London pre-open: Stocks to fall after weakness on Wall Street

(Sharecast News) - London stocks were set to decline at the open on Monday following a downbeat session on Wall Street at the end of the last week and weakness in Asia. The FTSE 100 was called to open 15 points lower at 7,535.

CMC Markets analyst Michael Hewson said: "While inflation in Europe is showing little sign of slowing down, in the US there is some optimism that we may well have seen a short-term peak, after the equivalent US CPI measure saw a sharp decline.

"This optimism did prompt some speculation that this slowdown in inflation could prompt the Federal Reserve to soft pedal on its rate hiking cycle. This comes across as wildly optimistic if some of the recent commentary from senior Fed officials is any guide over the past few weeks, in a sign that perhaps markets don't truly believe the messaging.

"As such, this week could well be a challenge for market sentiment, where there still seems to be a hard-core cohort who believe the Fed will start cutting rates sometime next year.

"While this week's US PCE inflation numbers are likely to confirm the slightly softer US inflation numbers, they are unlikely to be sufficient to shift the narrative enough to shake the complacency of those who still think a Fed pivot may be coming.

"This is why this week's Jackson Hole symposium is so important as it could well set the tone for the rest of the year, as it has done on previous occasions over the last 10 years.

"As such the focus this week is set to be on Fed chairman Jay Powell's speech at the end of the week."

In corporate news, Vodafone said it was planning to sell its Hungary business to 4iG and Corvinus, a Hungarian state holding company, for €1.8bn.

Vodafone's shared services business in Hungary - VOIS - is not included in the transaction perimeter and it will continue to provide services to Vodafone's other operating companies, the company said.

Elsewhere, Cineworld confirmed that it is considering filing for bankruptcy in the US as it looks to access near-term liquidity.

Responding to press speculation, the company said: "Any such filing would be expected to allow the Group to access near-term liquidity and support the orderly implementation of a fully funded deleveraging transaction.

"Cineworld would expect to maintain its operations in the ordinary course until and following any filing and ultimately to continue its business over the longer term with no significant impact upon its employees. As previously announced, any deleveraging transaction would, however, result in very significant dilution of existing equity interests in Cineworld."