London pre-open: Stocks to rise ahead of payrolls report

(Sharecast News) - London stocks were set to rise at the open on Wednesday as investors eyed the release of the latest US non-farm payrolls report. The FTSE 100 was called to open around 20 points higher.

The payrolls report had been due last Friday but was delayed due to the partial US government shutdown.

Ipek Ozkardeskaya, senior analyst at Swissquote, said expectations are weak.

"The US economy is expected to have added around 66K nonfarm jobs in January, with wage growth slowing to 3.6% year-on-year. The unemployment rate is seen steady near 4.4%," she said. "If we dig deeper, however, unemployment among workers aged 16-24 stood above 10% in December. The struggle is real.

"A soft data set would likely reinforce dovish Fed expectations, push short-term US yields and the dollar further lower, and support the rotation trade. Stronger-than-expected data may reduce expectations for earlier Fed cuts, but it won't change the broader narrative that part of the US economy - excluding tech - is heading in the wrong direction. Main Street needs the Fed's help. And softer spending could temper inflation, allowing the Fed to support the economy.

"Fed funds futures are now tilting toward a possible rate cut by April instead of June. The probability of a June cut is approaching 80%, up from roughly 50-50 earlier this year. The probability of an April cut stands at 42%, moving closer to a coin toss."

In UK corporate news, Barratt Redrow reiterated full-year guidance despite subdued market conditions, following a "resilient" first half.

The housebuilder - which acquired rival Redrow 16 months ago - said it had delivered 7,444 total home completions in the 26 weeks to 28 December, a 4.7% increase on the same period a year previously. Adjusted operating profits were largely flat, dipping 0.3% to £210.2m.

However, Barratt said the second half had started well, leaving it on course to deliver total home completions of between 17,200 and 17,800, and adjusted pre-tax profits within the consensus range.

Engineering group Renishaw said it expected strong full-year revenue and profit growth despite a mixed market outlook after interim earnings jumped 11.5% on an adjusted basis.

The company said it expected ongoing strong demand across specific sectors and product lines offsetting more subdued conditions in general industrial markets.

Adjusted pre-tax profit came in at £64.1m on the back of a 7.1% rise in revenue to £365.6m.

Severn Trent said that its financial performance was in line with expectations, with the group also "on track" to meet its environmental and operational targets.

Severn Trent expects capital investment to come in toward the top end of its guidance range, supported by the benefits of insourcing and early scaling, but also reiterated that it remains on track to deliver at least £40m of reward from outcome delivery incentives and price‑control deliverables in the current year.