Direct Line dials in lower profits, InterContinental Hotels remains solid

London open

The FTSE 100 is expected open 21.3 points lower on Tuesday morning, after closing 0.45% lower at 6,693.95 on Monday.

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Insurance company Direct Line Group posted its half year report for the six months to 30 June on Tuesday, with gross written premiums for ongoing operations 3.9% higher, driven by strong growth in motor in-force policies - up 2.5% - and a 9.5% increase in premium rates. The FTSE 100 firm said its combined operating ratio from ongoing operations continued to be strong at 89.6%, or 0.2pts higher, including the Flood Re levy impact of 1.6pts. Motor current-year attritional loss ratio improved by 1.0pt, the board reported. Operating profit from ongoing operations decreased £12.2m to £323.6m, which Direct Line attributed to £18.5m lower investment gains

InterContinental Hotels booked in a solid first half performance and despite the uncertain environment in some markets, remains confident in the outlook for the rest of the year. While reported revenues of $838m for the six months to 30 June were down 8% on the previous year's and short of analyst expectations, underlying sales, which excludes the effect of disposals and exchange rates, rose 5% to $771m, with operating profits up 2% at the reported level and 10% underlying to $345m.

First-half silver and gold production rises of 6% and 23% respectively helped to boost Fresnillo EBITDA earnings to $474m from $317.9. Silver production was 25,212 ounces, while gold was 447,569. The company said it was well-placed to meet 2016 silver production guidance of 49m – 51m ounces, and recently increased 2016 gold production guidance of 850,000 – 870,000 ounces. Revenues rose 17.9% to $886.9m. The dividend has been ramped to 8.6 cents a share from 2.1 cents.

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The vast majority of investment industry executives fear Brexit will harm the City of London, and most believe it will damage the rest of the country too – potentially leading to the breakup of the United Kingdom. A total of 82pc of fund managers believe London will be a loser from Brexit, according to a survey by the Chartered Financial Analyst (CFA) Institute. - Telegraph

A former Bank of England rate-setter has warned that cutting interest rates would do more harm than good as pressure grows on the monetary policy committee before this week’s meeting. Dame Kate Barker, an MPC member for nine years until 2010, says that cutting rates further in response to the Brexit vote would be a bad mistake that would fail to boost household or business spending. - The Times

US crude oil prices have slipped below $40 a barrel for the first time since April on signs that production is picking up as clouds gather over the global economy. The price of a barrel of West Texas Intermediate, the US benchmark, dropped $1.66 to $39.94 a barrel as figures suggested that wells in Nigeria and Iraq were pumping faster and mothballed US rigs were coming back on stream after the recovery in the price back above $50 a barrel a month ago convinced drillers to bring rigs back on stream. - The Times

Supermarkets have cut the price of petrol and diesel by up to 2p per litre, sending forecourt prices lower across the country. Asda has announced a national cap, meaning motorists will not pay more than 105.7p per litre (ppl) on unleaded and 106.7ppl on diesel across its 272 stations. Tesco rolled out a 2p drop that came into effect at 5pm on Monday. - Guardian

US close

US stocks were mixed on Monday as oil prices slumped and as traders weighed manufacturing data.

The Dow Jones Industrial Average fell 0.15%, the S&P 500 dropped 0.13% and the Nasdaq rose 0.43% at the close.

At the same time oil prices plunged on worries about a supply glut with West Texas Intermediate crude down 4.05% to $39.98 per barrel and Brent down 3.2% to $42.14 per barrel.

The Institute for Supply Management’s index for US manufacturing fell to 52.5 in July from June’s 53.2, missing expectations for a reading of 53.0 but above the 50 level that separates an expansion from a contraction in sector activity.

The ISM said demand and industrial production slowed in transport and equipment while poor weather affected construction.

In contrast, Markit’s final US manufacturing purchasing managers’ index rose to 52.9 in July from 51.3 in June, in line with the flash reading and analysts’ expectations.

“Janet Yellen will be pleased that the manufacturing numbers are holding somewhere close to June’s high watermark, showing that production in the US is in relatively rude health,” said Dennis de Jong, managing director at UFX.com.