London pre-open: Stocks seen muted as investors mull Powell comments

London stocks were set for a muted start on Wednesday following an uninspiring session on Wall Street, as investors digested the latest comments from Federal Reserve chairman Jerome Powell.

The FTSE 100 was called to open three points lower at 7,148.

In a testimony to Senate late on Tuesday, Powell reiterated the need for patience as the US economy is healthy and said he sees no inflationary pressures but "some crosscurrents and conflicting signals".

London Capital Group analyst Jasper Lawler said traders "remained un-enthused" by Powell reaffirming a patient approach to rate hikes to the US Senate Banking Committee.

"Jay Powell delved into the conflicting signals from the economy that the Fed has been trying to decipher across recent months. As if on cue, disappointing US housing data and stronger than forecast consumer confidence figures provided further evidence of these mixed signals."

Meanwhile, sterling was trading flat versus the dollar, having surged in the previous session amid growing hopes that a no deal Brexit will be avoided.

"After Theresa May promised ministers two further votes in addition to the meaningful vote, the edge has been taken off today’s voting in Parliament," Lawler said. "The pound is reflecting this with a steady performance heading towards the European open. With Brexit coming to a head in the week commencing March 11th, with the meaningful vote, and a vote on a no deal Brexit and delaying Brexit, volatility in the pound is expected to remain elevated in the coming weeks. Developments so far suggest that we now have an increasingly solid floor at $1.30."

In corporate news, Ocado is selling Marks & Spencer a 50% share in its UK retail business for up to £750m. The joint venture will trade as Ocado.com but benefit from access to M&S's brand, products and customer database from September 2020 at the latest.

To pay for the deal, M&S intends to conduct a rights issue to raise up to £600m and cut its dividend by 40%

Full year pre-tax profits at mining services group Weir rose 22% to £310m as orders increased 15% on a like-for-like basis to £2.5bn.

The company said it expected its mining and infrastructure markets to “continue to benefit from positive industry fundamentals with oil and gas activity to improve modestly from current levels”.

It added that if market and macro-economic conditions remained supportive, the group should deliver “another year of good constant currency revenue and profit growth”.

Anglo-Australian mining giant Rio Tinto rewarded shareholders with a bumper special dividend worth a total $4bn as part of $7bn payout.

Overall underlying earnings rose 2% to $8.8bn as higher contributions from copper and diamonds offset lower earnings in other divisions.