City sources predict the FTSE 100 will open around 25 points yesterday's close of 6,798.56.
Stocks to watch
Industrial engineering firm Meggitt has been awarded a contract by JGC Corporation for the supply of printed circuit heat exchangers (PCHEs) for Petronas' second floating liquefied natural gas facility (PFLNG2). JGC is part of a consortium developing the PFLNG2 which will be located in gas fields offshore Malaysia, with a production capacity of 1.5m tons of LNG per year.
Engine maker Rolls-Royce has announced that it is selling its energy gas turbine and compressor business to German engineering group Siemens. The unit, which supplies aero-derivative gas turbines, compressor systems and related services to customers in the oil and gas and power generation sectors, is to be sold for £785m in cash.
Construction materials group CRH said improving trends in its European markets during the second half of last year has continued in 2014 as the economic backdrop continues to stabilise. "This, combined with the absence of the prolonged winter conditions which impacted last year's early season trading, benefited construction activity in most of our markets," it explained. Like-for-like European sales to the end of April were 10% ahead of the first four months of 2013.
Sainsbury's Chief Executive Justin King delivered his last set of annual results, with profits growth ahead of expectations. Underlying profit before tax rose 5.3% to £798m, ahead of the consensus of £782m, on group sales including fuel up 2.8% to £23.95bn.
Arms company BAE Systems said the outlook for defence spending in the US has become more predictable than in the last few years as it reported trading in line with expectations so far in 2014.
Broadcaster ITV has acquired an 80% controlling interest in Leftfield Entertainment Group, making ITV Studios US Group the largest unscripted independent producer in the US. The acquisition, which has been made for an initial cash payment of $360m, will be earnings enhancing from day one.
In the Press
Vince Cable said he would not "rule out intervention" in Pfizer's £63bn bid for Astra Zeneca as he warned that the "future of the UK is a knowledge economy not a tax haven". The Business Secretary told the House of Commons that just as both AstraZeneca and Pfizer were "motivated by hard-headed commercial considerations" the government would be "motivated by hard-headed considerations of the national interest." - The Daily Telegraph
AstraZeneca suggested that it had 10 new medicines in its development pipeline with the potential to generate more than $1bn of annual revenue each. Such bullish figures imply that the City has been spectacularly undervaluing AstraZeneca's potential. Industry followers are far from convinced. In a research note, Jefferies described the figures as "overly optimistic and an obvious bid-defence tactic". Savvas Neophytou of Panmure Gordon said: "The management has some convincing to do as most analysts remain sceptical on the achievability of these targets." - The Times
Carphone Warehouse and Dixons Retail are on the cusp of agreeing a near £4bn in merger to create a powerful UK retailer with 1,300 stores. A statement on the tie-up is expected around May 15th, when Dixons is due to publish a full-year trading update. Based on last night's closing prices, Carphone Warehouse has a market capitalisation of £1.9bn and Dixons Retail £1.8bn, implying the value of a combined group would be £3.7bn. - The Daily Telegraph
The country´s largest chain of estate agents, Countrywide, continues to be confident on the recovery in the housing market. The firm projects that the market will expand by 10% to 15% this year and that its own numbers may come in at the top end of forecasts. In the period to the bank holiday total income expanded by 35% to £157.1m, or by 21% if Lambert Smith Hampton, the unit purchased last September, is excluded. That came despite the introduction of the Mortgage Market Review a fortnight ago, requiring lenders to ask many more questions about borrowers´ finances.
If anything can derail housing it would be that. Even so, estate agents are the ultimate cyclical business, as these shares´ strong performance shows. The stock came to market at 350p last spring and now trade at about 14 times earnings. This is not the moment to go short the sector, but that valuation looks fair enough and up with events, says The Times´ Tempus.
Twitter, AIG and Netflix all helped drag US stocks markets for the third time in four sessions.
Also weighing on sentiment was data that indicated the country's economy likely contracted in the first quarter - the first time in three years. As such, the figure is now being predicted to come in at a contraction of between 0.2% and 0.4%.
The Dow Jones declined 129.53 points, or 0.78%, the Nasdaq fell 57.30, equal to 1.39%, while the S&P 500
dropped 0.9% lower to settle at 1,867.72.
Investors were also likely thinking ahead to US Federal Reserve Chair Janet Yellen's latest testimony before the Joint Economic Committee of the US Congress, amid considerable debate regarding the likely behaviour of inflation as the labor market continues to recover.