London open
City sources predict FTSE 100 will fall 11 points from yesterday’s close of 5,351.
Stocks to watch
Oil giant BP has confirmed Tony Hayward is to step down as chief executive of the group on October 1 to be succeeded by fellow executive director Bob Dudley. Dudley currently runs the recently-established unit responsible for clean-up operations and compensation programmes in the Gulf of Mexico.
Revenues and profits continued soaring at ARM in the second quarter as the chip-designer continued to see strong demand for its technology from makers of mobile ‘phones and other must-have gadgets. ARM, whose chips are used in some of the tech giant Apple’s products, posted a pre-tax profit of Ł43.5m in the three months to June 30, up from Ł16.3m over the same period the previous year.
In the Press
BP's billionaire partners in Russia indicated they are willing to back their old adversary Bob Dudley as its new chief executive, as the oil giant's board met on Monday night to finalise a radical shake-up. The endorsement will be a boost to BP, as it attempts to draw a line under its Gulf of Mexico oil spill by on Tuesday announcing the departure of chief executive Tony Hayward and revealing hefty impairment charges of up to $25bn (Ł16bn), the Telegraph reports.
The Parliamentary Ombudsman weighed into the row about compensation for victims of the Equitable Life scandal yesterday, saying she could not support the findings of a Government-backed inquiry published last week. Ann Abraham said that proposals in Sir John Chadwick's report, to which the Government has lent its support, "seem to me to be an unsafe and unsound basis on which to proceed", the Independent reports.
The National Audit Office has called for a project-by-project review of future Private Finance Initiative contracts amid concerns about a rise in bank lending rates. An NAO report said that higher rates charged by private sector lenders meant that the PFI was less likely to represent value for money in future. Deals entered into during the credit crunch locked in an extra Ł500m to Ł1bn of financing costs because of higher bank charges, the NAO report found, the Times reports.
Newspaper tips
The good news for its shareholders is that Pearson tends to generate the majority of its profits in the second half, even though yesterday it was striking a cautionary note, given the uncertainty in the market. While Pearson will face tougher comparatives, the management believe they are in a good position to grow in the medium term, given the growth prospects in core markets. Pearson, on a forecast multiple of 14 times full-year earnings, trades in line with its peers. It deserves to be on a premium, so buy says the Independent.
Set-top box maker Pace’s shares still trade at a lowly 7.7 times’ RBS projected earnings for 2011, a legacy of market fears that its products were becoming increasingly commoditised. Pace should be given the benefit of the doubt; those with an appetite for a high-tech gamble should regard the shares as a buy, says the Times.
National Grid prides itself on its cautious approach and reliability. Yesterday's trading statement confirmed this image, with a positive outlook and results in line with expectations. There were forecasts of a "substantial improvement" from the company's gas distribution business, which contributes more than a fifth of operating profits, after a poor showing last year. National Grid looks attractive. On just 8.6 times next year's estimated earnings, it's cheap, too, so buy says the Independent.
US close
Wall Street closed higher after better than expected home sales data and strong corporate figures.
Across the markets, the Dow added 100 points to 10,525, with the Nasdaq up 26 points to 2,296. The S&P 500 is up 12 points to 1,115.
US new home sales rose faster than expected in June. Analysts expected a sales increase of 310,000 last month but the outcome was 330,000. This may signal that the worst is over in the housing market.
FedEx also gave the market a boost as it raised its first quarter and full year profit forecast, citing better than expected growth in FedEx Express and Ground volumes. The group expects earnings to be in the range of $1.05 to $1.25 per diluted share for the first quarter ending 31 August, up 81% to 116% from $0.58 per diluted share a year ago.
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