M&S sales fall, AB Foods upbeat on weak sterling

London open

The FTSE 100 is expected to open 67 points higher on Thursday morning, after its 1.25% drop to 6,463.59 on Wednesday.

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Associated British Foods said the weaker pound after last week's Brexit vote had improved the outlook for the current financial year and it no longer expect a decline in adjusted earnings per share for the group for the full year. “In our next financial year, these rates would have both positive and negative effects on profit. There would be an adverse transactional effect on the profit margin on Primark's UK sales, currently half of its turnover, a favourable transactional effect on British Sugar's margins and a translation benefit on group profits earned outside the UK, which last year were some 50% of the total,” the company said.

Hospitality group Whitbread announced on Thursday that it has exchanged agreements with Legal & General for the sale and leaseback of its 389-room ‘Hub by Premier Inn’ hotel in Kings Cross, due to open in 2017, in exchange for a 25 year lease agreement. The FTSE 100 company announced plans in April to carry out sale and leaseback transactions during this year, with proceeds of £100m to £150m. Legal & General will pay £84.5m in cash for the property, with an initial payment of £46.5m due on exchange and further staged payments made during the construction of the property.

Marks & Spencer saw a drop in UK sales in the first quarter as new chief executive Steve Rowe's recovery plan for general merchandise took hold, with reported group sales up 1.3%. Food sales in the 13 weeks to 2 July fell 0.9% on a like-for-like basis, hit by the difference in Easter timing compared to last year, but despite an 8.9% slide in LFL sales from the Clothing & Home as the number of promotions was cut back but Rowe said he saw "encouraging early signs".

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Chinese officials are open to launching trade negotiations with Britain in the aftermath of the Brexit vote, raising hopes that the UK’s economy can receive a boost after it leaves the EU. Critics of Brexit warned that the UK could find itself alone and cut off from the world economy outside the EU, but the indications from China are that deals are possible. - Telegraph

Company pension schemes could be given new ways to calculate the cost of future promises to members in an attempt to ease the pressure of rising deficits. Ros Altmann, the pensions minister, said she was reviewing how schemes could account for their liabilities, as new measures to ease the economic shocks from Brexit are expected to inflate pension shortfalls. - Financial Times

BT faces a renewed attack from Sky over control of Openreach, after pensions experts and the former City minister Lord Myners said its £47bn retirement scheme would be unaffected by financial independence for the network unit. A report by the law firm Sackers, due to be circulated in the City on Thursday, claims there are multiple “straightforward” options to maintain the scheme if Openreach is incorporated as a legally separate subsidiary with control over its own cash flows. - Telegraph

US close

US stock markets recovered from early wobbles to recoup most of the week's losses so far on Wednesday, as minutes from the Federal Reserve's latest policy meeting indicated there would be no rate hike until markets simmered down and domestic data strengthens.

The Dow Jones Industrial Average stood 0.44% higher at 17,918.62 by the close, with the S&P 500 up 0.54% at 2,099.73 and the Nasdaq was up 0.75% at 4,859.16.

Earlier as stocks slid, benchmark Treasury yields wallowed around record low of 1.357% from the prior day, while the price of gold showed steel as investors flock to perceived safe havens.