City sources predict FTSE 100 will open down 35 points from previous close of 5,215.
Stocks to Watch
Outsourcing giant Capita said pressures on public spending may affect growth in the short term but it is confident its ability to deliver cost efficiencies will stand it in good stead. “There is buoyant demand for outsourcing across both the private and public sectors, with the most active markets in our strong bid pipeline remaining local government and life and pensions,” said Paul Pindar, chief executive of Capita.
Tate & Lyle said it has made a sound start to the year and continues to anticipate progress in the current full year. However, despite some improvement in demand, industrial starch margins are expected to remain at lower levels and the group continues to see little near term improvement in US ethanol markets.
Imperial Tobacco said cigarette volumes for the nine months to June were down 4.3% as a result of market declines in Spain, USA, Russia and Ukraine being only partly offset by gains in Central Europe. Overall, the group’s financial performance for the financial year to 30 September remains in line with expectations.
In the Press
Santander is gearing up to list its UK operations on the London Stock Exchange as soon as this autumn in a deal that could raise an estimated Ł3bn (€3.5bn) to fund growth by the acquisitive Spanish bank. The group, which is on the verge of buying a portfolio of 318 UK branches from RBS, needs the money to fund that deal, following a spate of other acquisitions – most recently the €555m (Ł467m) purchase of 173 branches in Germany from Sweden’s SEB, says the FT.
Reckitt Benckiser could offload the Scholl footwear business if it wins control of SSL International with a Ł2.54 billion takeover bid, writes the Times.
The chairman of Vodafone is under pressure from shareholders unhappy with the company’s performance and the executive team’s management of its global assets. Sir John Bond, the former HSBC chairman, was parachuted into the world’s biggest mobile operator in 2006 to soothe investor concerns over the expansion strategy of Arun Sarin, then chief executive, reports the Times.
Newspaper Tips
Announcing yesterday's second-quarter numbers, GlaxoSmithKline said it might start a shares buyback programme, which could help the share price. GSK has ruled itself out of any bidding war for the Durex maker SSL, which yesterday recommended a bid from Reckitt Benckiser. The stars are starting to align for GSK and, at these levels, the shares should not be missed. Buy, says the Independent.
Yesterday's quarterly production numbers from Hochschild Mining revealed a more-than-healthy 12 per cent rise in silver equivalent ounces (which tots up both gold and silver output) to a total of 6.8 million ounces. Goldman Sachs has the company on 12.9 times this year's forecast earnings, dropping to an attractive 6.8 next year. It notes the development of the Azuca and Crespo operations in Peru, coupled with further increases in the resource life of the company's mines. This could fuel the stock, so buy, says the Independent.
De La Rue’s woes at its Overton plant in Hampshire, which prompted this week’s precipitous plunge in its share price, fall within Donald Rumsfeld’s “unknown unknowns”. The share price fall may have been overdone, but De La Rue is the classic “falling knife” and BP watchers who took the same view during the Macondo disaster know just how sharp these can be. Only for the brave, according to the Times.
US close
US stocks fell back after Federal Reserve chairman Ben Bernanke’s testimony to US congress. The Fed chief warned the economic outlook remains "unusually uncertain," but he gave few clues on what measures the central bank might take to deal with this uncertainty.
Bernanke reiterated that the US economy would avoid falling into another recession in the near term. Economic growth would allow the Fed to tighten its monetary policy eventually, he added.
President Barack Obama, meanwhile, signed the Wall Street reform bill, the most historic set of financial rules since the Great Depression.
Morgan Stanley beat Wall Street expectations with a quarterly net profit of $1.4bn compared with a loss of $138m in the same period last year. Net revenue was $7.95bn, up 53% from the second quarter of 2009.Elsewhere in the sector, Wells Fargo saw quarterly net profit fall slightly to $3.1bn, or 55c a diluted share, from $3.2bn a year earlier, but the figure was still better than expected. Analysts were looking for earnings per share of 49c.
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