London pre-open: Stocks seen up ahead of BoE announcement

1st Aug 2024 07:34

(Sharecast News) - London stocks were set to rise at the open on Thursday following strong gains on Wall Street after Fed chair Jerome Powell put a September rate cut on the table, and as investors eyed an expected rate cut from the Bank of England later in the day.

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

On Wednesday, the Fed kept its benchmark rate at between 5.25% and 5.50% as expected. However, Powell signalled that the central bank would be prepared to loosen monetary policy at its next meeting if price pressures continue to ease.

"A reduction in the policy rate could be on the table as soon as the next meeting in September," Powell said. "We're getting closer to the point at which it'll be appropriate to reduce our policy rate, but we're not quite at that point."

As far as the BoE is concerned, economists are widely expecting a 25 basis points cut to 5%. This would mark the first reduction since 2020.

On the corporate front, investors will be wading through a deluge of earnings.

Barclays reported a return on tangible equity (RoTE) of 11.1% for the first half, alongside announcing £1.2bn in capital distributions to shareholders.

The FTSE 100 bank also increased its 2024 net interest income guidance to around £11bn, driven by higher interest rates and improved deposit dynamics.

Despite a slight year-on-year decline in group income and an increase in operating expenses, Barclays maintained its key financial targets, including a CET1 ratio of 13.6% and a cost-to-income ratio of around 63%.

Next reported a 3.2% increase in full-price sales for the second quarter, surpassing expectations by £42m, despite forecasting a slight decline.

For the first half of the year, full-price sales rose by 4.4%, leading the company to raise its full-year profit guidance by £20m to £980m, a 6.7% increase from the previous year.

The high-street retailer said the profit boost was driven by higher sales and £9m in cost savings, primarily in logistics.