London pre-open: Stocks seen muted after strong gains; BP results in focus
Sharecast
Pre-open Market Report
06:36, 4th August 2020

(Sharecast News) - London stocks were set for a muted open on Tuesday following strong gains in the previous session, with results from the likes of BP and Diageo in focus.
The FTSE 100 was called to open four points lower at 6,028, having rallied more than 2% on Monday.

CMC Markets analyst David Madden said: "Dealers in Europe and the US were hopeful that a deal would be struck in regards to the US $1 trillion stimulus package, even though there weren't any positive sounds coming from Washington DC. Republicans and Democrats are still fighting over the details of the stimulus programme, but traders feel that some sort of compromise will be worked out in the end. Politicians have to be seen to put up a fight, but it wouldn't go down well with their respective voters if the negotiations came to nothing."

In corporate news, Diageo proposed an unchanged final dividend as the drinks company reported a 15% drop in underlying annual profit. Operating profit before exceptional items for the year to the end of June fell to £3.49bn from £4.12bn a year earlier as net sales dropped 9% to £11.75bn. Diageo recommended a final dividend of 42.47p a share, taking the annual payout to 69.88p a share - up 2%.

BP halved its quarterly dividend as it swung to a heavy second quarter loss in a "volatile and challenging environment" and announced a 10-fold increase in low carbon investment by the end of the decade. The company, which has been hit hard by a slump in oil prices caused by the coronavirus pandemic, declared a dividend of 5.25 cents a share, compared to 10.5 for the previous quarter as part of a new distribution policy. Its underlying replacement cost loss for the quarter was $6.7bn, compared with a profit of $2.8bn a year ago.

Babcock said that underlying operating profit in its first quarter was around 40% lower than last year. The FTSE 250 company said around half of that reduction was due to lower levels of productivity in the core business amid the Covid-19 pandemic, while Magnox, South Africa and land adjacent market businesses accounted for the other half. Order intake in the quarter was £0.7bn, and in July the firm secured around £500m of new contracts in its aviation business, which it said was helped by coronavirus delays in bid decisions starting to clear.

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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.

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