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(Alliance News) - Stocks in London are set to rebound slightly on Wednesday following the previous session's sharp losses, which were sparked by US President Donald Trump threatening tariffs on France and saying he has "no deadline" for a trade deal with China.
In early UK company news, Rio Tinto said it is halting activities at Richards Bay, South Africa, due to escalating violence in the area, while Vodafone said it is to collaborate with Amazon Web Services.
IG says futures indicate the FTSE 100 index of large-caps to open 2.54 points higher at 7,161.30 on Wednesday. The FTSE 100 index closed closed down 127.18 points, or 1.8%, at 7,158.76 on Tuesday.
Commerzbank said Trump is "throwing oil on the fire of market uncertainty".
"The US stock markets are nose-diving and risk aversion on the FX market is rising, but this time round the dollar is the loser on a broad basis (with the exception of levels against the renminbi). Even the EM currencies are losing comparatively little ground against the greenback," said Antje Praefcke at Commerzbank
Sterling was quoted at USD1.2989 early Wednesday, flat on USD1.2999 at the London equities close on Tuesday. The pound started the week around USD1.2910.
The euro was quoted at USD1.1075 early Wednesday, soft on USD1.1089 late Tuesday. Against the yen, the dollar was quoted at JPY108.53, also flat versus JPY108.50.
"The dollar's losses are likely to please Trump, but the collapse on the US stock markets no doubt less so. If the US data this afternoon also disappoints, EUR-USD is likely to establish itself above the USD1.11 mark," said Praefcke.
In the US on Tuesday, Wall Street ended firmly in the red, with the Dow Jones Industrial Average ending down 1.0%, the S&P 500 down 0.7% and Nasdaq Composite 0.6%.
In Asia on Wednesday, the Japanese Nikkei 225 index closed down 1.1%. In China, the Shanghai Composite ended down 0.2%, while the Hang Seng index in Hong Kong is down 1.2%. Â
Released overnight, data showed China's total business activity in November expanded at a 21-month high as manufacturing and services expanded.
The Caixin China composite output index for November reached 53.2 from the 52.0 reported in October, indicating the highest rate of growth since February 2018. Caixin said the rise was driven by strong performances from both the manufacturing and services sectors, in particular an accelerated increase in activity from services.
The services business activity index rose to 53.5 from 51.1 in October, a seven-month high. Companies widely commented on planned expansions, new projects and an improvement in overall demand conditions, Caixin said.
Meanwhile, in Japan, the country's private sector decline slowed somewhat in November thanks to a slight expansion in services activity.
The Jibun Bank Japan composite purchasing managers' index reading for November was 49.8, up from 49.1 in October. While this was a month-on-month improvement, it also represented the second consecutive month of contraction given the reading was below the neutral mark of 50.
The seasonally adjusted services business activity index crept over the 50.0 mark, though at 50.3 signalled only marginal growth. This compares to October's figure of 49.7.
In early UK company news, Rio Tinto said it has decided to curtail operations at Richards Bay Minerals in South Africa due to violence in the area.
"There has been an escalation of criminal activity towards RBM employees and one was shot and seriously injured in the last few days. As a result, all mining operations at RBM have been halted and the smelters are operating at a reduced level, with a minimum number of employees now on site. Construction of the Zulti South project has also been temporarily paused," the miner explained.
Titanium dioxide slag production for 2019 is now expected to be at the bottom end of guidance of between 1.2 and 1.4 million tonnes.
Wm Morrison Supermarkets said it has promoted Trevor Strain to chief operating officer and Michael Gleeson to chief financial officer.
Strain is currently chief financial & commercial officer, and his responsibilities in the new role will include commercial, manufacturing, supply chain, logistics, operations development, online and wholesale.
Gleeson is currently trading director responsible for ambient grocery, frozen, dairy, fuel and services.
Vodafone said it is collaborating with Amazon Web Services to make AWS WAvelength available in Europe.
AWS Wavelength provides developers the ability to build applications that serve end users with single-digit millisecond latencies over the 5G network.
"With Europe's largest 5G network across 58 cities and as a global leader in IoT with over 90 million connections, Vodafone is pleased to be the first telco to introduce AWS Wavelength in Europe," said Vinod Kumar, chief executive of Vodafone Business.
AWS Wavelength will be available first in the UK and Germany on the Vodafone 5G network, expanding to other Vodafone markets across Europe.
Stock Spirits reported a rise in both revenue and profit for its recently ended financial year.
Revenue surged to EUR312.4 million for the financial year to September 30 from EUR193.8 million a year ago.
On a proforma basis - due to the fact Stocks Spirits has changed its year-end to September from December - revenue was EUR282.4 million in the 2018 financial year, up 11%.
The central and eastern Europe-focused alcohol maker reported pretax profit rose 24% proforma to EUR38.2 million from EUR30.7 million. Volumes were up 8.5% on a proforma basis to 14.4 million nine-litre cases.
"While there are challenges in certain areas of our business, notably in managing any impact that might result from the proposed excise tax increases in the Czech Republic and Poland, we remain confident in the strength of our brands, the quality of our people and the viability of our strategy. As a result, we feel well positioned for future success," the company said.
M&C Saatchi said it will make downward adjustments of GBP11.6 million following an independent review by PwC, and warned that profit for 2019 is expected to be significantly below forecasts.
M&C in September engaged PwC's Forensic Services group to perform a review of issue identified by an internal review of several UK subsidiaries. Following the review, the company judged it would take adjustments of GBP11.6 million.
Of the total proposed adjustments, GBP9.6 million is considered to relate to 2018 and will be treated as a prior period adjustment, and GBP2.1 million to 2019. The company said it will be taking action to ensure that the accounting misstatements which led to the review do not recur.
Separately, the company said underlying pretax profit for 2019 is expected to be "significantly lower" than expected at the time of its interim results release and, in addition, the company has incurred substantial central costs in its UK business.
Underlying pretax profit for 2019 is expected to be 22% to 27% below 2018 on a like-for-like basis.
"The trading performance in the second half of this year is disappointing. However our operating businesses remain strong, creative and competitive and we expect that, when combined with the impact of our restructuring coming through, we will have a stronger trading performance in 2020," said Chief Executive David Kershaw.
In the economic calendar on Wednesday, there are services PMIs from Germany, the eurozone, the UK and the US at 0855 GMT, 0900 GMT, 0930 GMT and 1445 GMT respectively.
Outside of this, there are ADP employment data in the US at 1315 GMT, which comes ahead of Friday's non-farm payrolls.
In commodities, gold was quoted at USD1,483.40 early Wednesday, higher compared to USD1,480.64 at the London equities close on Tuesday.
Brent was quoted at USD61.14 early Wednesday, higher than USD60.96 at the London equities close on Tuesday.
By Lucy Heming; lucyheming@alliancenew
