London open City sources predict FTSE 100 will open down 40 points from yesterday's close of 5,299.
Stocks to watch
British Airways has taken a major step towards restructuring its huge pension liabilities after the trustees of its two pensions funds agreed a recovery plan that avoids their closure to new members. The airlines' New Airways Pension Scheme (NAPS) and Airways Pension Scheme (APS) have a deficit of about Ł2.9bn. The recovery plan maintains British Airways' annual contributions at the current level of some Ł330m, plus agreed annual increases in line with inflation expectations averaging 3%.
Electronic sensors firm Halma has produced record results for the seventh year in a row and topped analyst forecasts with an increase in adjusted profit of 9%. Profit before tax from continuing operations jumped to Ł86.2m in the 12 months ended 3 April, up from Ł79.1m in 2009, trumping expectations of about Ł82m.
Distribution and outsourcing group Bunzl said overall trading is in line with full year expectations with revenue growth of 2%. Operating margin has improved in the six months ending 30 June compared to the same period in 2009 as a result of increases in the UK & Ireland and the Rest of the World, largely due to the favourable impact of cost reduction and the absence of a negative transaction impact from foreign exchange which particularly affected these business areas in the first half of last year.
Mitchells & Butlers announced the appointment of Tim Jones as new finance director of the pub group. Jones, who has been holding the same position at services, maintenance and building group Interserve since 2003, will replace Jeremy Townsend.
In the Press
George Osborne will claim today that the harshest Budget for 30 years will squeeze the rich more than it hits the poor. The Chancellor will seek to sell his package of record spending cuts and tax rises as being stamped by fairness as he tries to win public support for a four-year austerity drive. Nick Clegg moved to pre-empt any revolt by Liberal Democrats last night by insisting that his party’s values were at the heart of Mr Osborne’s assault on the deficit, the Times reports.
George Osborne will attempt to soften the impact of what is expected to be the most brutal Budget in a generation by promising to take up to 900,000 low earners out of the income tax system. The chancellor will announce that all basic rate taxpayers will benefit from a Ł1,000 rise in the income tax allowance – worth Ł200 a year – at a cost to the public purse of Ł3.7bn. But in an act of political symmetry, Mr Osborne is expected to raise a similar amount from a new levy on Britain’s banks – based on their balance sheets. Banks will also be required to lend more to companies, the FT reports.
J Sainsbury is considering entering the Chinese market after announcing the biggest management shake-up of Justin King’s six-year reign. The supermarket appointed a new chief financial officer yesterday as part of a boardroom reshuffle, with Darren Shapland, the incumbent finance boss, taking on a new executive role in charge of business development. Mr Shapland’s remit will include studying Sainsbury’s international options. Consultants have already been asked to explore the Chinese market, The Times has learnt.
Newspaper tips
Kewill provides services to businesses that need help streamlining their supply chains. The group sells software that simplifies logistics management, from sourcing to compliance and finance issues. The investment case is complicated by a bid, after it was approached in May with a deal worth 130p a share. It is worth picking up, however, even though the price is likely to fall in the short term if the talks break down. Buy says the Independent.
Hedge fund BlueCrest AllBlue has consistently been one of its sector’s strongest performers, with net asset value rising 12% in 2008, 22% in 2009 and 5% so far this year. The shares are trading at a premium to NAV, and provide no dividend. At 166p, hold on says the Times.
Intercontinental Hotels, which yesterday relaunched its 2,500th Holiday Inn hotel, has had what can only be described as an excellent run of late. The shares are up about 18% since 25 May, and are more than 30% ahead of the levels seen at the beginning of the year. In terms of enterprise value to earnings before interest, tax, depreciation and amortisation, it's on a multiple of 10 times and has an adjusted free cash-flow yield of 5.7%. These metrics leave it on a 14% discount to American peers, which is promising. Buy says the Independent. US close
The Dow failed to hang onto its early gains and closed lower. News that China will relax its currency’s peg to the dollar had given the markets’ a positive boost early on.
The People’s Bank of China said it would end the currency peg started during the global financial crisis to help protect exporters. The yuan would be allowed to make a 'modest appreciation.' It’s hoped the decision will reinvigorate the Chinese economy.
Across the US markets, the Dow closed 8 points lower at 10,442, with the Nasdaq down 20 at 2,289 and the S&P 500 down 4 at 1,113.
Alcoa was the best performer in the Dow. Other metals-related companies also rose including Freeport-McMoRan Copper & Gold, US Steel and AK Steel. Good box office for Toy Story 3 pushed Walt Disney higher.
Amazon was a late faller as it cut the price of its Kindle ereader to match a price cut by rival Barnes & Noble earlier in the day.
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