London pre-open: Stocks seen higher, pound regains some poise
London stocks were poised for a firmer open on Wednesday as investors eyed the latest reading on the UK services sector, while sterling regained some poise as MPs were set to debate a bill blocking a no-deal Brexit.
The FTSE 100 was called to open 30 points higher at 7,298. Meanwhile, having suffered heavy losses on Tuesday, sterling was up 0.3% against the dollar and the euro at 1.2118 and 1.1038, respectively.
CMC Markets analyst David Madden said: "Last night MPs voted in favour of trying to prevent a no-deal Brexit, and in response, Prime Minister Johnson said he would press for a general election - a reaction that didn’t spook the markets. Opinion polls put Mr Johnson’s Tory party in the lead, but as Theresa May found out in 2017, polls can’t always be trusted."
Ipek Ozkardeskaya, senior market analyst at London Capital Group, said: "It is worth keeping in mind that a snap election is a risky bet for Boris Johnson. If he loses, he will be the shortest serving PM in the country’s history, and more importantly, the Labour Party would opt for a second Brexit referendum to make sure this is what Brits really, really want."
Away from Brexit, market participants will be mulling the latest data out of China. The Caixin services survey was released overnight, showing a reading of 52.1 for August versus 51.6 in July and expectations of 51.7.
On home shores, the focus will be on the services PMI, which is due for release at 0930 BST. Madden said the reading is tipped at 51 for August.
In corporate news, Royal Bank of Scotland Group said a last minute higher-than-expected spike in claims for payment protection insurance claims would result in an extra charge of £600m - to £900m in the third quarter.
The deadline for claims expired on August 29 and RBS on Wednesday said it had so far made provisions of £5.3bn of which £4.9bn had been utilised.
Barratt Developments reported an increase in annual profit and continued good progress against medium term targets as growth was driven by the success of margin initiatives.
The FTSE 100 housebuilder completed 17,856 new homes during the year, its highest number for 11 years, and said that its order book remained strong despite continued economic and political uncertainty.