London pre-open: Stocks to edge lower as investors mull US government shutdown
London stocks were set for a slightly weaker open on Monday as investors mulled the US government shutdown, although losses were likely to be minimal.
The FTSE 100 was expected to open 14 points lower at 7,716.
CMC Markets analyst Michael Hewson said: "Having seen the US government shutdown confirmed after last week’s US close there might be a case for suggesting that stocks may well be adversely affected. This seems unlikely in the long run given that the shutdown, at least in the short term, is likely to be fairly limited in nature, given that by and large economic data from across the globe continues to show a fairly robust level of economic activity.
"Furthermore, dysfunctional US politics isn’t really anything new, in fact dysfunctional politics appears to be becoming the norm, not only in the US, but the world over, even if in Germany we do appear to be starting to make progress on the formation of a new government after the German SPD party membership granted permission for the party leaders to begin new coalition talks with Angela Merkel."
In corporate news, Ocado has signed its second major international customer less than two months after the first, with a contract to build a customer fulfilment centre for Canada's second largest supermarket group.
Winning a contract with $24bn-sales-a-year Sobeys should create "significant long term value" for the FTSE 250 online grocery specialist, although it will be earnings-neutral in the current year.
Smiths Group has agreed to sell its John Crane's Bearings business to private Austrian company Miba AG for an enterprise value of $35m.
Smiths said the divestment is part of the ongoing corporate programme to concentrate the portfolio on scalable market leading positions in the company's chosen markets, and the proceeds will be reinvested in "attractive growth opportunities".
Having rejected a £7bn hostile bid from Melrose Industries last week, GKN sought to highlight its potential as a standalone entity on Monday, lifting sales forecasts for its electric driveline business.
The engineer said it now expected sales in the unit to increase over eight-fold to £275m in 2020, up from a previous forecast of £200m and £33m the year in 2017.