London pre-open: Stocks set for more gains

London stocks were set for more gains on Tuesday, having gained a day earlier as Sainsbury’s surged on deal speculation.

The FTSE 100 was called to open 14 points higher at 7,123.

CMC Markets analyst Michael Hewson said: "European markets enjoyed a modest rebound from their worst week since February, while US markets hit new record highs for the Nasdaq and S&P500."

He said the move higher looks to have had its origins in Friday’s comments from Dallas Fed President Robert Kaplan’s admission that he might adjust his views on a taper if the current surge in Delta cases prompts a US economic slowdown in the coming months.

"In a sense this was a timely intervention on the part of Kaplan, reminding markets that the Fed remains very much data dependent and that for all the focus on the timing and composition of a taper, it's not likely to happen if Fed officials feel the economy isn’t able to withstand it."

He added: "Some have suggested that the US FDA granting full regulatory approval of the Pfizer BioNTech vaccine helped oil the wheels for the move higher to new records for US stocks, however this feels like adding a narrative to fit the price action."

In corporate news, Wood Group reported a rise in interim profit as trading momentum improved in the second half and its order book grew.

Operating profit for the six months to June 30 rose to £68.2m from £65.6m a year earlier. On a pre-tax basis, profits soared to £18.4m from £0.9m although revenue fell 22.9% to $3.2bn. The dividend was withheld.

"Trading momentum and good growth in our order book, which is up 18% year-to-date, underpin our confidence in delivering a stronger second half which will reflect a return to growth compared to both H1 2021 and H2 2020, and further growth in our full year adjusted EBITDA margin," the company said.

Elsewhere, Spectris said it has agreed to sell its NDC Technologies business to Nordson for $180m (£130m).

NDC, part of Spectris' Industrial Solutions division, designs, develops and produces a range of on-line and off-line process measurement and control instrumentation.