London pre-open: Stocks to follow US higher as trade war gets underway
London stocks are expected to rise for the second day running on Friday as markets shrug off the trade war between the US and China got underway and Theresa May holds a potentially decisive Brexit meeting at her Chequers retreat.
The FTSE 100 was predicted to add 37 points after finishing at 7,603.22 a day earlier.
Overnight, Wall Street enjoyed its strongest session in more than a month, with stock futures for Asia and Europe pointing to an upbeat Friday.
This despite the fact that tariffs on $34bn of Chinese imports were finally imposed by the US overnight, with China promising its retaliatory trade levies will soon follow. Chinese stock markets fell initially but ahead of the European session were mostly in the green.
“China promised not to fire the first shot, but in order to safeguard the country’s core interests as well as that of the people, it is forced to fight back,” according to the state-owned Xinhua news agency. With Friday's US measures expected to be followed by further tariffs on $16bn of Chinese goods in a few weeks, Beijing said this would shave 0.2 percentage points off of China’s GDP and the “overall impact would be limited,” Xinhua added.
Analyst Jasper Lawler at London Capital Group said he would have expected to see more anxiety in the markets. "Still, there was plenty to distract traders with hawkish Fed minutes and strong US economic data."
Minutes from the FOMC’s June policy meeting showed policy makers acknowledging the negative risks of Washington’s current belligerent trade policy, pointing to the possibility for negative effects on investment and business sentiment.
But despite those headwinds, policymakers still said there was broad support for “gradual” rate increases, saying that the benchmark federal funds rate could be at or beyond its neutral level “sometime next year”.
US non-farm payrolls are due at 1330 BST.
"Expectations are for 195k new jobs to have been created in June, a solid number after May’s impressive 223k," said Lawler. "Given the historically low levels of unemployment, which is expected to remain constant at 3.8% in June, a miss on the headline job creation number is not going to cause too much distress, whilst a surprise to the upside would highlight the strength of the US economy."
In company news, Rolls-Royce agreed to sell its commercial marine business to Norway's Kongsberg for net proceeds of around £350m to £400m. The transaction has been approved by the boards of both Rolls-Royce and Kongsberg and is expected to close in the first quarter of 2019, subject to clearance from the regulatory authorities.
BCA Marketplace revealed that private equity group Apax had walked away after the operator of WeBuyAnyCar.com rejected two takeover proposals. Directors said they had unanimously rejected both "preliminary and conditional indicative proposals" after careful consideration on the conclusion that they undervalued the company and its "attractive prospects".
Essentra acquired Sweden-based Nolato Hertila for a cash consideration of approximately SEK 58m (£4.9m), to expand its components division's product range. The FTSE 250 firm said the acquisition would also add manufacturing capacity in Scandinavia, complementing Essentra's existing facility in Sweden.
Ahead of an expected tense annual shareholder meeting, Stobart Group revealed that chief financial officer Richard Laycock has decided to step down. The Southend Airport owner said it has started the new trading year trading "satisfactorily".