London pre-open: Stocks seen lower on US rate cut worries

3rd Apr 2024 07:31

(Sharecast News) - London stocks were set to fall at the open on Wednesday following a downbeat close on Wall Street, as doubts over US interest rate cuts grew following solid economic data.

The FTSE 100 was called to open down around 25 points.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said the mood was down in Asia as the strongest earthquake in 25 years led to halted operations in TSM and United Microelectronics.

"Elsewhere, major stock and bond markets in Europe and the US were painted in the red yesterday as well; rising oil and commodity prices fuelled inflation expectations while further strength in the US economic data boosted worries that the Federal Reserve (Fed) may not cut the interest rates as much as wished this year," she said.

"Yesterday's data showed faster-than-expected recovery in factory orders, though job openings fell more than expected.

"The market now prices less than three rate cuts from the Fed this year, below the three rate cuts plotted by the Fed members at last month's FOMC meeting. And even though Fed's Mary Daly and Loretta Mester said that three rate cuts look appropriate this year - God knows why - Mester added that 'it's a close call' on whether fewer rate cuts will be needed. She was certainly referring to robust economic data and up-ticking inflation!"

Investors will also be mulling the latest data out of China, which showed that activity in the services sector grew as expected in March.

The Caixin services PMI ticked up to 52.7 from 52.5 in February, in line with expectations.

"Coupled with the strong manufacturing PMIs of late, this supports the narrative of the Chinese economy gaining momentum in Q1," said Danske Bank.

In corporate news, meat, seafood and meat alternatives group Hilton Foods saw profits rise by a fifth in 2023 despite modest top-line growth, helped by the turnaround in its seafood business.

Adjusted pre-tax profit came in at £66m, up 20.3% at constant currencies, with adjusted operating margins improving to 2.4% from 1.8%. Volumes increased by just 0.7% to 517,347 tonnes, while revenues rose 5.7% to £3.99bn.

The recovery in seafood is being delivered "ahead of plan", Hilton said, returning to full-year operating profitability.

Wizz Air said in an update that it carried 4,778,980 passengers in March, marking a 12% year-on-year increase, with a 90.8% load factor, influenced by one-way traffic during the Easter period.

The low-cost airline resumed flights to Tel Aviv from six bases during the period, announced special flights for the UEFA European Football Championship, celebrated International Women's Day with all-female crews, and reported carbon dioxide emissions of 51.5 grams per passenger-kilometre for March, slightly higher than the prior year.