London pre-open: Stocks seen lower on negative US cues

London stocks were set to fall at the open on Thursday after US stocks reversed early losses to end sharply lower overnight.

The FTSE 100 was called to open 70 points lower at 7,098, taking its cue from Wall Street, after the first US case of the Omicron variant was identified.

CMC Markets analyst Michael Hewson said: "With cases being reported everywhere it was only a matter of time before the US got its first case, so for US markets to react in the way they did yesterday is a little bit surprising, though given how fickle sentiment has been recently maybe we shouldn’t be.

"Even so last night’s US reaction does seem a little over the top given that thus far there is no evidence at all that while it may be more transmissible it certainly isn’t more virulent.

"Nonetheless, yesterday’s market reaction gives a flavour of how fickle and fragile sentiment currently is, despite the various reassurances from the likes of the WHO, as well as many of the vaccine companies, including BioNTech and Oxford University who came up with the AstraZeneca jab.

"While stock markets continue to fluctuate between hope and fear, bond markets are also chopping around in anticipation of what the Federal Reserve’s next move on monetary policy might be.

"Against this backdrop it is then perhaps not surprising that we’re set to see a negative European open later this morning, as the bulls and bears continue to do battle."

In corporate news, financial services platform AJ Bell lifted its dividend and announced a special payout to shareholders as it increased annual profits by 13%.

The company’s total dividend was hiked by 13% to 6.96p a share, augmented by an extra 5p each. Pre-tax profits for the year to September 30 rose to £55.1m from £48.6m.

Royal Dutch Shell has launched a $1.5bn share buyback as the first stage of returning cash to shareholders from the sale of its Permian business in the US. Shell said the buyback would last until 28 January.

The FTSE 100 oil group said it would announce the form and timing for returning a further $5.5bn from the Permian sale to shareholders, plus any unused funds from the buyback, in early 2022.