London pre-open: Stocks seen higher after Thursday's selloff

(Sharecast News) - London stocks were set to rise at the open on Friday following huge losses in the previous session. The FTSE 100 was called to open 40 points higher at 7,085, having closed down 3.1% on Thursday after the Bank of England hiked rates by 25 basis points to a 13-year high of 1.25%.

CMC Markets analyst Michael Hewson said: "Markets appear to be pricing the likelihood that the Bank of England will have to become much more aggressive when it meets next in August, where there will also be a press conference, as well as new grimmer forecasts.

"Current market pricing is for another 1.75% by year end, which seems a little on the optimistic side given the Bank of England's rather chequered track record on guidance, and the fact that the MPC has never hiked by more than 25 bps in its 25-year history.

"With four meetings left this year, we'd need to see at least three consecutive 50bps rate moves to get to 3% by year end.

"With Asia markets also trading lower, US futures are enjoying a bit of a rebound which means today's European open looks set to be a positive one."

In corporate news, supermarket chain Tesco said it was seeing early indications of changing customer behaviour as a result of the cost-of-living crisis and inflationary environment as it reported a fall in first quarter sales.

The company said UK like-for-like sales for the three months to May 28 fell 1.5% to £9.8bn. On a group basis sales were up 2%, boosted by a strong performance at its Booker division, where revenue rose 19.4% to £2bn.

Glencore said that its full-year portfolio mix adjustment guidance was expected to increase dramatically as a result of "unprecedented dislocation" in energy markets.

Glencore stated that its February full-year portfolio mix adjustment guidance of $32.8 per tonne was expected to increase to a range of roughly $82-86 per tonne for the first half of 2022. Government royalties also increased "significantly" when compared to the FTSE 100-listed group's prior cost expectations, which together with higher input costs, were now expected to result in an increase in its reported average FOB thermal unit cost to approximately $75-$78 per tonne, compared to earlier guidance of $59.3 per tonne.