London pre-open: Stocks seen up as investors eye US inflation

(Sharecast News) - London stocks were set for a higher open on Thursday following gains on Wall Street and in Asia, as investors eyed the release of the latest US inflation reading.

The FTSE 100 was called to open 23 points higher at 7,674.

CMC Markets analyst Michael Hewson said: "Yesterday saw another subdued session for markets in Europe with the FTSE100 underperforming once again, with weakness in commodity prices as well as insurers and food retailers weighing on sentiment.

"US markets on the other hand managed to finish the session higher with the S&P500 coming to within touching distance of last year's high, while the Nasdaq 100 closed higher for the 4th day in a row, with this weeks' focus being very much on today's US CPI report.

"Today's Asia session saw a 34-year high for the Nikkei 225 as expectations of low rates helped buoy the Japanese market, pushing it above 35k, a rising tide that looks set push Europe higher on the open."

The US consumer price index for December is due at 1330 GMT, alongside the latest initial jobless claims figures.

Hewson said the inflation numbers have the potential to either add to the expectation of a rate cut in March, or push it out until later in the year, "with expectations of a tick higher to 3.3%, even as lower gasoline prices exert a loosening of financial conditions to the US consumer".

In corporate news, supermarket giant Tesco delivered an impressive set of third-quarter results with sales growth picking up sharply during the key Christmas trading period, as it upped its profit guidance for the full year.

The country's biggest grocer said like-for-like sales increased by 6.6% across the group in the three months to 25 November, with UK LFL sales up 7.9%.

In the six weeks to 6 January, UK LFL sales were 6.8% higher than last year, which includes growth of 9.2% in the four weeks to Christmas.

As a result of the stronger-than-estimated performance, the retailer raised its adjusted operating profit forecast for the year to £2.75bn, from £2.6-2.7bn.

Marks & Spencer said it was set to deliver annual results in line with expectations despite higher-than-expected cost increases as it reported an 8.1% rise in sales over the key Christmas quarter driven by food revenue and womenswear.

The company said UK sales came in at £3.56bn in the 13 weeks to December 30. Food sales rose 9.9% as supply chain constraints eased, while clothing and homewares were up 4.8%, mainly due to price rises and fewer discounts.

"As we enter the new year and full-year 2025, expectations for economic growth remain uncertain, with consumer and geopolitical risks," said chief executive Stuart Machin.

"We also face additional cost increases from higher than anticipated wage and business rates related cost inflation. Nevertheless, the strong Christmas trading performance provides confidence that the results for the year will be consistent with market expectations."