London pre-open: Stocks to rise ahead of Fed announcement

(Sharecast News) - London stocks were set to rise at the open on Wednesday following a positive US session, as investors eyed the latest policy announcement from the Federal Reserve. The FTSE 100 was called to open 11 points higher at 7,332.

CMC Markets analyst Michael Hewson said: "Having overseen a pause in September the US Federal Reserve looks set to undertake a similar decision today, although they still have one more rate hike in their guidance for this year, which markets now appear to be pricing for December.

"Fed chair Jay Powell, in comments made just before the blackout, appeared to indicate that a status quo hold is the most likely outcome at today's meeting, with the key message continuing to be higher for longer. This is certainly being reflected in market pricing especially in the longer dated part of the treasury curve, as the yield curve continues to un-invert."

On home shores, the latest survey from Nationwide showed that house prices unexpectedly rose in October.

House prices ticked up 0.9% on the month, following a 0.1% increase in September, beating expectations for a 0.4% decline. This marked the biggest increase since March last year.

On the year, house prices were down 3.3% in October following a 5.3% slump in September.

Nationwide chief economist Robert Gardner said that nevertheless, housing market activity has remained "extremely weak", with just 43,300 mortgages approved for house purchase in September, around 30% below the monthly average prevailing in 2019.

"This is not surprising as affordability remains stretched. Market interest rates, which underpin mortgage pricing, have moderated somewhat but they are still well above the lows prevailing in 2021," he said.

"The uptick in house prices in October most likely reflects the fact that the supply of properties on the market is constrained. There is little sign of forced selling, which would exert downward pressure on prices, as labour market conditions are solid and mortgage arrears are at historically low levels."

In corporate news, Next boosted its full-year guidance after third-quarter trading beat internal expectations.

The fashion retailer said full-price sales in the three months to 28 October rose 4% year-on-year, £23m ahead of earlier guidance for 2% growth.

Within that, online sales jumped 6.5% but retail eased 0.6%. Next attributed the variable sales performance to changing weather conditions, "rather than any underlying changes in the consumer economy".

As a result, the high street giant increased its full-year guidance for pre-tax profits by £10m, to £885m. It also upped its forecast for full-year sales, which are now expected to be 3.1% stronger at £4.74bn on the assumption full-price sales remain 2% higher for the rest of the year. Next previously forecast full-year sales growth of 2.6%.

Mining engineering company Weir reiterated its guidance for "strong growth" this year despite orders slipping in the third quarter.

Orders from continuing operations totalled £636m in the three months to 30 September, down from £651m in the same period a year before. Nevertheless, chief executive Jon Stanton said the company performed "in line with our expectations", as it maintained its forecasts for "strong growth in constant currency revenue and operating profit" for the 2023 full year.

Separately, Weir announced the appointment of Brian Puffer as its new chief financial officer, joining the company from BP where he serves as chief financial and risk officer of the Integrated Supply and Trading division.

GSK reported strong year-to-date and third-quarter performances, leading to an upgrade in its full-year guidance.

Total third-quarter sales increased 10%, or 16% excluding Covid-related factors, driven by a 33% growth in vaccine sales, particularly Shingrix and Arexvy.

The company's operating profit and earnings per share also showed substantial growth, supported by lower charges for contingent consideration liabilities, though partially offset by increased research and development investment and reduced Covid solutions sales.