London pre-open: Stocks seen up on Beijing support as May braces for big defeat
By Michele Maatouk
Date: Tuesday 15 Jan 2019
(Sharecast News) - London stocks were set for a positive open on Tuesday, taking their cue from an upbeat session in Asia after Beijing promised to step up its efforts to support the economy, as investors eyed the Commons vote on Theresa May's Brexit deal.
The FTSE 100 was called to open 48 points higher at 6,903.
London Capital Group analyst Jasper Lawler said: "Today's bounce comes following a pledge of more supportive measures from Beijing to stabilise the slowing Chinese economy. The move has boosted sentiment, sending Asian markets higher and European and US futures northwards. With risk back on the table, equities are back in favour, whilst the yen is moving lower."
On home turf, Brexit was firmly in focus as Theresa May's deal looked set for a heavy defeat in parliament after she failed to shift the EU's position on the Irish backstop.
In an exchange of letters with the EU's leadership, May failed to get the legal assurances she needed that the backstop would not be time-limited.
Instead, European Council President Donald Tusk and his Commission counterpart Jean-Claude Juncker said the EU was "determined to give priority in our work programme to the discussion of proposals that might replace the backstop with alternative arrangements".
Lawler said: "The broad expectation is that Theresa May will lose the vote and by a significant majority. With this, we could expect a knee jerk sell off in the pound until the next steps or Plan B are given.
"Plan B is unlikely to mean a no deal Brexit. Renegotiation and an extension of Article 50 is looking much more likely. The extension is significantly more pound friendly than a no deal Brexit. An extension boosts hope of further negotiations with Brussels, a different agreement such as the Norway style, or it could result in eventually no Brexit. All of these of possibilities beat crashing out of the EU with no deal, which explains why the pound has perked up over the past few sessions."
In corporate news, housebuilder Persimmon said it expected 2018 pre-tax profits to be modestly ahead of current market consensus, having benefited from new developments opened through the year.
Total group revenues of £3.74bn were 4% higher as new housing revenues increased by 4% to £3.55bn and legal completion volumes increased by 406 new homes to 16,449 against 16,043 in 2017.
Ashmore's assets under management grew in the $0.3bn in the past quarter as positive net inflows were counterbalanced by negative investment performance.
The emerging markets-focused asset manager enjoyed $0.5bn of net inflows, with negative investment performance of $0.2bn.
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