London pre-open: Stocks set for higher start

London stocks were set for a slight rebound on Wednesday morning after falling the previous session, though concerns over the health of the Chinese economy were likely to dominate newsflow on a quiet day for company news.

By 0715 BST, futures on the FTSE 100 were up by 34.5 points at 7,543.

The UK benchmark index declined 0.4% on Tuesday after weaker-than-expected trade data from China dented share prices in the mining sector, while banking stocks fell on the back of concerns about a windfall tax levied against their Italian counterparts.

“A disappointing set of China trade numbers for July saw European and US markets selloff sharply yesterday, reinforcing concerns that the Chinese economy is struggling, undermining hopes that the slowdown in Q2, was simply a one-off,” said Michael Hewson, chief market analyst at CMC Markets UK.

In economic news on Wednesday, China fell into deflation in July, official government figures revealed, with consumer prices falling 0.3% year-on-year (after a 0.2% gain in June) on the back of a sharp drop in food inflation from +2.3% to -1.7%,.

“Consensus expected this outcome, but it is still a striking development,” said analysts at Danske Bank. “It is rare that consumer prices decline in China. It happened [during] global crises in 2020 and 2009. It also comes at a time when many other large countries are still battling high inflation.”

Coca-Cola HBC lifts guidance

As for corporate announcements, Coca-Cola Hellenic Bottling Company posted a 17.8% jump in organic revenues for the first half of the year, with organic sales per case growth of 19% thanks to price and mix improvements. Also on an organic basis, earnings before interest and taxes were up by 17.7% alongside unchanged organic margins of 11.2%. The company also lifted guidance for average annual organic growth of 6-7%, up from a prior range for 5-6%. Average annual organic EBIT was seen expanding 20-40bp per year. Free cash flow on the other hand dropped by 22.9% to ~€256.6bn.

Gambling giant Flutter Entertainment reported 38% first-half revenue growth and a swing to profitability on Wednesday, largely driven by a robust US performance and the addition of Sisal last year. Its profit after tax totalled £128m for the period, compared to a loss of £112m in the first six months of 2022. For the second half, it anticipated full-year adjusted EBITDA to align with market expectations, considering normalised sports results.