London pre-open: Stocks seen up on positive US cues
London stocks were to rise at the open on Tuesday following a positive session on Wall Street.
The FTSE 100 was called to open 25 points higher at 6,130.
CMC Markets analyst Michael Hewson said US markets were able to shrug off concerns about a second wave of coronavirus infections and souring Sino-US relations on hopes that the start of new coronavirus vaccine trials from Moderna and Pfizer will yield some positive results. He also pointed to the Republican party’s plans for a new $1trn stimulus bill, designed to replace the old one which expires at the end of this week.
"More notably, gold prices continued to push higher making new record highs, while the US dollar slid further, making fresh 22-month lows against a basket of currencies, as well as the euro," he said.
"The rise in US markets has continued to be driven by the likes of the tech sector with Facebook, Amazon, Apple, Microsoft and Alphabet responsible for the majority of the gains in the main benchmark index year to date, in what could be described as a mushroom effect. Take these 5 stocks out and the S&P would be down year to date, while the much broader Russell 2000 is down 10% year to date.
"Today’s European session looks set to take its cues from last night’s positive finish for US markets with a higher open, and ahead of the start of today’s Federal Reserve rate meeting, which is due to conclude tomorrow."
On the UK data front, the CBI distributive trades survey for July is at 1100 BST.
In corporate news, consumer goods giant Reckitt Benckiser reported a 10.8% jump in first-half net revenue thanks to a strong performance from its health and hygiene businesses amid solid demand for cleaning and pain relief products.
Total revenue for the half rose to £6.9bn, with revenue from the hygiene business up 13.9% to £2.7bn, while the health segment saw an 8.8% increase to £4.2bn.
Asset manager St.James's Place beat analysts' estimates on many metrics for the first half of its financial year, posting funds under management of £115.7bn, with both gross inflows and net inflows edging past forecasts. At 140%, the group's solvency ratio was also well ahead of some analysts' estimates.
Over the same period, the group's IFRS profit after tax did nearly quadrupled to £178.1m, coming in far ahead of estimates. However, the underlying cash result of £114.4m was slightly worse than the £116bn that the consensus had pencilled in.
As well, management said that "there remains significant uncertainty for the world ahead." Hence the decision to continue retaining one third of the 2019 dividend and to postpone the decision on the 2020 payout until February "when we believe we will be in a stronger position to assess the impact that COVID-19 has had on our business."
Fresnillo reported gross profit of $321.2m (£249.75m) in its first half, up 56.3% year-on-year.
The FTSE 100 company said that included a $65.1m benefit from the reassessment of the recoverable gold inventories on the leaching pads at Herradura.
It said its operating profit and EBITDA came in at $216.9m and $469.9m for the six months ended 30 June, up 232.1% and 52.6%, respectively.