London pre-open: Stocks seen higher after Monday's losses

1st Oct 2024 07:36

(Sharecast News) - London stocks were set to gain on Tuesday following heavy losses in the previous session, as investors digested a speech by Federal Reserve chair Jerome Powell and looked ahead to the latest UK manufacturing reading.

The FTSE 100 was called to open up around 25 points, having ended Monday's session down 1% after second-quarter UK GDP was revised lower.

Danske Bank said: "Fed Chair Jerome Powell stated that the Fed is in no rush to cut rates quickly, signalling two more 25bp rate cuts this year if the economy evolves as expected. Powell also emphasised that risks are two-sided and decisions will be made on a meeting-by-meeting basis.

"Atlanta Fed President Raphael Bostic indicated support for another 50bp rate cut in November if job growth slows faster than expected, but his baseline stance is for an 'orderly' easing cycle over the next 15 months, bringing the policy rate to 3.00-3.25% by the end of 2025. We share a similar view, expecting rate cuts of 25bp at each meeting until June, with the policy rate reaching 3.00-3.25% by end-2025."

On home shores, the British Retail Consortium-NielsenIQ Shop Price Index showed that prices continued to move into deflation in September, with a year-on-year decline of 0.6%.

That marked a further fall from the 0.3% deflation recorded in August, and was below the three-month average of -0.3%.

The latest figures indicated the sharpest drop in shop prices since August 2021.

Non-food items saw the most significant deflation, with prices dropping 2.1% year-on-year, accelerating from the 1.5% deflation in August. The category has now recorded its lowest inflation rate since March 2021, as consumer demand for non-essential goods remains subdued.

Still to come, the S&P Global manufacturing PMI for September is due at 0930 BST.

In corporate news, luxury handbag maker Mulberry said it has rejected an £83m takeover offer from Mike Ashley's Frasers Group as it failed to recognise the company's "substantial future potential value".

Frasers, which already holds a 37% stake in Mulberry, on Monday offered a 130p a share in cash in response to an emergency £10.75m placing of shares in the luxury group late on Friday to support its balance sheet after it slumped to a £34m full-year loss.

British-Australian metals and mining titan Rio Tinto announced a lithium supply chain commercial partnership with UK-based, lithium refinery developer Green Lithium.

Green Lithium is a mineral processing company with plans to build and operate a large-scale lithium refinery in Teeside, providing lithium chemicals to the UK and EU markets.

Rio Tinto said in a statement that the signed memorandum of understanding with Green Litihium will build an end-to-end value chain "that provides security of supply to safeguard the UK's and EU's automotive and battery manufacturing industries".

Endeavour Mining announced the appointment of Sonia Scarselli as its new executive vice-president of exploration, effective December, succeeding Jono Lawrence.

The FTSE 100 company said Scarselli, formerly of BHP, would oversee its exploration programme, which aimed to discover 12 million to 17 million ounces of measured and indicated resources by 2025, with 10 million ounces already achieved at a cost below $25 per ounce. Her appointment would bring the executive committee's female representation to 30%.