London pre-open: Stocks seen down after weak US close; Informa and UBM to merge
London stocks were set for a weaker open on Wednesday after a downbeat session on Wall Street, where equities failed to hold on to their initial gains after the Dow breached the 26,000 level for the first time.
The FTSE 100 was expected to open down 21 points at 7,734.
CMC Markets analyst Michael Hewson said: "When US markets opened yesterday after two weeks of strong gains returning from the long weekend break, it looked to all intents and purposes as if US investors were intent on carrying on where they left off last week. The Dow surged through the 26,000 level, the S&P500 poked its head above 2,800 and the Nasdaq also posted new record peaks.
"For all of that early optimism sentiment started to turn around and we started to see a sharp sell-off with the Dow falling peak to trough, by 383 points, before closing the day 10 points lower from where it finished last Friday.
"There wasn’t any immediate catalyst for yesterday’s sharp sell down apart from some weakness in commodity markets, but US markets inability to hold onto these sorts of gains might suggest that we could be due some sort of pullback, after the strong start to this year. Either that or investors are starting to get a little nervous ahead of a possible US government shutdown at the weekend.
"At any rate last night’s sharp turnaround in US markets is likely to weigh on European markets this morning with a lower open, after a failure yesterday to consolidate what were at one point similarly strong gains."
In corporate news, Informa, the events and specialist publishing group, has agreed a merger with smaller events-focused rival UBM in a deal that is expected to generate "significant synergies",
Informa, which will offer 1.083 of its shares and 163p per UBM share, or 972.43p, will also supply chairman Derek Mapp and chief executive Stephen Carter for the combined group.
Publishing group Pearson said it expected 2017 adjusted operating profit to be at the upper end of forecasts at £600m-605m at guidance exchange rates.
At average effective exchange rates it expected to report adjusted operating profit around £570m-575m and adjusted earnings per share of 53.5p-54.5p.
“We expect growth from that base and are giving guidance for 2018 adjusted operating profit of between £520m and £560m,” Pearson said.
Luxury clothes retailer Burberry reported slower sales growth in the last three months of 2017 than had been expected but remained confident of sashaying on to hit full year profit targets as it makes initial progress on its new strategy.
Sales of £719m in what is the FTSE 100 group's third quarter were down 2% on a reported basis but up 2% on a like-for-like basis.