London pre-open: Stocks seen higher but trade concerns persist
London stocks were set to rise at the open on Monday ahead of a slew of data releases, although worries about trade remained at the forefront of investors’ minds.
The FTSE 100 was called to open 16 points higher at 7,293.
CMC Markets analyst Michael Hewson said: "China stocks were lower overnight as the trade concerns hang over the markets, and the data that was released over the weekend only puts further strain on the trading relationship between Beijing and Washington DC. It was revealed that China’s trade surplus with the US grew to a record level in July - this will add weight to President Trump’s argument that there is a trading imbalance between the two nations. In Mr Trump’s eye, China is taking advantage of the US, and it is up to him to redress the situation.”
Hewson also pointed to increased speculation that the US could impose tariffs on a further $200bn worth of Chinese goods, with another $267bn also possibly lined up.
"The trade numbers from Beijing are likely to have struck a nerve with Mr Trump, and given that he thinks the US are winning the trade spat on account of the recent weakness in the Chinese stock market, he is likely to stick to his protectionist line. Beijing said they would retaliate should the US impose fresh tariffs, and traders are fearful they might weaken the yuan or target US firms operating in China," Hewson said.
On the UK data front, industrial and manufacturing production figures are due at 0930 BST, along with the goods trade balance and gross domestic product for July.
In corporate news, RPC Group confirmed that it was in "preliminary discussions" with private equity groups over a potential offer for the plastics manufacturer.
The FTSE 250 group, which has come under pressure from investors over its growth plans, said talks were taking place with both Apollo Global Management and Bain Capital.
Associated British Foods reiterated its outlook for the year as it said a strong performance from Primark, grocery, agriculture and its ingredients business should more than offset the impact of lower EU sugar prices.
The company expects sales at Primark to have risen 5.5% at constant currency from the previous year, driven by increased selling space, offset by a 2% drop in like-for-like sales. At actual exchange rates, sales are expected to be 6% higher.
GlaxoSmithKline has received a complete response letter from the US Food and Drug Administration over its recent application around mepolizumab.
The drug maker had applied for mepolizumab to be an add-on treatment to inhaled corticosteroid-based maintenance, for the reduction of exacerbations in patients with chronic obstructive pulmonary disease, guided by blood eosinophil counts. The response letter stated that more clinical data was required to support an approval, with GSK saying it would work with the FDA to determine the appropriate next steps.