London pre-open: FTSE to drop on Tesco Q1 result, Queen speech, PMIs

A disappointing result from Tesco, the Queen's speech at the opening of Parliament and expectations of services data are all set to push blue chips into the red at this morning's opening bell. City sources predict the FTSE 100 will open around six points lower than yesterday's close of 6,836.30.Jasper Lawler, Market Analyst at CMC Markets UK, said: "After sluggish Chinese manufacturing data put investors on the defensive yesterday, European markets look set to open lower with Tesco earnings and the Queen's speech in the UK, service purchasing managers' indices (PMIs) across Europe and an updated Eurozone first quarter to follow." He added: "The Queen's speech today to the UK parliament will lay out more pension reforms with annuity and fund providers still reeling from the UK budget. Insurers have largely priced in the changes, but any surprises in the Dutch-style system to be revealed could see shares dropping again." On the macro front, UK services PMI is expected to show a slight decline to 58.2 in May, while across the Channel, with the exception of France, Eurozone PMI's are predicted to see a climb in the second quarter."Spain's May services PMI is estimated at 56.1, down slightly from April," Lawler said. "The Italian May services PMI is expected to budge up to 51.4 from 51.1. In France and Germany the final May services PMI should be unchanged from preliminary readings at 49.2 and 56.4 respectively." Price cuts hit top line in Tesco's Q1The decline in like-for-like (LFL) sales at Tesco's UK business worsened in the first quarter as the recent wave of price cuts across the grocery industry began to take its toll on supermarkets' top lines. UK LFL sales excluding petrol fell by 3.7% in the first three months of Tesco's fiscal year, worse than the 2.9% drop recorded in the fourth quarter.Office space provider Workspace reported a strong set of annual results, thanks to London's flourishing technology sector, with LFL rent roll up 8.5% in year to £47.4m. LFL rent per square feet rose 8.5% to £15.28 while pre-tax profit surged to £252.5m for the year ended March 31st from £76.4m a year earlier.Ophir Energy and BG Group have added an 'important' gas discovery at their joint owned offshore blocks offshore Tanzania estimated with a mean recoverable resource of around 1trn cubic feet. The pair drilled successfully at the Taachui-1 and subsequent Taachui-1 sidetrack well in Block 1, where Ophir holds 20% and BG Group operates with 60%.Support services group Mears reported strong trading and said it had a good view of business over the next couple of years. Mears, which provides social housing and care services to local councils and others, said it had won new contract awards since January 1st 2014 of more than £110m, giving it an order book of £3.8bn.In other company news, Lloyds Banking Group has reportedly withdrawn from a $1.5-$2bn trade finance deal involving Russian oil company Rosneft. The part-government owned lender, as well as Deutsche Bank, HSBC and Bank of China, was a mandated lead arranger on the loan to finance BP's purchase of crude oil and refined products from Rosneft.NR