London pre-open: Stocks to rise after positive Asian session
By Michele Maatouk
Date: Wednesday 12 Feb 2020
(Sharecast News) - London stocks were set to gain at the open on Wednesday, taking their cue from an upbeat session in Asia as concerns about the coronavirus receded.
The FTSE 100 was called to open 23 points higher at 7,522.
London Capital Group analyst Jasper Lawler said: "China reporting the lowest number of new cases of the coronavirus since January keeps the prospect of a pandemic at bay. Asian equities were pushing higher overnight.
"The FTSE 100 looks ready to open back above the key 7,500 threshold. Looking now at the Stoxx 600 at record highs and up 6 of the last 7 days, it looks like markets have already priced in a big 2020 earnings recovery. If the coronavirus, or some other black swan does throttle the expected recovery come Q1 earnings season, then we could be in a tricky spot."
Investors will also be mulling comments from Federal Reserve chairman Jerome Powell, who said on Tuesday that the Fed was "closely monitoring" the coronavirus and the impact it will have on Chinese and global economic growth.
"The dollar was lower yesterday because it felt like Jay Powell left the door slightly ajar for a rate cut this year," said Lawler. "It seems that one possible cause for the Fed to adjust its plans and lower interest rates again is the coronavirus."
In UK corporate news, engineering firm Babcock lowered its full-year profit guidance range due to contract award delays in its aviation division and write downs in oil and gas operations.
The company said it now forecast underlying operating profit of ?540m compared with a previous range of ?540m - ?560m. Revenue guidance was unchanged at around ?4.9bn. Babcock said it expected to make an ?85m charge after writedowns in oil and gas assets and leases.
Homeware retailer Dunelm reported a rise in interim profit as like-for-like sales grew and said full-year pre-tax profit will be "slightly ahead" of the top of the latest range of analyst expectations.
In the 26 weeks to 28 December, pre-tax profit increased 19.4% to ?83.6m, with like-for-like sales up 5.6% and revenue 6% higher at ?585m.
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