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LONDON (Alliance News) - London stocks are set to open higher Tuesday ahead of the first reading of second quarter UK GDP and amid another busy day of the UK corporate updates with half-year results from BP, GKN and ITV, among many others.
IG says futures indicate the FTSE 100 index to open higher at 6,536.0. The index closed down 1.1% at 6,505.13 on Monday, its fifth straight day of losses after a rout in Chinese stocks sent the Shanghai Composite to its biggest daily loss since 2007.
In Asia on Tuesday, the Shanghai Composite continues lower, down 0.9%, after falling 8.5% on Monday. The Chinese central bank is to inject CNY50 billion into money markets in the country through seven-day reverse bond repurchase agreements on Tuesday, Reuters reports, citing traders. The injection is the largest made by the People's Bank of China through open market operations since July 7.
"Successive easing measures since November don't appear to be filtering down into the real economy, and this is raising concerns about the ability of the Chinese economy to sustain the growth target set by Chinese authorities at the beginning of this year," says Michael Hewson, chief market analyst at CMC Markets.
"This concern about a much slower growth path for the world?s second largest economy has also fed into a negative feedback loop on commodity prices sending copper prices to their lowest levels since 2009, while oil prices have continued their downward slide, with Brent prices down 10% from its July highs, and lower for the fourth day in succession," Hewson adds.
Brent oil fell to a fresh four-month low on Monday to USD52.80 a barrel and ahead of the open on Tuesday trades at USD52.91 a barrel.
Elsewhere in Asia, the Japanese Nikkei closed down 0.1% and the Hang Seng in Hong Kong trades up 1.3%.
On Wall Street Monday, the DJIA closed down 0.7%, the S&P 500 ended down 0.6% and the Nasdaq Composite closed off 1.0%.
Investors will be looking ahead to looking ahead to a preliminary reading of UK second quarter GDP at 0930 BST. Economists forecast GDP to edge up 0.7% quarter-on-quarter from the 0.4% growth seen in the first quarter and to rise 2.6% year-on-year, slowing slightly from the 2.9% seen in Q1.
"The weakness of growth in Q1 of only 0.4% [quarter on quarter] was mainly caused by the surprise fall in services output growth from 0.9% [quarter on quarter] in Q4 14 to only 0.4% in Q1 15. Looking at Q1 in more detail we find that the culprit was a fall in services output in January," say analysts at Societe Generale.
"We expect a rebound in the Q2 GDP growth to 0.6% [quarter on quarter] (from 0.4% [quarter on quarter] in Q1) primarily on the back of uninterrupted services growth throughout Q2 and a likely increase in the overall industrial production by a little over 1% in the quarter due to stronger energy output," the analysts add.
Also in the economic calendar is the US Markit services and composite purchasing managers' index at 1445 BST and consumer confidence at 1500 BST. In addition the US Federal Open Market Committee begins its two-day meeting ahead of its interest rate announcement on Wednesday at 1900 BST.
Oil and gas giant BP said it swung to a loss in the first half of 2015 after revenue fell and it booked expected charges related to its long-awaited settlement over the 2010 Deepwater Horizon oil spill in the Gulf of Mexico.
The company reported a replacement cost loss of USD4.16 billion in the first half of 2015, swinging from a USD6.65 billion profit a year earlier, caused by a fall in revenue and the recently announced agreements in principle to settle US federal, state and the vast majority of local government claims arising from the 2010 Deepwater Horizon accident.
ITV maintained its outlook for 2015, continuing to expect "another strong performance with revenue growth across the business", as it posted a rise in pretax profit for its first half. The broadcaster posted a pretax profit of GBP327 million for the half year to end-June, up from GBP250 million a year before, as revenue rose to GBP1.36 billion from GBP1.23 billion. Revenue growth was boosted by a strong performance from its ITV Studios business, and 6% revenue growth in its Broadcast & Online segment.
GKN said its pretax profit declined in the first half of the year, hit by continued weakness in some of its key markets, and said it has agreed a EUR706 million deal to acquire Fokker Technologies Group BV.
The FTSE 100-listed engineer said its pretax profit for the six months to the end of June was down to GBP212 million from GBP224 million a year earlier, despite an increase in sales for the group to GBP3.62 billion from GBP3.57 billion.
Fashion retailer Next said its full-price brand sales rose in the first half of its financial year and said it has upgraded its full-year pretax profit expectations after its sales came in ahead of guidance. Next said its total sales in the 26 weeks to July 25 were up 3.5%, with 0.8% growth in retail sales and 7.5% growth in directory sales in the period. The sales were marginally ahead of the guidance of 0% to 3% growth that Next issued in March.
Zurich Insurance said early Tuesday it is evaluating a potential bid for RSA Insurance Group. In a short statement, the Swiss insurer confirmed it is evaluating a potential offer for RSA. It added that the announcement does not represent a firm offer to buy RSA and said there is no assurance that any offer will be made.
Announcing disposals early Tuesday were Diageo and Melrose Industries, which is selling its Elster businesses for GBP3.3 billion to Honeywell International.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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