London pre-open: Stocks seen flat ahead of Fed announcement

1st May 2024 07:30

(Sharecast News) - London stocks were called to open flat on Wednesday as investors eyed the latest UK manufacturing data and a policy announcement from the US Federal Reserve.

Danske Bank said: "Today's main event will be the FOMC meeting, where we and the markets expect no changes to the Fed's policy rate.

"With no new economic projections, focus will be on Powell's verbal guidance as well as on any hints on the Fed's plans to taper the pace of QT."

On home shores, the S&P Global/CIPS manufacturing PMI for April is due at 0930 BST.

Investors will also be mulling the latest data from Nationwide released earlier, which showed that house prices fell in April for the second month in a row, as borrowing rates went up.

House prices fell 0.4% on the month following a 0.2% decline in March.

On the year, house price growth slowed to 0.6% in April from 1.6% the month before.

Nationwide chief economist Robert Gardner said: "The slowdown likely reflects ongoing affordability pressures, with longer term interest rates rising in recent months, reversing the steep fall seen around the turn of the year.

"House prices are now around 4% below the all-time highs recorded in the summer of 2022, after taking account of seasonal effects."

In corporate news, fashion retailer Next said first-quarter sales came in ahead of forecasts and held guidance for the full year, but warned that the next three months would be weaker due to wet spring weather.

Full-price sales in the thirteen weeks to April 27 were up 5.7% year on year, slightly ahead of guidance for a 5% rise. Next still expects annual profit before tax to increase by 4.6% to £960m.

"We expect the sales performance in the second quarter to be weaker than the first quarter because last year benefited from particularly warm weather from late May through to the end of June," the company said in a trading statement, and forecast a fall of 0.3% for the period.

Like-for-like sales at Domino's Pizza Group declined year-on-year in the first quarter as expected, but the company said it still expects to return to growth over 2024.

The UK-based master franchise of the global takeaway chain reported that like-for-like sales on a comparable basis were down 0.5% on last year, with total orders down 0.8%, though trading improved in February and March after a slow January.

"Like Q1, Q2 is another tough comparative period but we remain confident of delivering order count and like-for-like sales growth this year and are pleased to confirm our full year profit guidance," said chief executive Andrew Rennie.

Smith & Nephew revealed a 2.9% increase in revenue to $1.39bn in its first quarter, with underlying growth driven by the orthopaedics, and sports Medicine and ENT segments, albeit with a 70 basis point adverse currency impact.

While Orthopaedics revenue rose 4.4% due to growth outside the US, advanced wound management declined 2%, primarily from advanced wound bioactives.

The company maintained its full-year guidance with expected underlying revenue growth of 5% to 6% and a trading profit margin of at least 18%, supported by continued product launches and clinical evidence.