Argos gives Sainsbury's an online boost, NEX selling c2c rail franchise
London open
The FTSE 100 is expected to open 11 points lower on Wednesday, after closing up 0.52% at 7,275.47 on Tuesday.
Stocks to watch
Sainsbury's third quarter like-for-like grocery sales were only just positive but last year's acquisition Argos helped lift the group as online sales proved a decisive factor over the key festive period. Total group sales for the 15 weeks to 7 January rose 0.8%, with group LFL sales up 1.0%. Supermarket LFLs edged up 0.1% but Argos LFLs climbed 4%.
Housebuilder Taylor Wimpey updated the market on its trading on Wednesday, ahead of its full year results for the 2016 calendar year, with total UK home completions increasing by 4% to 13,881 during the period. The FTSE 100 firm reported a year end order book valued at £1.68bn, down from £1.78bn a year earlier, with a stable short-term landbank of 76,000 plots.
Passenger transport operator National Express Group announced on Wednesday that it reached an in-principle agreement for Trenitalia, the passenger rail transportation company part of FS Italiane Group, to acquire its ‘c2c’ commuter rail franchise. The FTSE 250 firm said completion of the acquisition is conditional upon final consent from the Department for Transport, expected to occur within the next three to four weeks. Total consideration is expected to be in the region of £70m, resulting in a small net profit for National Express.
Newspaper round-up
Bovis Homes has been accused of pressuring customers to move into unfinished houses before Christmas by offering them cash incentives, a week before it issued a profit warning. Several Bovis customers said they had been offered cheques of £2,000 to £3,000, or other incentives, if they completed on their house purchases before 23 December. – Guardian
The Volkswagen group confirmed on Tuesday that it has negotiated a $4.3bn (£3.53bn) draft settlement with US regulators to resolve its diesel emissions troubles, alongside plans to plead guilty to criminal misconduct charges. The guilty plea is part of the deal to settle the scandal, as the carmaker looks to restore its tarnished global brand. Volkswagen (VW) said that, with the addition of the fine, its diesel scandal costs will exceed the nearly €18.2bn (£15.76bn) it set aside to handle the problem. VW added that it will face oversight by an independent monitor over the next three years. – Guardian
The iPad was once expected to render the PC practically extinct, with households and offices forecast to ditch their computers for portable touchscreens. But sales of tablet computers are now set to fall sharply for their third consecutive year after researchers said demand had peaked and that the technology had proved less popular than smartphones or home computers. – Telegraph
Some companies are simply “paying lip service” to their shareholders' complaints about boardroom bonuses and governance rules, according to one corporate watchdog. Despite several years of bruising rebellions from investors unhappy at directors, pay packets and business decisions, a few of Britain’s biggest listed firms continue to give vague or non-existent explanations for falling short of the rules. – Telegraph
The World Bank has slashed its growth forecasts for Britain up to 2019, with no sign of recovery from a Brexit-induced slowdown. In its first update since the European Union referendum last June, the bank cut its expectations for UK growth from 2.1 per cent to 1.2 per cent in 2017 and from 2.1 per cent to 1.3 per cent in 2018. It predicted growth of 1.3 per cent in 2019. – The Times
Senior figures in the City are calling on Theresa May to negotiate a three-year breathing space after Britain leaves the European Union in 2019, during which existing financial rules and trading arrangements remain in force. Xavier Rolet, chief executive of the London Stock Exchange, and Douglas Flint, chairman of HSBC, want a standstill arrangement to give them and other firms and their clients more time to prepare and to prevent an early exodus of companies and jobs from London. – The Times
US close
US stocks finished mixed on Tuesday as investors weighed economic data and looked ahead to a speech by President-elect Donald Trump and corporate earnings.
The Nasdaq reached its fourth record close in a row, marking the longest run of record closes since 1999. The index closed up 0.36% to 5,551.82 points.
In contrast, the Dow Jones Industrial Average fell 0.16% to 19,855.53 points while the S&P 500 ended flat at 2,268.90 points.
Traders are highly awaiting a news conference from Trump in New York on Wednesday, his first since being elected on 8 November.
Michael Hewson, chief market analyst at CMC Markets, said investors are beginning to become a “little more cautious ahead of a number of key earnings announcements, as well as a speech by president-elect Donald Trump in New York tomorrow, where we may get further clues as to the type of president he intends to be when he takes over the reins in 10 days’ time from President Obama”.
The corporate earnings season will kick off on Friday with big lenders, Bank of America and JP Morgan Chase reporting.