FTSE 100 preview: Another downbeat start ahead

Written by: Tsveta van Son
August 6, 2019

The FTSE 100 looks set to extend the previous sessions’  hefty losses, with the trade tensions between the US and China continuing to weigh on investor sentiment around the world. On the corporate front, Rolls-Royce Holdings (LON:RR) and InterContinental Hotels Group (LON:IHG) are scheduled to post results.

FTSE 100 seen subdued

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IG’s opening calls suggest that the Footsie will start trading 0.30 percent lower at 7,202 points. In the US, shares fell sharply last night, responding to the escalation of tension between Washington and Beijing.

“Now we have a trade situation that is going off the rails as the side effects multiply due to the ramping up of the use of tariffs and we are only further apart from any resolution with the Chinese,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group, as quoted by CNBC. “The policy of using tariffs as a tool to address our legitimate beefs with the Chinese has failed miserably.” Asian stocks have also retreated this morning.

“The markets are now scrambling to factor in the possibility of the United States imposing not only an additional 10% of tariffs on Chinese imports, but the figure being raised to 25%,” Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities, commented, as quoted by Reuters, adding that this was “likely to be a protracted trade war without a quick resolution”.

In the UK, the FTSE 100 posted another hefty fall, giving up 2.47 percent to close at 7,223.85 points, with the trade tension between the US and China keeping investors off equities. In individual movers, Ocado (LON:OCDO) and Marks Spencer (LON:MKS) retreated as the wrapped up their joint venture deal.

Tuesday’s agenda

There are no major macroeconomic releases out of Europe to drive the market further this morning. On the corporate front, Rolls-Royce is scheduled to post its interims, and the Guardian reports that for the first half of the year, analysts expect the engine maker’s underlying pre-tax profit, which excludes Trent 1000-relate costs and other one-offs, to have climbed to £95 million from £81million.

InterContinental is the other FTSE 100 company reporting tomorrow and according to Proactive Investors, the consensus forecast for revenues stands at $1 billion, while underlying earnings (EBITA) are expected to come in at $410 million.