London pre-open: Stocks to rise as US, China reach 'phase one' agreement on trade
London stocks were set for a positive open on Monday on the back of news that the US and China have reached a ‘phase one’ agreement on trade.
The FTSE 100 was called to open 37 points higher at 7,390.
US Trade Representative Robert Lighthizer said on Sunday that a deal between the two nations was "totally done" and will nearly double US exports to China over the next two years.
CMC Markets analyst David Madden said: "Beijing agreed to purchase roughly $40-$50bn worth of agricultural goods as a gesture of goodwill. There appears to be an absence of clarity regarding the size of the agricultural orders, which is why stocks in Asia are mixed.
"The US said it won’t be imposing tariffs on roughly $150bn worth of imports from China as both sides have come to an agreement. The deal that was brokered should be signed in January, and 30 days after the agreement is signed off, the US will reduce tariffs on $120bn worth of imports to 7.5%. The US-China trade spat has been going on for approximately for 18 months, so it has been a major story for some time now. After much toing and froing, progress has been finally made."
In UK corporate news, Aberdeen-based bus and train operator FirstGroup said it had appointed advisors to look at the future of its US business, including a sale.
The move comes after pressure from two major shareholders, Coast Capital and Robert Tchenguiz, who hold almost 15% between them.
"We are actively addressing the cost base of First Bus through a comprehensive efficiency programme, the results of which will be substantially more evident in the second half of the year and beyond," FirstGroup said in a statement.
"Therefore, the board determined that greater value will be achieved by delivering this margin enhancement prior to any launch of a formal sale process.”
Cineworld has agreed to buy Canadian cinema china Cineplex for $2.1bn.
Under the terms of the deal, Cineplex shareholders will receive CAD34 per share in cash. The acquisition is expected to be double-digit accretive to earnings and cash flow in the first full year after completion and will 165 cinemas and 1,695 screens to Cineworld’s portfolio.
Sports Direct boss Mike Ashley said he expected further House of Fraser store closures as underlying group revenue fell in the first half of the company's financial year.