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

(Sharecast News) - London stocks were set to fall at the open on Thursday following downbeat US and Asian sessions. The FTSE 100 was called to open 30 points lower at 7,412.

CMC Markets analyst Michael Hewson said: "European markets have fallen every day this week, although yesterday's losses were by far the worst, and look set to continue again today. US markets also struggled yesterday, although their losses have been much more modest.

"Yesterday's weakness was driven by concerns over softer than expected Chinese as well as European services PMIs, which fed into increased slowdown worries, as well as rising interest rate risk, which fed into weakness in basic resources, energy and financials, and has translated into further weakness in Asia markets."

Investors will be digesting the latest minutes from the Federal Reserve, which came out on Wednesday after the close of London markets.

Hewson said: "The release of last night's Fed minutes showcased some significant splits amongst policymakers over the decision to signal a rate pause in June, citing "few clear signs" of progress that US inflation was falling quickly enough.

"Some officials wanted to carry on with rate hikes of 25bps but given the "uncertainty" about the outlook it was decided a pause would be preferable, just so long as it was made clear that the door to a July hike, as well as further hikes was pushed to the top of the narrative. This helps to explain the very hawkish guidance with no rate cuts expected by Fed officials until 2024.

"The publication of the minutes, and the clear willingness amongst many members to do more on rates saw US 2-year yields close higher on the day, wiping out their early declines."

In corporate news, office provider Workspace reported a rise in first-quarter rents, driven by resilient demand.

The company said 260 new lettings were completed in the three months to June 30 with a total rental value of £7.0m a year.

Like-for-like occupancy was stable at 89.2% and the LFL rent roll was up 3.2% to £103.6m.

"We have had a good start to the new financial year highlighting the appeal of our flexible offer, with stable like-for-like occupancy and continued improvement in pricing," said chief executive Graham Clemett.

"As always, we are staying very close to our customers monitoring trends on a real time basis. While we remain vigilant, London's small and medium enterprises are proving resilient in the current economic climate."

Electrical retailer Currys pulled its final dividend, citing an uncertain outlook as annual profits fell due to its poorly-performing Nordics division but came in at the top end of guidance.

Group adjusted profit before tax fell 38% to £119m, at top end of guidance, due to lower Nordic profits. On a statutory basis the seller of fridges and computers swung to a pre-tax loss of £450m, driven by a previously announced non-cash goodwill impairment of £511m.

"Looking ahead, we're wary of optimism about consumer spending power. Accordingly, we're being prudent in our planning, and in further strengthening our balance sheet," said chief executive Alex Baldock.

"Our focus is on continuing a very encouraging trajectory in the UK & Ireland while we get the Nordics back on track, and being attentive to mitigating any downside risk. We may be cautious in our promises for the short-term, but our confidence is undimmed as we build a stronger and more resilient business that is fit to prosper in the longer term."