London pre-open: Stocks to edge lower ahead of inflation data
London stocks were set to edge lower at the open on Wednesday as investors eyed the signing of the 'phase one' Sino-US trade deal and the release of key UK inflation figures.
The FTSE 100 was called to open eight points lower at 7,614.
Stocks in Asia fell after a report suggested that existing tariffs on billions of dollars of Chinese goods coming into the US were likely to remain in place until after the US presidential election. Citing people familiar with the matter, Bloomberg said any move to reduce the tariffs will hinge on Beijing’s compliance with the terms of the phase one deal.
Bloomberg said the two sides have an understanding that no sooner than 10 months after the signing of the agreement at the White House on Wednesday, the US will review progress and potentially consider additional cuts on tariffs affecting $360bn of imports from China.
"Reports that there will be no reviews of the deal until the phase one agreement has been running for at least ten months, saw US stocks slide back into the close, despite better than expected earnings announcements from US banks," said CMC Markets analyst Michael Hewson.
"While on the one hand, the risk of further escalations has now gone and is to be welcomed, tariffs are still higher now than they were two years ago, and in the short term are unlikely to come down, meaning that as far as China and the US is concerned, this is as good as it gets, until well into 2021.
"This realisation on the part of US investors, that any further progress on trade was unlikely until well into next year, sent US markets into retreat after another day of record highs, to close more or less flat on the day.
"As a result of this late weakness, markets in Asia have slipped back with the result that markets in Europe are likely to open slightly lower this morning."
Investors will also be awaiting the release of UK consumer price, retail price and producer price inflation, all due at 0930 GMT.
In corporate news, troubled house builder Persimmon reported a fall in full year revenue as it spent more cash fixing poor quality homes after an independent review last month slammed the standards of the company's work.
Group revenue was 2.4% lower at £3.65bn as Persimmon said it expected pre-tax profits to be in line with expectations.
The company has struggled to emerge from the furore over a £75m bonus paid to former chief executive Jeff Fairbairn. To compound its woes, the review said Persimmon “has traditionally been more a land assembler and seller of houses rather than a housebuilder” and its former executives were motivated by bonuses that “were widely perceived as excessive”.
Vistry Group updated the market on its trading for the year ended 31 December, reporting that it expected to deliver another record year of profits, slightly ahead of market consensus.
The FTSE 250 housebuilder, previously known as Bovis Homes, said it saw a “significant” step up in average weekly sales rate to 0.58 for the year, adding that total completions were up 3% at 3,867.
Its board also said “good progress” had been made to date for Vistry Group, following the acquisition of the Linden Homes and Partnerships & Regeneration businesses, which completed on 3 January.
Cairn Energy, along with its joint venture partners Woodside and FAR, has signed a joint final investment decision statement in agreement with Petrosen and the Government of Senegal on the Sangomar Field Development.
The company said the decision on the first phase of Sangomar, offshore Senegal, followed the receipt of the 25-year exploitation authorisation from the government last week.
It said the phase would target estimated 2P recoverable oil reserves of 231 million barrels gross, with total recoverable oil resources over the life of the field estimated to be around 500 million barrels.