London pre-open: Stocks seen muted as investors eye retail sales

London stocks were set for a muted open on Thursday as the pound steadied, with all eyes on the latest retail sales data.

The FTSE 100 was called to open two points higher at 7,678.

Meanwhile, the pound was down 0.1% against the dollar and the euro at 1.3051 and 1.1221, respectively, at 0735 BST, having fallen sharply on Wednesday on the back of stalling inflation.

London Capital Group analyst Jasper Lawler said: "With trade war concerns fading from view, optimism is returning. The markets are interested in two points right now. Firstly, interest rates; an upbeat assessment on the US economy from Fed Chair Jerome Powell and a broadly encouraging Beige Book update, has seen the market gaining confidence that the Fed will hike 4 times across this year.

"The second point is earnings. Data shows that, of the companies reported so far 90% have beaten profit forecasts. As earnings and interest rate expectations are in a good place right now, traders are buying in."

On the data front, retail sales figures for June are due at 0930 BST.

Lawler said: "With inflation sitting at a one year low and wage growth slipping, traders will be watching closely to see if some encouragement for an August rate hike can be drawn from retail sales data.

"Expectations are not that great, fitting in nicely with the running theme for UK data this week. On a monthly basis, retail sales are expected to have increased by a rather lacklustre 0.2%, compared to April’s 1.3% month on month gain. On an annualised basis sales are expected to fall from a strong 4.4% to a more mediocre 3.7%."

In corporate news, SSE said first quarter operating profits would take an £80m hit due to Britain's hot summer and “persistently high gas prices” combining to cut renewable output, customers using less energy and increased costs.

The utility added that fully year results could also be hit.

Unilever's underlying sales growth slowed in the second quarter due to the impact of a truckers' strike in Brazil but the company remained confident of hitting full year targets.

Underlying sales growth, excluding the sale of its spreads business that was completed at the start of July, rose 1.9% in the three months to 30 June, meaning the consumer goods giant increased sales 2.5% in the first half of the year.

Business information and events group Euromoney Institutional Investor updated the market on its trading for the period from 1 April to 19 July on Thursday, reporting that since its interim results on 17 May, trading had continued in line with the board's expectations.

The company said underlying revenue in the quarter to 30 June was flat compared to last year, when adjusted for exchange-rate differences, acquisitions, disposals and discontinued operations. Reported revenue of £107.9m for the quarter was down 9% year-on-year, largely due to exchange and the sale of the Global Markets Intelligence Division (GMID), which was entirely a subscription-based business.