London pre-open: Stocks to edge higher ahead of services data
London stocks were set to edge up at the open on Wednesday as investors eyed the latest reading on the UK services sector, particularly after this week's dismal manufacturing and construction figures.
The FTSE 100 was called to open eight points higher at 7,567.
On the data front, Markit's services PMI for June, due at 0930 BST, is expected to be unchanged at 51.0.
Ipek Ozkardeskaya, senior market analyst at London Capital Group, said: "Services stand for nearly 80% of the UK’s economic activity. A soft figure will likely reinforce the Bank of England doves’ call for a softer monetary policy to boost the waning activity, as the country feels the pinch of the global trade tensions and prepares for a tough divorce from the European Union."
She added that UK stocks remain supported by dovish BoE expectations and a softer pound. "But the FTSE 100 will likely lose the backing of the energy stocks in the coming sessions," she said.
Market participants will also be digesting data out of China earlier. The Caixin services PMI slipped to a four-month low in June of 52.0 versus expectations for a reading of 53.0, amid subdued foreign demand. Meanwhile, the composite output index dipped to 50.6 from 51.5 in May.
In corporate news, Serco said it had agreed to pay a £19.2m fine and £3.7m in costs for overcharging on a UK government contract.
The fine was reduced by 50% after Serco co-operated with the Serious Fraud Office's investigation, which began in 2013, into overbilling the Ministry of Justice to electronically tag offenders.
No criminal charges would be brought, the company added in a statement.
Sainsbury's said its like-for-like first-quarter sales dropped by 1.6%, with the general merchandise and clothing sectors continuing to experience challenging market conditions as poor weather conditions impacted demand in some seasonal categories.
Grocery sales also dropped, coming in 0.5% lower than last year's first quarter, but the supermarket giant said they improved relative to the market due to outperformance from its 'Taste the Difference' range.
Smiths Group announced said that the trustee of the Smiths Industries Pension Scheme has entered into a bulk annuity buy-in agreement with Canada Life.
The company said the buy-in policy covered liabilities totalling £176m relating to more than 2,000 legacy scheme pensioners and dependants. It was the scheme's second such policy with Canada Life, with the board saying that through a series of buy-ins, around £0.8bn of the Smiths Industries Pension Scheme liabilities had now been insured, and across the company's two main UK schemes around £1.6bn of the liabilities were now insured.