Whitbread will meet full-year expectations, RBS takes another £3bn for US penalties

London open

The FTSE 100 is expected to open 14 points higher on Thursday, after closing up 0.2% at 7,164.43 on Wednesday.

Stocks to watch

Whitbread, the owner of Costa Coffee and Premier Inn, reported that third quarter revenue rose and that it will meet full year expectations, as it remains on track with its three point plan to grow and innovate its UK businesses, to expand internationally, and to build a platform to support future growth. In the quarter ended 1 December 2016, sales increased 8.6% and rose 1.7% on a like for like basis, compared with the same period the previous year.

Royal Bank of Scotland confirmed it will take a further £3.1bn provisions to pay off a looming penalty in the US for its sale of residential mortgage-backed securities in the run up to the financial crisis. RBS said on Thursday that it has set aside a total of £6.7bn, which would reduce its tangible net asset value per share at 30 September 2016 by 27p to 311p.

Venture capital company 3i Group described a “robust performance” from its portfolio companies in the third quarter on Thursday, and continued investment momentum. The FTSE 100 firm’s net asset value per share at period end was 558p, for a total return of 24.1% at 31 December. Cash realisations reached £917m in the nine months from its private equity business, while year-to-date private equity cash investment were £356m.

Newspaper round-up

The car industry has told Theresa May that the introduction of tariffs after Britain leaves the EU is a “red line” issue that would lead to a fall in sales and potentially result in job losses. In a severe warning about the consequences of a hard Brexit, Mike Hawes, the chief executive of the Society of Motor Manufacturers and Traders, said tariffs would make UK car plants uncompetitive and it was critical that any trade deal with the EU contained some of the benefits of the single market and customs union. – Guardian

Ministers are considering taking direct control of the rail franchise that includes Southern rail, it has been claimed. Options ranging from splitting off Southern from Govia Thameslink Railway (GTR), to a complete “managed exit” to take direct control of the entire franchise until a new contract could be let are under consideration by the Department of Transport, according to the Rail Business Intelligence magazine. – Guardian

The single currency is failing to bring its economies closer together, with the strong core nations pulling ever further ahead of the weak periphery - leaving the eurozone as a whole set for years of stagnation and political crises, according to analysts at credit ratings agency Moody’s. Plans to reform weak economies have largely ground to a halt, Moody’s fears, while debt levels are not falling as hoped, leaving the countries vulnerable to economic shocks. – Telegraph

An alleged cash-for-contracts scandal that has engulfed Britain’s biggest housebuilder went further than previously thought, the Metropolitan police said as it gave details of two further arrests at Barratt Developments. The company announced in October that Alastair Baird, 52, regional managing director of its London division, had been arrested after the company had handed to police the initial findings of an internal investigation. A 47-year-old woman from east London, a former Barratt employee, was also arrested on suspicion of bribery at the time. – The Times

US close

As new President Donald Trump rubber stamped the building of a wall between the US and Mexico, the Dow Jones cemented its early breach of the historic 20,000 barrier for the first time on Wednesday by closing above that hurdle.

On top of the billionaire property developer's bricklaying plans, he also pleased Wall Street with orders to reduce the regulatory burden on domestic manufacturers and the construction of two major new oil pipelines, with investors also running the rule over a deluge of earnings.

The Dow finished up a bigly 0.78% to 20,068.51, the S&P 500 ended the day 0.80% higher at 2,298.37, and the Nasdaq increased almost 1% to 5,656.34.

Market analyst Neil Wilson at ETX Capital said: “The Dow has capped a remarkable rally since Donald Trump’s election by finally breaking the 20,000 level. It’s psychologically huge and, after a bit of pullback ahead of the inauguration, really confirms that the ‘great rotation' from bonds to stocks is definitely upon us. Fears about protectionism are running second to optimism about inflation and growth – for now at least.

“Trump’s election victory, far from roiling markets, has been greeted with universal optimism about what it means for global growth. Something like $3trn has been pulled from bonds and $3trn pumped into equities.”