(Sharecast News) - London stocks were set to fall at the open on Wednesday amid fading hopes of a US stimulus deal and as figures showed the UK economy has fallen into recession for the first time in 11 years due to the Covid-19 pandemic.
The FTSE 100 was called to open 11 points lower at 6,143.
Data released by the Office for National Statistics showed the economy contracted by 20.4% between April and June, having shrunk 2.2% in the first quarter. Analysts had been expecting a 20.5% contraction.
Dashed hopes of further US stimulus were also set to weigh on the mood.
CMC Markets analyst Michael Hewson pointed to the fact that US stocks turned red overnight.
"It wasn't immediately apparent what the actual catalyst was for the sudden change in sentiment, but it soon became apparent that downbeat comments by Mitch McConnell, the Republican leader of the US Senate about the imminent prospect of an agreement on a stimulus deal, may well have played a part in the late sell-off.
"For several days now markets have been working on the assumption that US politicians would reach a deal in some form, after President Trump's executive orders at the end of last week. This now seems rather premature, and could actually be causing these same politicians to drag their heels in coming to an agreement. A rising stock market doesn't exactly fuel a sense of urgency, and as such could be counter-productive. On the other hand, a market puke might actually concentrate minds and focus attention on the job in hand."
In UK corporate news, M&G's first-half profit more than halved as the savings and investments company suffered fund outflows and pressure on retail margins.
Adjusted operating pre-tax profit fell to £309m from £714m in the six months to the end of June as fee-based revenue dropped to £580m from £637m. The company declared an interim dividend of 6p a share.
Elsewhere, construction giant Balfour Beatty swung to an interim loss as the coronavirus lockdown shut down building sites, but increased its order book and maintained full-year guidance.
The company reported a pre-tax loss of £26m for the six months to June 26 compared with a profit of £63m. No dividend was declared. Balfour's group order book increased to £17.5bn from £14.3bn at the end of 2019.
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.
United Oil & Gas PLC (AIM: "UOG"), the growing oil and gas company with a portfolio of production, development, exploration and appraisal assets has reported its maiden revenue and positive operating cashflow.
Pires Investments plc (AIM: PIRI), the investment company focused on next generation technology, has announced Admix has extended its Series A round to raise further $1.5 million from leading gaming investors from Zynga and Dentsu Aegis.
Britain will launch training options for adults to learn new skills in an effort to boost productivity and help the country recover from the coronavirus crisis, Boris Johnson will announce today. The unemployment rate, already at over 4%, is expected to rise further as a job subsidy scheme put in place early in the pandemic expires next month to be replaced by a scaled-back job support programme.
Concepta, the female personalised healthcare company, 1H20 Report highlighted a period of successful corporate reorganisation, recapitalisation and product and commercial development. The Company relaunched its home-use personalised fertility tracking and pregnancy self-testing system under the MYLO® brand during the period with plans on accelerating UK sales and entering new territories in 2H20 and beyond.
Salt Lake Potash FY20 results highlight the significant operational progress the Company has made during the year with a strong outlook including the fully funded commissioning of the Lake Way Project in December 2020 for first production in 2021. The Company has signed with six offtake partners during the year, accounting for 224kt per annum of Lake Way's 245kt per annum capacity.