London pre-open: Stocks to fall after recent gains

(Sharecast News) - London stocks were set to fall at the open on Thursday following recent gains on the back of softer-than-expected UK and US inflation data. The FTSE 100 was called to open around 20 points lower at 7,467.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "Yesterday was about digesting Tuesday's softer-than-expected US CPI data, feeling relieved that the US Senate passed a stopgap spending bill to avert a government shutdown and welcoming a softer-than-expected producer price inflation, and a softer-than-expected decline in US retail sales -which came to support the idea that, yes, the US economy is probably slowing but it is slowing slowly, while inflation is easing at a satisfactory pace.

"The sweet mix of the recent economic data backs the idea that the Federal Reserve (Fed) could achieve what they call a 'soft landing' following an aggressive monetary policy tightening - and more importantly stop hiking the interest rates.

"At this point, investors are 100% sure that the Fed won't hike rates in December. They are 100% sure that the Fed won't hike rates in January. There is more than a quarter of a chance for a rate cut to be announced by March. And the pricing suggests that there is a higher chance for a rate cut in the Fed's May meeting, than not."

On the corporate front, there was another avalanche of releases, with Aviva, Burberry, Halma, Melrose, Crest Nicholson and Premier Foods among those reporting.

Burberry warned that the slowdown in luxury demand is having an impact on current trading and could affect full-year sales.

The company said that while it is confident in its medium and long-term targets, it hasn't been immune to the wider challenging market conditions that have already hit a number of major players, including Kering, Hermès and LVMH.

"If the weaker demand continues, we are unlikely to achieve our previously stated revenue guidance for FY24," it said in its interim results.

Current guidance points to low double-digit growth in full-year revenues for the year ending March 2024. "In this context, adjusted operating profit would be towards the lower end of the current consensus range (£552m-£668m)," it said.

Halma reported record first-half profit and revenue and said it was on track to deliver full-year 2024 adjusted pre-tax profit in line with analyst expectations.

In the six months to the end of September, revenue jumped 9% to £950.5m and adjusted pre-tax profit was up 3% at £177.5m.