London pre-open: Stocks seen up ahead of Fed, BoE policy announcements

31st Jul 2024 07:31

(Sharecast News) - London stocks were set for a positive open on Wednesday as investors looked ahead to policy announcements from the US Federal Reserve and the Bank of England.

The FTSE 100 was called to open around 50 points higher.

Ahead of the BoE announcement on Thursday, all eyes will be on the Fed at 1900 BST.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "The Fed is not expected to make a change to its rates today, but is widely and wildly expected to hint at a September rate cut. Activity on Fed funds futures doesn't only hint at a 100% chance for a rate cut to happen in September but it also shows that the doves are getting ahead of themselves with the assessment of a nearly 15% chance that the Fed could cut 50bp or more in September - which will obviously not happen unless there is a big crisis or stress on the financial markets.

"Therefore, the stretched Fed pricing is a sign that the Fed cut expectations went too far and that we shall see a correction even though the Fed hints strongly at a September cut today - with the risk of hardly upsetting the market if it does not."

In UK corporate news, HSBC said it would start a $3bn share buyback after the Asia-focused bank reported estimate-busting interim profits in its final set of results under chief executive Noel Quinn.

Pre-tax profits surged to $8.9bn from $8.8bn a year earlier and smashed analysts' forecasts of $7.8bn.

Quinn, who has been CEO for five years, will be succeeded by finance chief Georges Elhedery.

The bank announced that financial controller Jon Bingham would take on the chief financial officer role on an interim basis.

Elsewhere, Rio Tinto reported underlying EBITDA of $12.1bn in its half-year results, up 3%, and net earnings growth of 14% to $5.8bn.

The mining giant said it generated $7.1bn in net cash from operating activities for the six months ended 30 June, up 1%, as it kept its dividend stable at 177 cents per share.

Housebuilder Taylor Wimpey saw profits fall by more than a fifth in the first half as residual build cost inflation and weaker pricing hit the bottom line, but said it now expects full-year completions to be at the top end of guidance after a solid operational performance.

Adjusted pre-tax profit slumped 21% year-on-year to £187.7m, with the operating profit margin falling 2.4 percentage points to 12.0%, while revenues were 7% lower at £1.52bn.

"Looking to the second half, our performance to date means we now expect to deliver 2024 full year UK completions towards the upper end of our previous guidance range of 9,500 to 10,000," said chief executive Jennie Daly.