London pre-open: Stocks seen up after positive US close

(Sharecast News) - London stocks were set to rise at the open on Tuesday following a positive close on Wall Street, after Federal Reserve officials suggested the recent spike in bond yields may mean the central bank can leave interest rates unchanged. The FTSE 100 was called to open 53 points higher at 7,545.

CMC Markets analyst Michael Hewson said: "US markets initially opened the week lower, however sentiment turned around after comments from Fed vice chairman Philip Jefferson that the central bank might need to be careful about further rate rises given the recent increase in yields.

"We also heard from Dallas Fed President Lori Logan earlier in the day who made a similar argument that the recent increase in rates, as well as Friday's strong payrolls report may mean that further tightening may not be required, and which helped US stocks finish the day higher.

"With US bond markets closed yesterday due to the Columbus Day holiday we've had to wait until today for US yields to play catch up with the rise in yields we saw on Friday getting quickly reversed, with yesterday's comments from Fed policymakers playing into the lower yield narrative."

On home shores, industry research out earlier showed that retail sales slowed dramatically in September, as milder weather affected seasonal clothing purchases and the cost-of-living crisis prevented consumers taking on big-ticket items like furniture and electricals.

According to the monthly Retail Sales Monitor, put together by the British Retail Consortium (BRC) and KPMG, sales rose at a year-on-year clip of 2.7% in September, down from the 4.1% jump seen in August.

That was in line with the three-month average growth of 2.7% but well below the 12-month average of 4.2%.

Food sales were up 7.4% over the three months to September, while non-food sales were down 1.2%. In-store non-food sales edged just 0.3% higher over the three-month period, while online non-food sales dropped 3.6%.

"Sales growth in September slowed as the high cost of living continues to bear down on households," said BRC chief executive Helen Dickinson.

"Big ticket items such as furniture and electricals performed poorly as consumers limited spending in the face of higher housing, rental and fuel costs. The Indian summer also meant sales of autumnal clothing, knitwear and coats, have yet to materialise."

It's important to note that the BRC-KPMG figures are not adjusted for inflation. So, with inflation still running higher than normal levels, the overall rise in sales masked a likely drop in volumes once inflation is accounted for. "As inflation eases, so too will longer-term sales growth prospects," Dickinson said.

The BRC chief also said that coming months will be "crucial" for retailers after recent heavy investments to bring prices down.

In corporate news, consultancy business Alpha Financial Markets Consulting said it still expects to meet full-year market expectations despite a drop in margins in the first half.

The company, which provides specialist consultancy services to the asset management, wealth management and insurance sectors, reported that net fee income grew 8% in the six months to 30 September in the face of a "more competitive environment with a longer sales cycle".

However, adjusted EBITDA margins fell to just over 17% from 20.5% at the end of the last fiscal year and lower than the 21% registered at the half-year stage a year earlier. Alpha said this was a result of reduced average utilisation - the percentage of time that consultants are billing clients - due to quieter months during the summer.

Elsewhere, Irish convenience food group Greencore said in an update that FY23 adjusted operating profit was set to be ahead of current market expectations and come in between £74m and £76m.

Consensus expectations were for £70.1m.