London pre-open: Stocks seen up as investors eye Fed

(Sharecast News) - London stocks were set to rise at the open on Wednesday following a positive close on Wall Street, as investors eyed the latest policy announcement from the US Federal Reserve. The FTSE 100 was called to open 10 points higher at 7,781.

CMC Markets analyst Michael Hewson said: "European markets finished the first month of 2023, sitting on some decent gains, although recent momentum has stalled in the last two weeks over concerns that a brighter economic outlook could prompt a more aggressive ECB monetary policy response tomorrow.

"US markets have also got a new lease of life in the last two weeks with the best start to the year for the S&P500 since 2019. The Nasdaq 100 has also enjoyed a stellar second half of the month gaining 10.6%, with yesterday's strong finish set to translate into a positive European open."

The Fed's rate announcement is due after the close of London markets, at 1900 GMT.

On home shores, data out earlier showed that shop price inflation hit fresh highs last month as the cost of food soared.

According to the latest BRC-NielsenIQ Shop Price Index, annual shop price inflation was 8% in January, up from 7.3% in December, above the three-month average of 7.5% and a record high.

Within that, non-food jumped 5.1% year-on-year from 4.4% a month earlier, while food surged 13.8%, compared to 13.3% in December. It is the highest inflation rate in the food category on record.

Helen Dickinson, chief executive of the British Retail Consortium, said retailers had reduced discounting in January while input costs had continued to rise.

She continued: "Ambient food inflation accelerated the most, as wholesale and bulk prices grew, particularly for sugar and alcohol. Fresh food prices also remained high due to increased food production costs as well as elevated wholesale fruit and vegetable prices.

"With global food costs coming down from their 2022 high and the cost of oil falling, we expect to see some inflationary pressures easing. However, as retailers still face ongoing headwinds from rising energy bills and labour shortages, prices are yet to peak - and will likely remain high in the near term."

Ambient food inflation was 11.3% in January, compared to 11% in December, the fastest rate of increase in the category on record.

In corporate news, Entain lifted its full-year profit expectations as it reported a record fourth quarter for both net gaming revenues and active customers.

The Ladbrokes owner now forecasts FY22 earnings before interest, tax, depreciation and amortisation of between £985m and £995m, up around 12% year-on-year and ahead of expectations.

Telecoms giant Vodafone said revenues fell in the third quarter as the economic slowdown hit trading in Continental Europe and offset a good performance in the UK.

The company said service revenue fell 1.3% to €9.52bn and continued to target its updated full-year guidance of adjusted core earnings after leases of €15-15.2bn and adjusted free cash flow of €5.1bn.