London pre-open: Stocks seen flat; services data eyed

Stocks in London were expected to open little changed on Tuesday ahead of services data and the Bank of England’s financial stability report, as worries about Brexit continued to weigh on investors' minds.

London’s FTSE 100 was set to open just five points lower than Monday’s close at 6,517.

Markit services PMI at 0930 BST and it’s expected to show a decline to 52.7 in June from 53.5 the previous month. The Financial Stability Report is due at 1030 BST.

CMC Markets’ Michael Hewson said: “The shock fall in yesterday’s UK construction PMI for June to seven year lows of 46 was a big surprise and doesn’t bode well for the sector heading into Q3, and while manufacturing improved, the main focus today rests even more importantly on the UK services sector which has borne the weight on its shoulders for the past few years of the UK’s economic outperformance.

“We need to see a decent June number here or we could well see a situation that sees the UK economy potentially stagnate in Q2. A slow down from 53.5 to 52.8 is expected ahead of the latest Bank of England financial stability report.”

Stocks in Asia were mostly lower. The Shanghai Composite was in the black, however, as the Chinese Caixin services PMI for June rose to 52.7 from 51.2, marking the fastest increase in 11 months.

In corporate news, housebuilder Persimmon said it was still too soon to judge the effect of Brexit on the new homes market, adding that trading through the first half had been “strong”.

“We believe that market fundamentals remain strong, supported by long term unfulfilled demand, and that the UK housing market will continue to provide good opportunities for those companies with the right strategic focus and the balance sheet strength to navigate future changes in trading conditions.”

The group increased its legal completion volumes by 6% to 7,238 new homes in the period, with the average selling price of around £205,500 having increased by 6%. Group revenues of £1.49bn were 12% ahead of last year.

Budget airline Ryanair reported an 11% increase in traffic in June to 10.6m customers.

The load factor, which gauges how many seats were taken up on the flights, nudged up to 94% from 93% and rolling annual traffic grew 16% to 109.6m.

Chief marketing officer Kenny Jacobs said: “These record monthly numbers and load factors were delivered, at lower fares, despite the repeated disruptions caused by unacceptable French ATC strikes, and we are again calling on the European Commission to urgently take action to reduce the impact of these ATC strikes on Europe's citizens and the single market."

Eastern Europe’s largest low-cost airline, Wizz Air, reported further growth in passenger numbers for June.

The FTSE 250 firm said its capacity increased by 15.3% over last June to 2.19 million seats, with the number of seats improving 18.7% on a rolling 12 month basis.

A total of 2.01 million passengers flew during June - 16.2% more than June 2015 - with 20.86 million flying with Wizz during the year, a 20.5% improvement.

The airline’s load factor improved 0.8 percentage points during the month to 91.7%, and by 1.3 percentage points on a rolling 12 month basis to 88.4%.