London pre-open: Stocks to gain amid optimism about Sino-US relations
London stocks were set for a firmer open on Wednesday, taking their cue from an upbeat Asian session as investors grew increasingly optimistic about Sino-US trade relations.
The FTSE 100 was called to open 62 points higher at 6,862.
Sentiment was underpinned by reports that China has agreed to cut tariffs on US cars from 40% to 15% in a move aimed at de-escalating the trade war with the US. The mood was also lifted by news that Huawei's chief financial officer, Meng Wanzhou, was released on bail.
Meanwhile, sterling was up 0.2% against the dollar at 1.2512, having taken a hit on reports of a no confidence vote against Prime Minister Theresa May.
Oanda analyst Craig Erlam said: "Reports suggest the delayed vote was the last straw and 48 letters have apparently been received - although we have heard this repeatedly before - meaning she now faces a vote that could bring her chaotic tenure to an abrupt end.
"Even if the letters have been collected though, that doesn’t mean she’ll lose the vote and if she doesn’t, this could actually empower her as the threat of a challenge that’s hung over her head for so long would instantly go away for another 12 months. Assuming of course that she doesn’t survive by a fine margin at which point there could be calls for her to step down, something I’m not entirely sure she’d do.
"Still, the soap opera that is Brexit goes on and it seems with every passing day the chaos is being ramped up a notch which is starting to taking its toll on the currency. The pound dipped below 1.25 against the dollar on Tuesday for the first time since April last year and in the near term at least - unless May arrives home jubilantly waving a concession on the backstop - it’s tough to build a bullish case or the currency."
In corporate news, Sainsbury's and Asda have asked the competition authorities for more time to argue the case for their proposed £12bn merger.
After having received a "large amount of material" from the Competition & Markets Authority, likely referring to rival supermarkets' objections to the deal, the pair has lodged an appeal to be given 11 extra working days over the Christmas period to prepare their response.
Rolls-Royce said it was still implementing its contingency plans after the UK government pulled its vote on the Brexit withdrawal agreement.
The aerospace company also confirmed its 2018 full year forecasts with both group and core profit and cash flow to be in the upper half of its full year guidance range.