London pre-open: Stocks seen muted ahead of US earnings

Tue 14 Jan 2020

LONDON (SHARECAST) - (Sharecast News) - London stocks were set for a muted open on Tuesday as investors look ahead to some key US bank earnings later in the session and this week's signing of the 'phase one' trade deal between the US and China.

The FTSE 100 was called to open unchanged at 7,617.

On the US corporate front, fourth-quarter earnings are due from banking giants Citigroup, JP Morgan and Wells Fargo later on Tuesday, while Bank of America and Goldman Sachs are slated to report on Wednesday.

Sentiment was set to be boosted after the US removed China from its currency manipulator list ahead of the signing of this week's phase one trade deal. CMC Markets analyst Michael Hewson noted that details of the deal "are slowly becoming clearer, in particular with respect to policies on forced technology transfers".

Investors will also be mulling the latest trade data out of China, which showed that that imports rebounded in December, up 16.3% and beating expectations, with US imports of agricultural goods faring particularly well. Exports rose 7.6% following a 1.3% decline in November, "in a sign of increased demand from the global economy", Hewson said.

In UK corporate news, house builder Taylor Wimpey said it expected full year results to be in line with expectations despite economic and political uncertainties cause by Brexit.

"While 2020 will continue to be a year of change for the UK, we welcome the increased political stability following the general election. We start the year with a strong order book and continue to target a smoother profile of completions throughout the year but expect 2020 to continue to be second half weighted," the company said.

Builders merchant Grafton reported better-than-expected trading conditions in November and December despite a weaker UK market.

The group now expected to report full year adjusted operating profit of around 202m and 190m on a pre-IFRS 16 basis for its continuing operations.

Group revenue from continuing operations increased by 2.7% in 2019 to 2.67bn. Growth in constant currency was 2.9% and average daily like-for-like revenue rose 1.9%.

Specialty chemicals company Elementis updated the market on its trading, reporting that the final quarter of the year was "somewhat subdued", and as a result, adjusted operating profit for 2019 was now expected to be between $122m and $124m (94.04m and 95.58m).

The FTSE 250 company did say that its operating cash conversion was expected to be in line with its medium-term performance objective of at least 90%.

It said it would announce its full-year results for the 12 months ended 31 December on 4 March.
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