London pre-open: Stocks to nudge up as earnings roll in; US-EU agree to lower tariffs

London stocks were set to nudge up at the open on Thursday as investors braced for a deluge of earnings reports, while headlines from US President Trump's meeting with EU Commission President Jean-Claude Juncker helped to soothe investors' nerves.

The FTSE 100 was called to open five points higher at 7,663.

CMC Markets analyst Michael Hewson said: "While automakers remained under pressure US markets remained resilient against the backdrop of trade tensions getting a late pre-close lift on reports that the meeting between President Trump and EU officials had yielded some progress, though details were a little vague with reports of lower industrial tariffs and an agreement to import more US soybeans.

"As a result, the S&P500 closed at its highest level since late January, when it hit an all-time high above 2,870, which should translate into a positive European open, despite Asia having a weak session.

"The resulting press conference between President’s Trump and Juncker filled in some of the blanks with pledges to work towards zero tariffs on industrial goods, strengthen co-operation on energy particularly liquefied natural gas, along with a confirmation that the EU would import more US soybeans."

Hewson highlighted the fact that there was no mention of removing the existing retaliatory tariffs imposed in the last few months, adding that while the pledge to work towards zero tariffs is "a noble goal", it is likely to face significant obstacles from some national governments in Europe, which means it’s unlikely to ever happen.

In corporate news, Royal Dutch Shell launched a $25bn (£19bn) share buyback as the oil producer posted a 30% increase in second-quarter profit.

Britain’s biggest oil company said it would buy back at least $25bn of shares ending in 2020 subject to debt reduction and oil prices. Earnings for the three months to the end of June rose to $4.8bn from $3.7bn a year earlier.

Sky reported a 5% increase in like-for-like revenue in its results for the year to 30 June on Thursday, to £13.6bn.

The subscription broadcaster and telecoms retailer said its ‘established business’ EBITDA rose 11% to £2.5bn, while EBITDA rose 9%. Earnings per share were ahead 10% year-on-year, to 67.3p.

Compass Group reported a jump in third-quarter revenue on Thursday as it said it continues to "well" and backed its full-year expectations.

In an update on its performance since the end of March, Compass said organic revenue was up 5.7%, or 5.1% excluding the impact of Easter, driven by strong net new business in North America, an acceleration in Europe and good progress in Rest of World.

For the nine months to 30 June, organic revenue was 5.1% higher.

British American Tobacco reported a fall in pro forma revenue for the first half of the year due to currency swings and a fall in cigarette and tobacco heating product volumes.

On a reported basis, revenue rose 57% to £11.6bn thanks to the acquisition of Reynolds American, though on an adjusted pro forma basis, as if Reynolds had been owned the year before, revenue fell 6.4%, but would have been up 1.9% but for the impact of currency movements. Adjusted, diluted earnings rose 2.1% to 137.2p at reported rates, and 10.4% at constant currencies.