London pre-open: Stocks to rise ahead of manufacturing data
London stocks were set to rise at the open on Tuesday, taking their cue from a positive session on Wall Street as investors eyed key manufacturing data.
The FTSE 100 was called to open 20 points higher at 7,428, with Markit’s manufacturing PMI due at 0930 BST.
Ipek Ozkardeskaya, senior market analyst at London Capital Group, said a weak PMI reading could further spoil the investor mood and send the FTSE below the 7,400 support despite the cheapening pound.
Market participants will also be digesting media reports that Prime Minister Boris Johnson is set to reveal his detailed Brexit plan to EU leaders within the next 24 hours.
"The Irish border remains the most intricate part of the puzzle, as the UK wants to gradually exit the Irish backstop according a person familiar with the matter, but Europeans don’t," said Ozkardeskaya.
"In the meantime, the oppositions party members are trying to agree on an alternative government plan and to oust Boris Johnson. The leading risk here is, if they fail to agree among themselves, Johnson could throw the snap election he wants before the Brexit deadline and somehow manage to get the country out of the EU by October 31st, probably without a deal."
She said that with the risks "comfortably tilted to the downside", a further fall in the pound is almost inevitable.
The latest survey from Nationwide out earlier showed that house prices fell 0.2% month-on-month in September compared to a flat reading in August and expectations of a 0.1% uptick. On the year, house prices rose 0.2%, down from 0.6% growth in August and below consensus expectations of a 0.5% increase.
Robert Gardner, Nationwide's chief economist, said this marks the tenth month in a row in which annual price growth has been below 1%.
"Indicators of UK economic activity have been fairly volatile in recent quarters, but the underlying pace of growth appears to have slowed as a result of weaker global growth and an intensification of Brexit uncertainty. However, the slowdown has centred on business investment - household spending has been more resilient, supported by steady gains in employment and real earnings.
"The underlying pace of housing market activity has remained broadly stable, with the number of mortgages approved for house purchase continuing within the fairly narrow range prevailing over the past two years. Healthy labour market conditions and low borrowing costs appear to be offsetting the drag from the uncertain economic outlook."
In corporate news, High Street baker Greggs said third quarter total sales rose 12.4% driven by higher customer numbers.
Company-managed shop like-for-like sales were up 7.4% for the 13 weeks to September 28 as Greggs maintained its full-year outlook, adding that it still expected year-on-year sales growth would reflect strengthening comparatives seen in 2018.
“As previously disclosed, we are preparing for the potential impact of the UK's departure from the European Union by building stocks of key ingredients and equipment that could be affected by disruption to the flow of goods into the UK,” the company said in a trading statement on Tuesday.
“Overall input cost inflation is in line with our previous guidance to the end of the year, with pressures on both labour and food input costs.”
Ferguson reported annual profit growth of 12% to $1.3bn despite encountering weakened US market conditions in the second half.
The plumbing and heating products specialist said it expected to continue to outperform as it recorded an overall revenue increase of 6% to $22.0bn as trading in North America was boosted by 15 new acquisitions.
AstraZeneca has agreed to sell the global commercial rights for ‘Losec’ (omeprazole) and associated brands, excluding China, Japan, the US and Mexico, to Cheplapharm Arzneimittel.
The FTSE 100 pharmaceuticals giant said the divestment included medicines containing omeprazole marketed by AstraZeneca and its collaborators under the Acimax, Antra, Mepral, Mopral, Omepral and Zoltum medicine names. Cheplapharm would pay AstraZeneca around $243m (£197.94m) on completion of the agreement, plus sales-contingent milestones of up to $33m in 2021 and 2022.