenue rose to £1.82bn from £1.74bn. Pre-tax profit rose by £1m to £436.2m.

Quality assurance provider Intertek said revenues were up 7.3% to £924.3m for the first four months of the year at actual currency rates, driven by broad-based organic growth, acquisitions and forex tailwinds.

“Given a good start to the year, we expect good organic revenue growth at constant currency rates in each of our three divisions,” the company said in a trading statement.

Bakkavor warned that it is feeling the heat from continued subdued consumer confidence and inflationary pressures, with the food manufacturer seeking further opportunities to increase operating efficiencies and optimise capacity after closing its loss-making Freshcook business.

Despite UK market challenges, the company said results for the year to date remain on course to meet expectations.