London pre-open: White House steals the spotlight from Apple with fresh trade threat
Stocks are being to called to dip at the start of trading after the White House ratcheted up the pressure on Beijing following the expiry of the deadline, at midnight on Tuesday, for the US to decide whether or not to impose tariffs on a further $16bn-worth of Chinese imports.
Apple Inc.
$169.30
11:25 26/04/24
Dow Jones I.A.
38,239.66
04:30 15/10/20
Nasdaq 100
17,718.30
11:25 26/04/24
Shares in London rose on Tuesday, in part following reports that officials from both countries were studying ways to restart trade talks.
But overnight Bloomberg reported that the Trump administration was now mulling levying tariffs of 25% on an additional $200bn-worth of goods from the Asian giant, instead of the 10% tax that had previously been threatened, citing three persons familiar with the deliberations taking place on the Potomac.
According to one person familiar with the decision-making process in the US, Washington was said to be attempting to secure "certain concessions" and if China agreed then it was possible that it would back off from further tariffs.
The public comment period on the proposed tariffs on $200-bn-worth of goods was scheduled to end on 30 August and any increase in the amount of the proposed levy would need to be formally announced beforehand.
Against that backdrop, the FTSE 100 was seen starting the session 11 points lower at 7,740.
On a more positive note, shares of Apple gained 4.0% in after-hours trading in New York, pushing them to a fresh 52-week high.
"Traders breathed a sigh of relief as Apple reported strong earnings after the close, putting a spark back into the Nasdaq. The Nasdaq had lost over 4% in 3 straight sessions following disappointing numbers from Facebook and Twitter which had weighed on demand for the broader sectors," said Jasper Lawler at LCG Research.
The manufacturer of the iconic iPhone reported better-than-expected quarterly results but fell short of analysts' estimates for the volume of iPhones that it would sell.
However, the company managed to soundly beat predictions for an average selling price of $693, managing to fetch $724 per unit instead.
Still ahead on Wednesday evening was the US Federal Reserve's policy announcement, at 1900 BST, although no changes in policy were anticipated given that no press conference was scheduled for after the release of the policy statement.
In the words of analysts at Bank of America-Merrill Lynch: "The August FOMC meeting is likely to be a non-event for the rates market as well, with virtually no chance of an August rate increase but close to a 95% likelihood of a 25bp hike in September. The FOMC minutes should be much more informative given shifting expectations for the Fed's ultimate balance sheet size. We expect limited FX market reaction; economic fundamentals remain supportive of USD."
Of more immediate concern, in the early part of the session the market spotlight will be on the results of two key manufacturing sector surveys due out in the UK and in the euro area for the month of July, courtesy of IHS Markit, at 0900 BST and 0930 BST, respectively.
Later in the session, the focus would shift to consultancy ADP's monthly private sector payrolls report in the States, at 1215 BST, followed by the ISM manufacturing sector survey, also in the US, at 1500 BST.
Next sales slow, Lloyds pleases
Trading at Next slowed more than expected in the second quarter as the high street clothing group's online and overseas sales was not enough to totally offset the persistent decline from its stores. For the 26 weeks to 28 July, full price sales rose 4.5% with online sales growing 15.5% and retail sales down 5.3%. Full year guidance was maintained.
Lloyds Banking Group’s first half profit jumped 23% as the bill for payment protection insurance and other compensation costs almost halved. Pre-tax profit for the six months to the end of June rose to £3.1bn from £2.5bn a year earlier as income rose 2% to £9.5bn. The cost of PPI and other remediation programmes fell to £807m from £1.59bn.
Direct Line saw gross written premiums slip 5% in the first half, it said on Tuesday, to £1.61bn, while direct own brand premiums grew 3.3%, driven primarily by continued growth in motor. The FTSE 100 company said that, normalised for weather, operating profit was up slightly, with the first half also including £49m of benefit from revised Ogden reserve releases. It said a headline decline in operating profit of £56.6m over last year was driven by higher weather-related claims.