London pre-open: Stocks seen up; retailers in focus

London stocks were set to rise at the open on Wednesday, tracking gains on Wall Street after US Fed chair Jerome Powell refrained from saying anything about rate policy in a speech in Sweden.

The FTSE 100 was called to open 26 points higher at 7,720.

CMC Markets analyst Michael Hewson said: "This week’s US CPI report is now the next focus for markets in the tug of war currently playing out between the market, which thinks the Fed will have to cut rates this year, and Fed officials who insist nothing even close to that will happen.

"Fed chair Jay Powell’s comments yesterday did little to indicate whether the FOMC was inclined to take another step down in its rate hiking cycle when it next meets at the end of the month.

"This means that the comments earlier this week from San Francisco Fed President Mary Daly and Raphael Bostic of the Atlanta Fed have continued to temper market reaction after last week’s ISM services and US jobs report, prompted speculation that we might see a pivot.

"Nonetheless the lack of hawkish comment from chair Powell yesterday gave US markets the perfect reason to stop trending lower as we saw a modest rebound into the close, led by the Nasdaq, although rather perversely bond yields also edged higher.

"This rebound after Europe had closed looks set to see European markets open modestly higher this morning, on a day with little in the way of economic data drivers."

In corporate news, JD Sports Fashion said it expected annual profits to be at the top end of expectations after revenues grew by more than a fifth over the Christmas period.

Current market expectations for the year to January 28 are for group profit before tax and exceptional items of £933m-985m although the final figure will reflect trading through the rest of January with the post-Christmas sale period still to take place in some of the company’s most important European markets.

Sales strengthened through the second half with total revenue growth for the 22 weeks to the end of 2022 of more than 10%, with retail revenue through the Christmas period, both in stores and online, growing more than 20%.

The company added that it expected profit before tax and exceptional items of just over £1bn for the full year to February 3, 2024.

Elsewhere, J Sainsbury increased full-year profits guidance after "record" Christmas trading.

The supermarket chain said sales in the 16 weeks to 7 January 2023 rose by 5.2%, excluding fuel, or by 5.9% on a like-for-like basis. In the Christmas trading period - the six weeks to 7 January - sales jumped 7.1%.