London pre-open: FTSE to edge up ahead of services data

4th Apr 2024 07:36

(Sharecast News) - London stocks were set to edge up at the open on Thursday following a mostly firmer US session, as investors eyed the latest reading on the UK services sector.

The FTSE 100 was called to open around 10 points higher.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "Federal Reserve (Fed) Chair Jerome Powell reiterated yesterday that the Fed is not in a rush to cut rates but that it will cut sometime this year and that the recent jump in inflation didn't 'materially' change their policy outlook. The latter was enough to send the market higher with joy.

"On the data front however, the data painted another picture. The ADP printed 184'000 new private job additions in the US - higher than expected, while the ISM non-manufacturing activity expanded - with however lower-than-expected employment and price components (supportive of dovish Fed). Yet, earlier this week, the ISM's manufacturing index jumped into the expansion zone and prices accelerated faster, and the Atlanta Fed's GDPNow forecasts points at a first quarter growth of 2.8%.

"The Fed may not feel in a hurry to cut rates, but investors think that it should be if it doesn't want to be part of the November's election story. So the challenge is big: either the Fed will cut by early summer and take the risk of seeing inflation pick up further into the year end, or it will wait until after the election and take the risk of imposing an otherwise unnecessary pressure on the economy.

"To make things easy, we will say that the data will decide. But the markets don't react fully to the data when the Fed members continue to keep the dovish talk on the table. And those who tell otherwise go unheard. Fed's Raphael Bostic said that he expects just one rate cut this year - after the election. Did anyone hear that?"

On the macro front, the S&P Global/CIPS UK services PMI for March is due at 0930 BST. Investors will also be eyeing the latest US initial jobless claims at 1330 BST, ahead of Friday's all-important non-farm payrolls release.

In corporate news, Entain, the sports betting and gambling group currently without a permanent chief executive, has announced that chair Barry Gibson will also step down later this year following a four-year tenure.

Gibson, who joined the board in November 2019 and became chair in February 2020, has given notice to retire some time before the end of September, depending on when Entain can find a replacement to former CEO Jette Nygaard-Anderson.

The Ladbrokes, Sportingbet and Foxy Bingo owner has been without a CEO since December when Nygaard-Anderson resigned in the wake of a £585m settlement with the Crown Prosecution Service regarding historic activities of its Turkish business.

Future reported a return to organic revenue growth in the second quarter, driven by strong performance in Go.Compare and its B2B division, alongside resilient results in magazines, despite challenges in affiliate products and digital advertising amid macroeconomic pressures.

The FTSE 250 publisher flagged progress in its growth acceleration strategy, particularly in 'hero' brands and US direct advertising, after a reorganisation aimed at enhancing agility and execution speed. It said it remained highly cash generative, and anticipated meeting full-year expectations, with its first half results set to be announced in May.