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London open: Stocks edge lower alongside fresh pound weakness
Stocks in London began the session slightly weaker, tracking losses overnight on Wall Street on the heels of some ‘hawkish’ Fedspeak and with the monthly US non-farm payrolls report looming ever-larger on the horizon.
As of 0813 BST the FTSE 100 was trading down by 15.84 points at 7,058.55. In parallel, cable was at a fresh 31-year low against the US dollar, changing hands at 1.2699.
Speaking on Tuesday afternoon, US Richmond Fed president Jeffrey Lacker suggested that, based on past economic relationships, the US central bank´s main policy rate should already be at 1.5% or more.
A report from Bloomberg late on Tuesday evening of a consensus among European Central Bank officials that its asset purchase programme would need to be tapered before quantitative easing came to an end was also weighing on sentiment.
In response, the ECB issued a denial that the Governing Council had discussed that topic.
On the data front, UK services PMI is at 0930 BST. In the US, the ADP employment report is at 1315 BST, while the ISM non-manufacturing purchasing managers´ index and industrial new orders are at 1500 BST.
CMC Markets’ Michael Hewson said: “A decent September construction survey, following on from a bumper manufacturing PMI number on Monday has raised the prospect that, despite the slowdown in the lead up to, and post Brexit, that the UK economy is picking up steam again.
“If today’s services PMI report is similarly positive then it could well be argued that the Bank of England acted prematurely when they slashed interest rates and added to QE in August. Expectations are for an expansion of 52.1, down slightly from 52.9, however if manufacturing and construction are any guide we could see an upside surprise.”
In corporate news, Tesco reported much improved sales and operating profits in the first half of the year, though its pension deficit has grown to a whopping £6bn due to lower bond yields.
As group sales grew 3.3% to £24.4bn in the 26 weeks to 27 August, UK like-for-like sales improved to 0.6% from the 0.3% in the first quarter, while operating profits rose 38.4%.
Other supermarket shares were carried higher in Tesco’s wake.
Centamin announced preliminary production results for the quarter to 30 September from its Sukari Gold Mine in Egypt on Wednesday, with preliminary total gold production of 148,674 ounces, a 6% increase on the previous quarter and a 41% increase year-on-year.
The FTSE 250 firm said quarterly throughput at the process plant was 2,806kt, a 4% decrease on the previous quarter and in excess of its base case target rate of 11 million tonnes per annum.
Open pit total material movement increased 7% on the previous quarter to 16,191kt, and open pit ore production decreased by 14% to 2,936kt at an average mined grade of 1.06g/t.
Investment company 3i Infrastructure announced it had invested €6.5m in a motorway in the Netherlands.
