London pre-open: Stocks seen higher but Brexit and trade woes remain
London stocks were set to rise at the open on Friday, taking their cue from positive sessions in the US and Asia, although worries about trade and Brexit were likely to remain on investors' minds.
The FTSE 100 was expected to open 40 points higher at 7,655.
"While the US administration appears to have softened its line on inward investment into the US economy, there still remains a great deal of uncertainty as to whether this slightly softer line will hold, or whether the more hawkish members of the administration will reassert themselves," said CMC Markets analyst Michael Hewson.
Hewson said the pound has had a disappointing quarter, hitting its lowest level against the US dollar this year, undermined by the failure of the Bank of England to deliver on a widely telegraphed rate rise in May, as well as growing uncertainty and anxiety about the progress of Brexit negotiations.
"The shambolic approach adopted by the UK government, as well as the failure of the opposition to hold the government to account, has raised concerns about the calibre of the political class in adopting any type of orderly Brexit process, as we head towards the business end of the negotiation process."
Market participants will be digesting news that EU leaders at the summit in Brussels reached a deal on migration in the early hours of Friday, after more than 10 hours of negotiations.
Under the deal, which is voluntary, new migrant centres would be set up in EU countries to process migrants and determine those who are genuine refugees, with those deemed "irregular" returned.
The leaders also agreed to tighten their external border and increase financing for Turkey, Morocco and North African states to prevent migration to Europe.
Investors will also mull over the latest survey from GfK, which showed consumer confidence fell in June as Britons became increasingly gloomy about the economy.
GfK's long-running consumer confidence index fell two points this month to -9, with all five of the key measures dropping.
Client strategy director Joe Staton said: "Scores on personal finance are down but there is a more marked deterioration in our levels of optimism about the general state of the economy, with the verdicts on the past year and the coming year each tumbling four points. When will the strong jobs market and low interest rates boost the economic mood? That’s the key to confidence increasing more generally.
"Meanwhile, with Britain’s hard-pressed retail sector very much in the news, there is little comfort in the one-point drop to zero in the Major Purchase Index. Shoppers are holding on to their cash and consumers in general seem set on their path of self-imposed austerity. The overall index score has now registered at zero or negative for 30-months. Contrast that with 2015 - when there was a full year of positive numbers. The trend since those 2015 figures has been resolutely downwards and it’s difficult to see the direction changing in the run-up to the UK leaving the European Union in March 2019."
Still to come on the UK data front, net lending, first-quarter GDP, consumer credit and mortgage approvals are due at 0930 BST.
In corporate news, BHP Billiton has agreed to pay $158m to a fund set up in Brazil to deal with remediation and compensation from the 2015 bursting of the Samarco tailings dam that killed 19 people.
The mining giant, which jointly owns the local mining outfit Samarco Mineração with Brazil's Vale, has also offered up to $53m to Samarco to carry out ongoing repair works, maintain Samarco's facilities and support the restarting of operations.
Indivior announced that the US District Court for the District of New Jersey heard its application for a preliminary injunction against Dr. Reddy's Laboratories, which was filed to extend the cessation of launch activities by DRL while the two companies await the outcome of recently-filed patent litigation against DRL.
The company said that at the hearing, the judge reserved judgment on Indivior's motion, and extended Indivior's temporary restraining order issued on 15 June for an additional 14-days, during which time the court would consider Indivior's application and ultimately issue a ruling on the preliminary injunction.
Outsourcing giant Serco Group updated the market on its first half trading, saying that for the period, it expected to report revenue of around £1.35bn and underlying trading profit of between £35m and £40m.
The group said that at constant currency, revenue was anticipated to have reduced by around 6%, and underlying trading profit to have increased by about 20%. As its board expected, the revenue reduction was driven largely by contracts that ended in 2017.