London pre-open: Stocks seen up after less hawkish Fed

(Sharecast News) - London stocks were set to rise at the open on Thursday as investors welcome a less hawkish stance from the US Federal Reserve. The FTSE 100 was called to open around 20 points higher at 7,368.

Overnight, the FOMC raised the Fed Funds target by 0.75% to a target range of 2.25%-2.50%, as expected.

Oanda market analyst Jeffrey Halley said: "It was what Mr Powell said afterwards that turbocharged the FOMO gnomes of Wall Street.

"Mr Powell said that it may be appropriate to slow the pace of increases going forward and that the decision on that would become a meeting to meeting one, effectively throwing out the forward guidance.

"I should also mention that Mr Powell couched that by saying that he 'wouldn't hesitate' to implement sharper increases if the data warranted it. For some time, the US bond markets have been pricing a US recession, inflation peaking and falling by early 2023, and Fed rate cuts to start in H2 2023.

"Therefore, markets happily ignored the 'wouldn't hesitate' remarks and concentrated solely on the potentially slower pace of rate hikes bit, ignoring the fact that the Fed still seems intent on getting to a 3.50% terminal rate; it's just whether it happens sooner or later."

On the UK corporate front, there was a deluge of earnings news and updates for investors to wade through.

Barclays reported a fall in pre-tax profits due to higher costs and a £300m impairment provision for bad debts amid the cost-of-living crisis.

The bank said pre-tax profits fell 24% to £3.7bn. Group income was £13.2bn, up 17% year-on-year, including £800m from hedging arrangements related to the over-issuance of securities.

Credit impairment charges were £300m compared with a £700m release of cash last year that had been set aside for debts expected during the Covid pandemic.

Centrica said it had delivered a "strong" operational performance in the six months ended 30 June, with adjusted earnings surging against a backdrop of "high and volatile" commodity prices.

Adjusted underlying earnings surged 143% to £1.66bn, adjusted operating profits jumped 412% to £1.34bn and adjusted earnings per share shot up to 11.0p from 1.7p at the same time a year earlier.

However, on a statutory basis, Centrica swung from an operating profit of £1.0bn in 2021 to a loss of £1.09bn a year later, due to a £1.9bn loss on net re-measurements after taxation.