London pre-open: Stocks seen down as investors mull Fed minutes

(Sharecast News) - London stocks were set to fall at the open on Thursday as investors mull the latest minutes from the US Federal Reserve. The FTSE 100 was called to open down around 20 points at 7,565.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "Released yesterday, the FOMC minutes were hawkish enough to get the S&P 500 erase early gains, but not hawkish enough to get the index to close in the red. The index closed the session 0.75% higher. Nasdaq gained 0.50%.

"The Federal Reserve repeated its determination to keep fighting inflation with further rate hikes, and warned that this determination should not be underestimated by investors.

"No one talked about a rate cut in the foreseeable future, even though pricing in the market still shows that investors continue to bet that the Fed will start cutting rates before the end of this year."

On the macro front, investors will eye the S&P Global/CIPS December services PMI for the UK at 0930 GMT, while in the US, the ADP jobs report is at 1315 GMT and initial jobless claims are at 1330 GMT.

In corporate news, B&M European Value Retail upgraded profit expectations and said it would pay a special dividend after a 12.3% rise in third quarter revenue.

The retailer, with operations in the UK and France, said it now expected annual adjusted core earnings to be in the range of £560m-580m, ahead of current analysts' consensus estimates of £557m. The board intends to declare a special dividend of 20p a share.

Retailer Next also lifted its full-year profit guidance, as it reported better-than-expected sales over the Christmas period.

In the nine weeks to 30 December, full price sales rose 4.8% versus last year. This was £66m ahead of the company's previous guidance of a 2% decline for the period. Next hailed a particularly strong performance from its retail segment.

"We think that we underestimated the negative effect Covid was having on our retail sales last year," it said. "We may have also underestimated the effect improved stock levels would have on both businesses (stock levels were exceptionally low last year as a result of widespread supply chain disruption)."

Next upgraded its full-year pre-tax profit guidance by £20m to £860m, up 4.5% on the year. Nevertheless, the group said it remains cautious in its outlook for the year ahead. Initial guidance for the year ending January 2024 is for full price sales to fall 1.5% and for pre-tax profit to decline 7.6% from the current year to £795m.