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(Alliance News) - Stocks in London are set for a lower open on Tuesday, as investors nervously await further trade war developments after a flurry of activity - and tweets - over the weekend.
Bunzl early Tuesday reported a slight rise in interim profit, despite weakening economic conditions, in an otherwise quiet day for UK company news.
IG futures indicate the FTSE 100 index is to open 16.7 points lower at 7,078.28. The blue-chip index closed down 0.5% at 7,094.98 on Friday. Markets in London were closed on Monday for the August Bank Holiday weekend.
US President Donald Trump said Monday US and Chinese trade negotiators would "very shortly" resume talks in what he described as a breakthrough in the two economic superpowers' trade war.
"China called last night..., said let's get back to the table. So we'll be getting back to the table," Trump told reporters at the G7 summit in Biarritz, France.
Trump said Chinese officials had made two "very, very good calls" and that "they want to make a deal".
The president's tone was in marked contrast to the steady hardening of positions in the number one and two economies. Just on Friday, Trump sharply raised tariffs on all Chinese imports after Beijing hiked its own levies.
"Trump noted China wanted a deal very badly and the two had a call to get the talks back to the table. Trump's conciliatory tone after last week's escalation is just what the markets needed to improve risk sentiment and push higher in such uncertain times," said Jasper Lawler at London Capital Group.
"A lack of confirmation from China indicates this latest headline could just be Trump back peddling after seeing the market's heavy fall from the previous week. Yet investors are willing to cling on to the optimism stemming from Trump's softer tone. China's silence and the unsubstantiated nature of Trump's claims [means that] a risk-off reversal could be in store sooner rather than later.
"The number of twists and turns in the trade dispute, particularly more recently have made the markets incredibly challenging to trade. Traders are so sensitive to US–Sino trade talk amid concerns over a slowing global economy, a headline or tweet can quickly cause a significant move," Lawler continued.
In the US on Monday, Wall Street ended higher, with the Dow Jones Industrial Average closing up 1.1%, the S&P 500 also up 1.1%, and the Nasdaq Composite 1.3% higher.
The Japanese Nikkei 225 index ended 1.0% higher Tuesday. In China, the Shanghai Composite is up 1.3%, while the Hang Seng index in Hong Kong is down 0.3%.
In early UK corporate news, FTSE 100 distribution firm Bunzl reported a slight rise in profit for the six months to June, despite slowing market conditions.
Pretax profit climbed 1.6% to GBP200.5 million, with the adjusted figure climbing 2.7% to GBP264.2 million. Bunzl's revenue rose 4.3% to GBP4.53 million.
Bunzl has increased the interim dividend by 2.0%, to 15.5 pence per share.
"Against the background of slowing macroeconomic and market conditions across the countries and sectors in which we operate, Bunzl has produced a resilient operating performance with high cash conversion and an increased dividend," said Chief Executive Frank van Zanten.
"Looking forward, the group's expectations for 2019 remain unchanged. Despite continuing economic uncertainties, the board believes the combination of our strong competitive position, diversified and resilient businesses and ability to consolidate our fragmented markets will lead to further progress. We have a strong balance sheet and are in active discussions with a number of acquisition targets which we anticipate will result in additional deals during the remainder of the year."
Russian gold miner Polymetal International reported a 20% rise in revenue for the first half of 2019 to USD946 million, mainly driven by a 22% increase in gold equivalent production. Gold sales climbed 36% year-on-year to 604,000 ounces, with prices flat on the year before.
Polymetal's adjusted earnings before interest, tax, depreciation, and amortisation rose 34% to USD403 million, "mostly driven" by higher output, though net earnings fell 13% to USD153 million due to foreign exchange.
The company has increased the interim dividend by 18% to 20 US cents, and has reiterated 2019 production guidance of 1.55 million ounces of gold equivalent.
Elsewhere, Bank of Cyprus reported a 3.8% drop in net interest income for the six months to June to EUR204.1 million, though its pretax loss narrowed significantly to EUR15.7 million from EUR55.9 million.
The lender's common equity tier 1 ratio for the half-year was 15.2%, compared to 14.9% at December's end, with gross loans dipping 1% to EUR13.07 billion and customer deposits falling 3% to EUR16.38 billion.
The company has also received European Central Bank approval for the appointment of Panicos Nicolaou as chief executive, effective from the start of September.
In UK political news, Jeremy Corbyn has insisted Labour will "do everything necessary" to halt a no-deal Brexit as he meets other senior members of Parliament to try to find a way to challenge UK Prime Minister Boris Johnson over EU withdrawal.
Before discussions on Tuesday with leading Commons figures opposed to breaking EU ties without an agreement in place, Corbyn insisted the country was heading for a crisis under the prime minister.
A no-deal exit from the EU would amount to a "bankers' Brexit" benefiting the rich, Corbyn said.
Johnson acknowledged on Monday reaching a new withdrawal deal with the EU will be a challenge as there was "substantial disagreement" between the two sides, but said he remained committed to trying.
Johnson also clashed with EU officials over whether Britain must pay the so-called divorce bill agreed with the EU in negotiations over the past few years - even in the event of a no-deal Brexit.
The pound was quoted at USD1.2222 on Tuesday, down from USD1.2274 late Friday.
In European economic news, on Monday, a report from ifo Institute said German chief executives' worry lines are getting deeper, showing a decline in business sentiment in Germany in August.
The ifo Business Climate Index fell in August to 94.3 points from 95.8 points, hitting its lowest level since November 2012.
"Companies were once again much less satisfied with their current business situation. Pessimism regarding the coming months also increased. There are ever more indications of a recession in Germany," Clemens Fuest, president of ifo Institute, said.
Germany confirmed Tuesday its economy shrank modestly in the second quarter after foreign trade crimped growth from the largest eurozone economy.
Second estimate data from Destatis showed gross domestic product in the second quarter of 2019 shrank 0.1% on the first quarter. This is in contrast to the 0.4% quarter-on-quarter growth reported in the first quarter.
The second quarter figure was in line with the initial GDP estimate given in mid-August.
"The development of foreign trade slowed down economic growth in the second quarter of 2019," Destatis said in a statement.
The economic calendar on Tuesday will see US consumer confidence at 1500 BST.