London pre-open: Stocks seen lower as Trump talks down dollar; US-China talks eyed
London stocks were set for a negative open on Tuesday after US President Trump talked down the dollar again and as investors eyed US trade talks with China.
The FTSE 100 was called to open 15 points lower at 7,576.
The US dollar weakened overnight after Trump criticised the Federal Reserve again for lifting interest rates.
London Capital Group analyst Jasper Lawler said: "Trump taking another swipe at Fed Chair Jerome Powell, pointing Powell out to not be the cheap money guy that he had had initially thought, is not about to change the current path of rate hikes, with the market pricing in a 93.6% probability of a hike in September and 65% chance of a further rate rise in December.
"However, Trump could be sowing the seed for market perception problems later down the line. For example, should the stronger dollar result in weaker economic data moving towards December and the Fed decides not to hike. The market could question whether the Fed opted not to hike on the basis of data or to appease Trump? So, whilst Trump will not influence the path of rate hikes, his comments could impact on market’s perception of what is happening, which is an equally dangerous game to be playing."
Elsewhere, market participants continued to focus on US-China trade talks due on Wednesday. Lawler said the most positive outcome that can be expected would be signs of a truce. "Should the two sides manage to broker a truce we would expect risk sentiment to lift dramatically, catapulting the markets higher."
As far as the UK is concerned, Jeremy Hunt will make his first appearance in the US as foreign secretary on Tuesday. He is due to make a speech at a Q&A in Washington during which he is expected to warn Brussels that a failure to strike a Brexit deal would destabilise the international order and urge Trump to impose wider sanctions against Russia.
In addition, international trade secretary Liam Fox will launch Britain’s new export strategy, with a speech and Q&A at the Institute of Directors in London.
In corporate news, BHP Billiton declared a record final dividend as higher prices and volumes sent the miner’s underlying annual profit up by a third.
Underlying attributable profit for the year to the end of June rose to $8.9bn from $6.7bn a year earlier, in line with analysts’ average forecast. The final dividend rose to 63 cents a share from 43 cents a share, taking the 2018 annual payout to 118 cents a share.
Persimmon reported a 13% increase in profits from the first half of the year as the housebuilder sold 4% more homes and the average selling price increased 1% to £215,813.
Chief executive Jeff Fairburn, who famously took home £47.1m in pay last year, pointed to a "resilient" market, with current forward sales 6% ahead of last year to place the group "in a strong position for the second half of the year”.
AstraZeneca announced that the Japanese Ministry of Health, Labour and Welfare has approved ‘Tagrisso’ (osimertinib) for the first-line treatment of patients with inoperable or recurrent epidermal growth factor receptor mutation-positive non-small cell lung cancer, following priority review.
The FTSE 100 drug maker said the approval was based on results from the global Phase III FLAURA trial, which included Japanese patients and which were published in the New England Journal of Medicine.