London pre-open: Stocks to rise as US hits China with more tariffs
London stocks were poised for gains at the open on Friday, with investors set to take US President Trump’s lifting of tariffs on $200bn of Chinese goods in their stride.
China has vowed to retaliate after the US lifted tariffs on Chinese goods to 25% from 10%. China said it "deeply regrets" the move and will have to take "necessary counter-measures."
Nevertheless, the FTSE 100 was called to open 21 points higher at 7,228.
London Capital Group analyst Jasper Lawler said: "The market’s reaction has not been all doom and gloom. We are not seeing see the same risk off reaction that we have seen in previous sessions. The fact that the two sides have agreed to continue negotiations on Friday is offering a glimmer of hope that the relationship between the two powers hasn’t deteriorated beyond repair. Markets are also clinging to Trump’s comments over a ‘beautiful letter’ from Chinese President Jinping Xi and an expected phone conversation between the two leaders."
Lawler said the best we can hope for at the end of the talks is an agreement for the sides to keep talking.
"But with tariffs now at 25% both sides will want to see things progress more quickly. Let’s not forget higher tariffs on Chinese imports will get passed on to the US consumer, who will end up paying more. This is not the legacy that Trump is after, he will want to see the China deal tied up quickly before US economic data takes a hit."
On the UK data front, first-quarter GDP is due at 0930 BST, along with industrial and manufacturing production and the trade balance.
In corporate news, International Consolidated Airlines’ profit more than halved in the first quarter as the owner of British Airways was buffeted by rising fuel costs and stiff competition.
Operating profit in the three months to the end of March dropped 60% to €135m (£117m). Total revenue increased 5.9% to €5.32bn but passenger revenue per available seat fell 0.8% to 6.16 cents.
Aviation support company BBA Aviation said trading remained in line with expectations, with revenue for the first four months of 2019 up 23.1% year-on year, reflecting organic growth along with the acquisitions of EPIC, Firstmark and Ontic licences acquired during 2018.
Like-for-like revenue was up 1.1% at constant currency rates, adjusting for fuel prices and before acquisitions.
Specialist international distribution and services group Bunzl said finance director Brian May has decided to retire after more than 13 years in the role and 25 years at the company.
He will be succeeded by Richard Howes, who will join the group on 1 September, initially as chief financial officer designate, before joining the board and become CFO on 1 January 2020.