London pre-open: FTSE set to dip as property wobble continues

The FTSE 100 is expected to move around 13 points lower on Wednesday morning as sterling set a new 31-year low in the early hours of the morning following warnings around Brexit risks from the Bank of England and a new wobble for the property sector.

Overnight, US stocks finished in the red on Tuesday as investors returned from the Independence Day holiday and oil prices retreated more than 4% to $46.82 a barrel for WTI and $48.16 for Brent.

The combination on Tuesday of a suspension of commercial property fund redemptions by a number of large companies, which precipitated a broader selloff in the UK property sector, the warning from the BoE that some Brexit effects were already starting to "crystallise" and the poor UK service sector data created a fearsome backdrop for the pound.

It has resulted in "a bit of a domino effect in locally exposed sterling assets, as well as risky assets generally across the world", said Michael Hewson, chief market analyst at CMC Markets.

Looking at Wednesday's likely points of interest, Hewson said the latest minutes from the Federal Reserve's rate setters might not be especially relevant.

"With the latest FOMC minutes due out later today attention will be fixed on the narrative behind the decision to keep rates on hold.

"We do know that some Fed policymakers were somewhat dismissive of the potential for the Brexit vote to impact on the US economy, however events have moved on since then and policymakers at the time will probably have been more concerned about the abrupt slowdown in the recent jobs market data that surprised the markets less than two weeks before the meeting."

In company news, low cost airline easyJet reported a 5.8% jump in passengers for the month of June on Wednesday, with 6.94m customers taking to their orange jets, compared with 6.56m in June 2015. The FTSE 100 firm’s load factor for the month was 94.1%, up 1.4 percentage points from the 92.7% figure the same time last year.

Late on Tuesday, the government unveiled changes to the new Digital Economy Act that will scrap a law that could boost the coffers of public broadcasters such as the BBC, ITV, and Channel 5 by tens of millions of pounds a year. ITV was said to be poised to seek to charge Virgin Media to broadcast its flagship channel, after this decision.

Melrose Industries has agreed to acquire US air conditioning and security techology group Nortek for $1.44bn in cash, funded by a proposed £1.61bn issue of new shares. FTSE 250-listed Melrose said the addition of the Rhode Island outfit would be "significantly accretive" to headline earnings per share in the first full financial year of ownership and thereafter.

A High Court challenge by alternative network builder CityFibre has accused regulator Ofcom of making “ridiculous” policy decisions that will cement BT Group’s position in the broadband market as a “single, unassailable wholesale infrastructure provider”. The communications regulator, the Telegraph reported, is planning a major overhaul of the broadband market by allowing rival service providers such as Sky and Vodafone to connect their own equipment to the high-capacity fibre-optic lines inside BT’s Openreach network at controlled prices.