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What to Watch: BASF slashes forecast, Ocado confident, Conservative debate

An Ocado delivery vehicle on delivery in a residential setting in north west London- a large British online supermarket
Ocado reported a £142m loss due to a fire at its robotic warehouse. Photo: Getty

Chemical giant BASF slashes forecasts

BASF (BAS.DE), the world’s largest chemical company, slashed its 2019 forecast by 30% late on Monday, citing global trade conflicts.

Shares in the company plunged 6.2% as it led European chemical stocks lower on Tuesday. The market had expected some dent to its earnings compared to 2018, but the extent of the cut took investors by surprise.

“Whilst previous guidance looked a stretch, the size and longevity of the demand shock is far beyond our initial expectations,” said Thomas Wrigglesworth, an analyst at Citigroup.

BASF has been affected by trade tensions between the United States and China, with the company citing delayed investments and decision-making in key Asian markets.

Ocado slides to £142.8m loss after robotic warehouse fire

Supermarket delivery firm Ocado is confident it can increase sales by up to 15% in the second half of 2019 despite suffering a £142.8m loss from a huge fire at its flagship robotic warehouse.

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Core earnings almost halved, with accounting changes and the cost of share schemes also denting earnings.

But the company, which has seen its share price increase by 48% this year, said its “centre of gravity” had shifted after it signed a £750m delivery deal with M&S earlier this year.

The agreement replaces Ocado’s sourcing deal with Waitrose, with M&S products set to be available on Ocado.com by September 2020.

Johnson and Hunt debate

Conservative party leadership contenders Boris Johnson and Jeremy Hunt will take part in their first head-to-head debate of the campaign on Tuesday.

While Johnson is the clear frontrunner, Hunt has recently secured significant endorsements from former prime minister John Major and former foreign secretary William Hague.

Both candidates, who have said they would prefer to negotiate a new deal with the EU but are willing to leave the bloc without one, are expected to expound further on their Brexit plans.

The party’s 160,000 or so members have already begun voting by postal ballot, and the results of the leadership race are expected on 23 July.

European stocks declined

European stocks broadly declined in early trading. The FTSE 100 (^FTSE) fell by 0.2% in early trading. Germany’s DAX (^GDAXI) was down by 0.82%, while France’s CAC 40 (^FCHI) declined by 0.24%.

European losses followed a mixed trading session in Asia. The Nikkei 225 (^N225) was up by 0.14%, while the SSE Composite (000001.SS) was down by 0.18%. The Hang Seng (^HSI) was also down by 0.76%.

Sterling was down 0.33% against the dollar (GBPUSD=X) on Tuesday, to around $1.248, and down 0.22% against the euro (GBPEUR=X), to around €1.113.

What to expect in the US

Stock futures are pointing to a lower open for the US market.

S&P 500 futures (ES=F) are down by 0.43%, while Dow Jones Industrial Average futures (YM=F) are down by 0.39%. Nasdaq futures (NQ=F) are down by 0.64%.

Companies reporting later on Tuesday in the US include: