London pre-open: Stocks seen steady after China stabilises currency
London stocks looked set for a steady start on Wednesday after China fixed the yuan at a slightly firmer rate, helping to assuage concerns about escalating tensions between it and the US.
The FTSE 100 was called to open three points lower at 7,168.
CMC Markets analyst David Madden said China's move to stabilise its currency "was the catalyst for the lightened mood throughout yesterday’s session".
"The move by the Chinese central bank was a response to the US accusing the organisation of manipulating the currency markets, which the PBoC has denied.
"That fact the Chinese central bank on Monday allowed the yuan to slide, and then slightly strengthened it suggests that Beijing is letting the US know they can use its currency as a tool to get back at them for the tariffs on Chinese imports.
"The Chinese authorities need to strike a balance of making their currency soft enough to assist exporters, but not so soft it prompts international investors to withdraw funds from the country.
"Overnight, the PBoC set the reference point of the yuan at 6.9996, which was slightly weaker than expected, and in turn we saw stocks in Asia slide a little. We could be in for a bit of back and forth when it comes to the Chinese currency in the near-term, and it is likely to be a driver of volatility."
On the UK data front, Halifax house prices for July are due at 0830 BST.
In corporate news, Glencore said it was shuttering its Mutanda cobalt mine in response to a plunge in prices and higher costs as the miner reported a sharp fall in adjusted core earnings.
The company said adjusted earnings before interest, tax, depreciation and amortisation fell 32% to $5.6bn, reflecting a “challenging economic backdrop for our commodity mix”.
Spirax-Sarco left full-year forecasts unchanged as it reported that strong first half organic sales growth of 8% surpassed expectations but indicated that this would be offset by weakened industrial production growth forecasts for the second half of the year.
The steam management systems manufacturer also warned of profitability deterioration in its Chromalox thermal technology business, where adjusted operating profit fell by 37% and margins fell from 14.7% to 9.7%.
AstraZeneca and its partner MSD announced positive results from the phase 3 ‘PROfound’ trial of Lynparza (olaparib) in men with metastatic castration-resistant prostate cancer who had a homologous recombination repair gene mutation, and had progressed on prior treatment with new hormonal anticancer treatments.
The pharmaceuticals giant said results from the trial showed a “statistically significant and clinically meaningful” improvement in the primary endpoint of radiographic progression-free survival with Lynparza, compared enzalutamide or abiraterone. It said the safety and tolerability profile of Lynparza was generally consistent with previous trials.