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(Alliance News) - Stocks are set for a lower open in London on Wednesday, with traders wary following a threat by the US to impose more tariffs on China.
In early corporate news in London, Kingfisher said recent trading has been disappointing while business software firm Sage Group reported a "strong" financial year.
IG futures indicate the FTSE 100 index is to open 7 points lower at 7,316.80. The blue chip index closed up 16.10 points, or 0.2%, at 7,323.80 on Tuesday.
US President Donald Trump on Tuesday warned failure to get a trade deal with China will prompt more tariffs.
"If we don't make a deal with China, I'll just raise the tariffs even higher," he told reporters at the White House.
Trump's latest tough comment came as markets are watching intensely for signs of progress in the two economic superpowers' attempt to reach a so-called "phase one" partial deal to take the heat out of a growing trade war.
"In the absence of a credible and comprehensive trade deal roadmap, investors might think optimism around phase one has peaked and turned more defensive to protect profits by taking chips off the table. Investors may be willing to look through the headline ping pong, but the missing roadmap they most certainly are not," commented Stephen Innes, chief Asia market strategist at AxiTrader.
"Trust remains a considerable problem, and there is still little clarity on how that trust gap might be bridged, especially given China has made it abundantly clear removing existing additional tariffs is a precondition for reaching a deal.
"Until that gap has been bridged, and the US administration agreed to a rollback, or at minimum provides a road map as to how that might be achievable, those threatening trade talk pessimism clouds will continue to linger," Innes added.
Wall Street ended mixed on Tuesday, with the Dow Jones Industrial Average closing 0.4% lower, the S&P 500 down 0.1%, but the Nasdaq Composite up 0.2%.
The Japanese Nikkei 225 index closed 0.6% lower on Wednesday. In China, the Shanghai Composite ended down 0.8%, while the Hang Seng index in Hong Kong is down 0.6%.
Brent oil was quoted at USD60.80 a barrel early Wednesday, from USD61.16 a barrel at the London equities close Tuesday. Late on Monday, a barrel was trading at USD62.20, with the price slipping over lingering US-China trade war fears.
The Chinese central bank cut its benchmark interest rates as expected on Wednesday to drive down lending costs amid slowing growth, Reuters reported.
The People's Bank of China lowered the interest rate for its one-year loan prime rate to 4.15% from 4.20% previously. The five-year LPR was trimmed to 4.80% from 4.85% prior.
The fresh cuts to interest rates follows a series of other lending rate reductions recently which are targeted to push banks to lend more to small and medium-sized business.
On the London Stock Exchange, Sage Group reported "strong growth in high-quality" recurring revenue, with the figure up 11% organically to GBP1.56 billion. Total organic revenue rose 5.6% to GBP1.82 billion, with the reported figure up 4.9% to GBP1.94 billion.
Sage's pretax profit slipped 9.3% to GBP361 million, and the underlying figure declined by 11% to GBP425 million.
The company's annual dividend has risen 2.5% to 16.91 pence per share, and it has decided to return an extra GBP250 million to shareholders following the sale of Sage Pay, announced on Monday.
The firm said profit was hit by increased investment as well as a rise in variable staff pay following "strong business performance".
Sage's outlook is "optimistic", and it sees recurring revenue growth in its new financial year of 8% to 9%.
United Utilities reported a 25% decline in pretax profit for the six months to September to GBP158.6 million, with the underlying figure rising 0.7% to GBP198.2 million.
The utility's revenue for the half was up 2.1% to GBP935.5 million, and it has increased the interim return by 3.2% to 14.20p.
The company said the profit fall was due to a rise in finance expenses by GBP99 million, which included fair value movements.
DIY retailer Kingfisher said trading in the three months to October was "disappointing", with sales falling 3.7% to GBP2.96 billion. Like-for-like revenue slipped 3.7%.
Kingfisher said this "reflects continuing disruption from new range implementations, lower promotional activity and ongoing operational challenges in France, and softer market conditions in our main markets".
Kingfisher expects the UK market to remain subdued, and in France the firm continues to believe its Castorama stores will underperform the wider market.
Aviva has simplified into five divisions, the insurer said, and it is targeting GBP300 million of net savings by 2022.
Operating profit for 2019 is "broadly in line" with expectations, and it will be investing GBP1.3 billion over the next three years.
"Consistent with the operating trends reported in our 2019 interim results, we have seen continued progress in Canada and stronger sales in bulk purchase annuities, offset by weaker results in Aviva Investors and UK personal lines insurance," said Aviva.
In the FTSE 250, Mitchells & Butlers reported like-for-like sales growth in the year to September 28, with total revenue rising 4.2% to GBP2.24 billion.
Pretax profit increased on an adjusted basis by 11%, with the reported figure rising by 36% to GBP177 million.
The pub owner, which has not paid a dividend, said it was a year of "strong trading with market outperformance and profit growth".
Defence contractor Babcock International posted a pretax profit for the half to September of GBP152.5 million, more than double the GBP65.1 million a year before. Underlying, it fell 18% to GBP202.5 million.
Babcock's revenue was 2.7% lower at GBP2.19 billion. It has boosted the interim payout by 1.4% to 7.2p.
Babcock, which said its combined order book and pipeline is at its highest ever level, said results met expectations and it has kept the annual outlook unchanged.
SSP Group, which operates food and drink outlets in travel locations, reported 1.9% annual like-for-like sales growth, with both air and rail delivering growth. Revenue was up 9.0% to GBP2.79 billion.
SSP's reported pretax profit climbed 7.8% to GBP197.2 million, and the underlying figure was 10% higher at GBP203.2 million.
The firm is paying a final dividend of 6.0p per share, taking the year's total to 11.8p, 16% higher than the year before. SSP has also announced a GBP100 million share buyback.
It said it was a "strong" annual performance, and trading in its new financial year is so far meeting expectations.
On the UK political front, Boris Johnson and Jeremy Corbyn were almost inseparable in the eyes of viewers after a series of heated exchanges during the first televised debate of the General Election.
Johnson edged a snap YouGov poll 51-49, although Labour figures were pleased with the showing of their leader in the prime-time ITV slot.
The pair clashed over their rival plans for Brexit, with Corbyn describing the Prime Minister's pledge to "get Brexit done" by the end of January as "nonsense", while Mr Johnson suggested his rival was "not fit to lead our country".
YouGov's poll, which surveyed 1,646 viewers, also found Johnson appeared more prime ministerial, although Corbyn was considered more trustworthy.
The pound was quoted at USD1.2910 early Wednesday, down from USD1.2929 at the close Tuesday.
By George Collard; georgecollard@alliancenews.com
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