BAE flags higher-than-expected earnings, 3i Infrastructure reports first-half growth

London open

The FTSE 100 is expected to open three points higher on Wednesday, having closed up 1.79% on Tuesday, at 6,296.85.

Stocks to watch

Defence aerospace group BAE Systems said underlying earnings would be slightly higher than forecast as order intake levels moved ahead of original pre-Covid planning. The company on Wednesday said its large order backlog and incumbent programme positions “are expected to lead to strong and profitable top line growth with increasing cash conversion in the coming years”. “The recent German parliament announcement confirming the approval of the purchase of an additional 38 Typhoon aircraft is significant for the consortium, and we are working with Eurofighter and our industrial partners to conclude the relevant contracts in the near future,” BAE said in a trading statement.

Infrastructure investment company 3i Infrastructure said it was on track to deliver an increased full-year dividend after its first half on Wednesday, as its total return came in at 3.8% or £84m, making for a net asset value per share of 259.4p. The FTSE 250 company said total income and non-income cash was £48m for the six months ended 30 September, while its cash balance stood at £360m. Its board declared an interim dividend of 4.9p.

Newspaper round-up

Two Conservative MPs have accepted jobs with the gambling industry worth tens of thousands of pounds before a government review of betting laws, the Guardian can reveal. The Ladbrokes owner, GVC, paid Philip Davies £33,320, or £396 an hour, for “providing advice on responsible gambling and customer service”, according to parliamentary disclosures. - Guardian

Ministers are seeking sweeping powers to block takeovers by Chinese and other foreign companies on national security grounds as part of the biggest shake-up in the UK’s industrial intervention policy for nearly two decades. A national security and investment bill is due to be published on Wednesday, which would also allow ministers to retrospectively halt acquisitions any time in the five years after the deal was concluded. - Guardian

Some of the world’s biggest luxury brands have warned Rishi Sunak that a proposed ban on tax-free shopping would cost the Treasury billions of pounds and trigger a brutal slump in tourism. Bosses of 11 firms including Gucci and Hugo Boss told the Chancellor in an open letter that his planned crackdown on VAT-free shopping for tourists would saddle Britain with the least competitive regime in Europe. - Telegraph

Economists have upgraded Britain’s growth forecasts amid hopes that Pfizer’s coronavirus vaccine will end the health restrictions that have hammered businesses and the economy this year. GDP may return to pre-pandemic levels as soon as the middle of next year as life gets back to normal faster than many forecasters had dared predict. Those that produced a range of scenarios said that their “upside” projections now appeared more likely. - The Times

Thousands of investors who were locked out of their accounts on the busiest trading day on record will not receive compensation, despite some claiming losses of up to £10,000. Customers of Hargreaves Lansdown, Fidelity and AJ Bell, which collectively manage more than two million accounts, were unable to trade on Monday as the businesses’ systems could not cope with a surge in demand. - The Times

US close

Wall Street stocks turned in a mixed performance on Tuesday following a strong rally seen in the previous session on the back of Covid-19 vaccine-related optimism.

At the close, the Dow Jones Industrial Average was up 0.90% at 29,420.92, while the S&P 500 was 0.14% weaker at 3,545.53 and the Nasdaq Composite saw out the session 1.37% softer at 11,553.86.

The Dow closed 262.95 points higher on Tuesday, extending a rally started in the previous session after Pfizer and BioNTech revealed their Covid-19 vaccine candidate had shown itself to be highly effective.

Pfizer's update came just as the US exceeded ten million cases of Covid-19, just ten days after hitting the nine million mark.

Many on Wall Street believe a viable vaccine would be crucial for the economy on its road to a full recovery.