London pre-open: Stocks set for lower start after Fitch cuts U.S. debt rating

(Sharecast News) - London stocks looked set for a slightly lower start following news that Fitch had downgraded the U.S. government's long-term credit rating. Fitch lowered the credit rating from AAA to AA+, saying that "The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management."

As of 0745 BST, FTSE 100 futures were down by 56.0 points at 7,595.0.

Cable was little changed, drifting lower by just 0.02% to 1.2774.

US Treasury debt yields ended the previous day's session higher amid what Michael Hewson, chief market analyst at CMC Markets UK said was the realisation that "rates may well have to stay at current levels for quite a while yet."

Rising debt yields were part of the reason why Wall Street finished on a mixed note on the first day of the third quarter.

"This profit taking has continued overnight after Fitch downgraded the US credit rating to AA+ from AAA, while simultaneously boosting demand for haven assets, with Asia markets falling sharply, and which looks set to translate into a sharply lower European open," Hewson said.

Still ahead for later in the session, at 1315 BST consultancy ADP was scheduled to publish its private sector payrolls report for July.

Taylor Wimpey posts drop in profit, BAE raises guidance

Taylor Wimpey said that revenues shrank by 21.2% to reach £1.64bn, alongside a drop of nearly 29% in its profit before tax to £237.7m, for earnings per share of 5.0p. Management highlighted what it termed as the company's "resilience" and said its focus in the back half of the year remained on optimising all areas of its operations, calling attention to its "robust" balance sheet and "excellent" landbank. Net cash at period en stood at £654.9m, up from £642.4m in the year earlier period. Its interim dividend was bumped up from 4.62p per share to 4.79p.

UK defence manufacturer BAE Systems on Wednesday lifted full-year guidance as the war in Ukraine led to increased demand for weapons, leaving the company with a record order book. Sales guidance was increased by 200 basis points to 5 - 7%, reflecting the accelerated spend profile on the Dreadnought submarine programme and good demand and operational performance across all sectors, while underlying earnings before interest and tax (EBIT) was lifted by the same amount to 6 - 8%.