London pre-open: Stocks seen lower amid US election worries, ahead of Fed

Stocks in London were set to open lower on Wednesday as jitters set in after a new poll revealed Republican candidate Donald Trump was in the lead in the US presidential race and ahead of the Federal Reserve’s rate announcement.

The FTSE 100 was called to open 37 points lower than Tuesday’s close at 6,870.

CMC Markets’ Michael Hewson said: “As with all binary outcomes there can only be one winner and one loser and having had their fingers horribly burnt with the “Brexit” vote in June, financial markets appear to be starting to pare some risk in the lead up to next week’s Presidential vote, in the event that in circumstances that would probably have been unthinkable a week or so ago, that Donald Trump could win the US Presidency.”

As far as the Fed decision is concerned, Hewson said there is little expectation it will act on interest rates on Wednesday, with markets assigning a mere 16% probability of a move.

“But we might get an indication from US policymakers as to whether they give stronger guidance towards a December move, or whether the statement is broadly unchanged,” he said.

On the data front, the UK construction purchasing managers’ index is at 0930 GMT. In the US, the ADP employment report is at 1215 GMT and the FOMC rate decision is at 1800 GMT.

In corporate news, 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.