Next trims full-year sales guidance, Persimmon still upbeat post-Brexit

London open

The FTSE 100 is expected to open 22 points lower on Wednesday, after closing down 0.53% at 6,917.14 on Tuesday.

Stocks to watch

Next trimmed its full year sales guidance after third quarter retail sales fell almost 6%, but thanks to cutting its cloth more severely it said profits would come in as expected. Total sales in the three months to 31 October were down 3.5%, with flat online and catalogue sales under the Directory segment and a 5.9% decline in its shops, meaning for the year to date group sales are up 0.4% on last year.

Rolls-Royce announced on Wednesday that Andreas Schell has been appointed as chief executive officer of Rolls-Royce Power Systems. The FTSE 100 engineering giant said Schell will join Rolls-Royce later this year, reporting to chief executive Warren East, and take up his new position from 1 January next year, succeeding Dr Ulrich Dohle who is retiring. Schell is currently vice president for digital strategy at UTC Aerospace Systems.

Housebuilder Persimmon said following the Brexit vote trading was “encouraging” but remains cautious about new land investment due to the economic uncertainty arisen since the referendum. In a trading update for the five months ended 1 November, the company expects the operating margin to improve in the second half of the year from 23.8% in the first half and said that it was likely to hold increased cash balances at the end of the year from £570.4m achieved last year.

Newspaper round-up

Chancellor Philip Hammond is to adopt a new flexible fiscal framework in this month’s Autumn Statement, banishing rigid targets to ensure the government has “headroom” to react if Brexit fallout hits the economy. Mr Hammond told cabinet colleagues on Tuesday to expect only a modest fiscal stimulus, with a programme of new infrastructure spending expected to run to the low billions of pounds a year. – Financial Times

Takeda, Japan’s largest pharmaceutical group, is in advanced talks with Valeant to acquire Salix Pharmaceuticals for about $10bn, according to people briefed about the negotiations. The exact terms of the potential transaction for the gastrointestinal treatment specialist company are still being discussed and two people warned that the deal could still fall apart. – Financial Times

British households can expect a cut in their disposable incomes next year as the knock-on effects of the vote to leave the European Union send inflation rocketing and weaken the outlook for the economy. The government’s freeze on tax credit payments will also play a part in dragging down real disposable incomes for the first time in four years, according to forecasts by the National Institute of Economic and Social Research (NIESR). – Guardian

One of the biggest insurance companies in Britain is to use social media to analyse the personalities of car owners and set the price of their insurance. The unprecedented move highlights the start of a new era for how companies use online personal data and will start a debate about privacy. – Guardian

Avant Homes, a privately-owned house builder, has reported a 43pc boost in revenues as the chief executive demanded the Chancellor use the Autumn Statement to help the whole UK housing market, not just the South-east. Revenues stood at £160m for the six months to October 31, and operating profit is believed to have increased by over 75pc to around £16m in the same period. – Telegraph

The government handed Heathrow a £10 million-a-year saving in business rates while increasing those charged at Gatwick, only weeks before giving the go-ahead for a £17.6 billion third runway at Britain’s biggest airport. Figures from the Valuation Office Agency show that at the five-yearly revaluation announced last month, the government cut the rateable value of Heathrow from £247.5 million to £215 million. – The Times

South West Water faces a £1.7 million fine by the industry regulator for missed targets, including a series of incidents that led to sewage being spilt into the sea. Ofwat is consulting on the penalty after finding that the company missed targets for serious waste water pollution in the year to April 2016. The spills occurred at Combe Martin, Sandy Bay and Dawlish in Devon, as well as Fistral beach and Looe in Cornwall. – The Times

US close

US equities faltered on Tuesday, as data revealed that the manufacturing sector grew steadily ahead of the Federal Reserve’s meeting on Wednesday, when the central bank is expected to stand pat on interest rates.

The Dow Jones Industrial Average fell 0.58% to 18,037.10 points, the S&P 500 declined 0.68% to 2,111.72 points and the Nasdaq 100 was also down 0.72% to 4,766.94 points.

Oil prices fell again after rebounding earlier in the session, from a 4% decline on Monday due to doubts over OPEC’s planned production cut to ease supply.

Brent crude was last down 1.48% to $47.90 per barrel and West Texas Intermediate crude lost 1.04% to $46.38 per barrel.

Philip Marey, senior US strategist at Rabobank, said: “Hiking only a week before the elections seems unlikely, therefore a December hike remains our baseline scenario.

"However, the decision to hike may not be unanimous, which could have a perverse effect on yield levels, especially at the longer end of the curve.”

The country’s manufacturing sector grew in October as the Institute of Supply Management’s index rose to 51.9 from 51.5 in September, above the 50 level that indicates an expansion.

This was above analyst forecasts of 51.7.