London pre-open: Stocks seen lower as commodities remain a drag
London stocks are called to open lower on Tuesday, with weakness in commodity prices likely to continue to weigh.
The FTSE 100 is expected to open 22 points lower than Monday’s close at 6,283.
On the macroeconomic front, CBI distributive trades are at 1100 GMT. Ahead of that though, investors will keep an eye out for the inflation report hearings.
“Today’s UK inflation report hearings will see Bank of England Governor Mark Carney come in for his usual quarterly grilling in front of the Treasury Select Committee as MP’s pick through the contents of the latest quarterly report which was delivered earlier this month, and surprised by its dovish nature,” said Michael Hewson, chief market analyst at CMC Markets.
“While MPC member Ben Broadbent last week played down the unexpected long term impact on lower rates, the recent weakness in sterling suggests that Mr Carney could decide to wear his dove’s hat today. Given recent sterling strength against the euro one suspects he might, but there's very little he can do about the strength of the pound, given the policy divergence in play between the ECB and Bank of England.”
In the US, the second release of third quarter GDP is at 1330 GMT, while S&P Case-Shiller house prices are at 1400 GMT and consumer confidence is at 1500 GMT.
Rolls-Royce Holdings said a “major restructuring” is on the cards as it unveiled the results of its operational review.
The FTSE 100 company released an outline of its intentions on Tuesday ahead of a full presentation later in the day.
It said the restructuring will “simplify the organisation, streamline senior management, reduce fixed costs and add greater pace and accountability to decision making”.
There are also proposals to increase revenue segmentation, business by business gross margin and trading cash flow analysis.
Overall the company plans to save between £150m and £200m per year, with benefits accruing from 2017.
Catering firm Compass Group posted a 5.8% rise in underlying revenue for the year to the end of September thanks to continued growth in North America and a strong recovery in its European and Japanese businesses.
Revenue came in at £17.8bn, while operating profit rose 4.6% to £1.3bn.
Chief executive Richard Cousins said: “Our expectations for 2016 are positive and unchanged. The pipeline of new contracts is strong, and the savings from the restructuring, together with the margin improvement in the rest of the group, are expected to offset the impact of lower volumes and pricing pressures in our Fast Growing & Emerging region.”
Kingfisher reported increased like-for-like sales in the third quarter of 2.6%, with total sales of £2.7bn down 2.5% due to currency effects as a strong UK performance was undermined by continued softer trading in France.
Retail profit of £223m was up 0.4% in constant currencies but margins in both the stronger UK market and softer France shrank.