London pre-open: Stocks to slip as US-China trade tensions resurface
London stocks were set to edge down at the open on Tuesday following losses on Wall Street, as worries about trade tensions between the US and China resurfaced.
The FTSE 100 was called to open 12 points lower at 7,014.
London Capital Group analyst Jasper Lawler said: "Wall Street extended last week’s sell off and Asian traders were edgy overnight following speculation of further trade tariff threats from Trump. President Trump reportedly threatened tariffs on all remaining Chinese imports by December should this next round of talks with China fail. This would be tariffs on approximately a further $250 billion.
"Given the current fragility of market sentiment this latest move will be a case of kicking the market whilst it's down, damaging the prospects for a solid recovery and increasing the probability of the bears retaining control. The volatility index, or fear gauge as it is commonly referred to, spiked by 27.86 points to its highest level since October 11, also the second highest reading since the spike in volatility in February.
"European markets are pointing to a broadly stronger start on the open. The FTSE is currently set to buck the trend, pointing to a marginal dip on the open as heavyweight oil majors could struggle on declining oil prices."
Lawler noted that the pound had a tepid reaction to Philip Hammond's Budget on Monday.
"On the downside GBP/USD remains uncomfortably close to $1.2776, the multi-month low reached last week. Meanwhile a push above resistance at $1.2850 could see the pair extended gains back towards $1.2880," he said.
In corporate news, WH Smith said it was buying US airport retailer InMotion $198m (£155m).
The deal doubles WH Smith's international travel business and would be EPS accretive in the first year after completion, the company said.
AstraZeneca has agreed to divest the prescription medicine rights to Nexium (esomeprazole) in Europe, as well as the global rights, excluding the US and Japan, to Vimovo (naproxen/esomeprazole) to Grünenthal.
The FTSE 100 pharmaceuticals giant said the medicines were outside its main therapy areas of oncology, cardiovascular, renal and metabolism and respiratory. Nexium had lost compound patent protection in the majority of global markets, AstraZeneca noted, while Vimovo was patent-protected in most European markets until 2025.
Ocado expects to receive orders for the first three US high-tech warehouses from grocer Kroger before the end of the year after the pair signed up to a formal services and operational agreement.
The FTSE 100 online grocery specialist has agreed to finance the first of the so-called customer fulfilment centres until a final funding structure has been finalised, using up to £90m of its £500m banking facilities.