Rio Tinto terminates two directors, first half profits rise at Johnson Matthey

London open

The FTSE 100 is expected to open 10 points higher on Thursday, after closing down 0.63% at 6,749.72.

Stocks to watch

Rio Tinto has terminated the contracts of two directors after an internal review into a controversial payment made to a consultant concerning the Simandou iron ore project in Guinea. Energy and minerals chief executive Alan Davies and legal and regulatory affairs group executive Debra Valentine were said to have "failed to maintain the standards expected of them under our global code of conduct".

Underlying pre-tax first half profits at specialist chemicals company Johnson Matthey rose 5% to £219.6m on revenues of £5.6bn, down 2%.Reported pre-tax profits fell 36% to £210m. The interim dividend was lifted 5% to 20.5p. Chief executive Robert MacLeod said the company had a “solid first half, supported by favourable exchange rates, and our health and safety performance improved. Trading for the group during the period was in line with our expectations in our continuing businesses on a constant currency basis. We have increased our interim dividend by 5% reflecting our confidence in the medium term”.

Royal Mail’s half year revenue increased slightly due to its European business, while the FTSE 100 company gears up for a busy Christmas, which its full year performance depends upon. For the six months ended 25 September, revenue nudged up by 1% to £4.58bn, compared to last year, driven by a good performance from GLs, its continental European parcel business.

AstraZeneca announced the completion of the licensing agreement between MedImmune, its global biologics research and development arm, and Allergan, for the global rights to MEDI2070 on Thursday. The FTSE 100 firm said MEDI2070 is an IL-23 monoclonal antibody currently in a Phase IIb clinical trial for moderate-to-severe Crohn's disease and ready for Phase II for ulcerative colitis, diseases that sit outside AstraZeneca's three main therapy areas. “AstraZeneca will not retain a significant ongoing interest in MEDI2070,” its board said in a statement.

Newspaper round-up

Philip Hammond will admit to the largest deterioration in British public finances since 2011 in next week’s Autumn Statement when the official forecast will show the UK faces a £100bn bill for Brexit within five years. Slower growth and lower-than-expected investment will hit tax revenues hard, the official forecasts will show, supporting the Treasury’s pre-referendum warnings that the long-term economic costs of Brexit are high. – Financial Times

Britain has jumped five places to tenth position in a World Bank league table of business-friendly tax regimes, in a sign of the government’s drive to increase competitiveness. The move reflected the corporate tax cuts introduced by George Osborne, the former chancellor, to demonstrate that Britain was “open for business”, as well as the relatively light compliance burden in the UK. The rise up the rankings also reflected Britain’s high score on a new indicator used for the survey, measuring how easy it is to receive VAT refunds, correct errors in tax forms and comply with a tax audit. – Financial Times

Car insurers have vowed to pass on the savings from a fresh crackdown on fake and exaggerated whiplash claims, which the Government has confirmed a year after the reforms were first announced. The right to cash compensation for minor whiplash could be abolished entirely, or capped at £425 for victims who can prove their injuries, under the proposals unveiled by the Ministry of Justice. – Telegraph

Royal Bank of Scotland could be forced to pay more than $12bn (£9.7bn) to settle claims in the US that it mis-sold toxic mortgage securities in the run-up to the financial crisis, according to UKFI, the body which manages the taxpayers’ stake in the lender. James Leigh-Pemberton, the chairman of UK Financial Investments (UKFI), told the Treasury Select Committee that the potential fine imposed on RBS by the US Department of Justice (DoJ) “might be $5bn, it might be $12bn”. He continued: “Based on what was said to Deutsche Bank it could be more”. – Telegraph

The archbishop of Canterbury will spend the next two years as part of a commission launched by a left-leaning thinktank that aims to rewrite the rules for Britain’s post-Brexit economy. Justin Welby will join other leading figures including the general secretary of the TUC, Frances O’Grady, and the chairman of the John Lewis Partnership, Sir Charlie Mayfield, on the Institute for Public Policy Research (IPPR) programme that will seek remedies for six key UK weaknesses. - Guardian

US close

A week after Donald Trump's unexpected election victory sent US stocks on a contrarian seven-day surge, the steam finally ran out on Wednesday as banks wobbled and the dollar notched up a 14-year high.

The Dow Jones Industrial Average could not build on its record closing high from the previous day, losing 55 points or 0.29% to close at 18,868.14 and the S&P 500 lost 3.45 points or 0.16% to 2,176.94.

The Nasdaq however gained almost 19 points or 0.36% to 5,294.58 as tech stocks, led by Apple and Microsoft, rebounded after their 'Trump dump'.

Oil prices were only just below flat, with West Texas Intermediate still above $45.

The dollar index hit a 14-year high of 100.57 during the Wall Street session, as markets continued to price-in the prospect of higher inflation and interest rates.

"The market is due for a correction, and we have two factors: the dollar ... and rising bond yields," said Peter Cardillo, chief market economist at First Standard Financial. "If you look at the 10-year yield, it's knocking on the door of 2.5 percent," he said. "At some point, that is going to prevent equities from going much higher."

Bank stocks JP Morgan and Goldman Sachs led the fallers as they particularly felt the pressure as investors digested renewed hawkish commentary from several Federal Reserve officials, the latest being Dallas Fed chief Robert Kaplan saying it was time to normalise interest rates.