London pre-open: FTSE to tick up as eyes remain on Middle East

(Sharecast News) - London stocks were set to tick higher at the open on Wednesday following heavy losses in the previous session, as investors continue to eye developments in the Middle East.

The FTSE 100 was called to open around 0.3% higher.

Emma Wall, chief investment strategist at Hargreaves Lansdown, said: "Escalating conflict in the Middle East saw market losses across the globe yesterday - and early trading suggests a mixed picture today.

"Oil prices reached just shy of $85 a barrel yesterday as trade through the Strait of Hormuz - through which 20% of global flow moves daily - halted entirely. Gas prices also rose sharply. Iraq announced plans to pause production due to the disruption. Equity and bond markets priced in the impact of a potential supply shock, anticipated to hike energy costs, stoke inflation and force higher interest rate policy. Gold fell 4% as higher Treasury yields offered haven seekers an alternative home.

"Europe felt the brunt of investor concern, with Germany's DAX down 3.44%, France's CAC 40 falling 3.46% and the FTSE 100 fell 2.75%. The US began trading with similar negativity but markets were granted reprieve in the form of President Donald Trump who pledged insurance guarantees and escorts for tankers using Hormuz. The S&P 500 therefore closed down a more muted 0.94% and Nasdaq index fell just 1.02%. The brent crude oil price fell back to $80 on the news."

She said today's trading in Asia has not picked up the optimistic baton but futures for Europe suggest a more robust open.

"The old-economy nature of the region, a headwind in recent years, is proving a boon. This underlines the importance of portfolio diversification in times of market stress."

In corporate news, Vistry said Greg Fitzgerald will retire as CEO next March after 45 years in the housebuilding sector.

The company also said adjusted pre-tax profits rose 2% to �268m despite a challenging market and uncertainty ahead of the government's Budget in November.

Barratt Redrow's long-standing chief executive is to step down after more than a decade, the housebuilder announced.

David Thomas, who was appointed chief executive in 2015, is retiring after 17 years with the blue chip. He will be replaced by Dean Banks, the current chief executive of Australian infrastructure services provider Ventia.

Engineering firm Weir Group said that both profits and margins had expanded in the 12 months ended 31 December as strong operational execution and rising mining activity drove growth across the business.

Weir said orders had risen 7% to �2.59bn, supported by minesite expansions, de-bottlenecking projects and increased technology adoption. Original equipment orders were flat, but up 6% on an underlying basis excluding large contracts, while aftermarket orders climbed 8% on high activity levels and recent acquisitions.

Revenues increased 6% to �2.56bn, with OE revenue up 2% and aftermarket revenue rising 8%, while adjusted operating profits advanced 15% to �518m, lifting Weir's adjusted operating margin to 20.2%, up 150bps year-on-year.