London pre-open: Stocks to tick higher ahead of BoE announcement

London stocks were set to tick higher at the open on Thursday as investors eye the latest policy announcement from the Bank of England.

The FTSE 100 was called to open 10 points higher at 7,301.

CMC Markets analyst Michael Hewson said: "European and US markets carried over a strong session from Asia yesterday, although some of the gains were underpinned by hopes of a ceasefire and a peace plan between Russia and Ukraine.

"As with everything the devil will be in the detail on any agreement, and while the fact that both parties are talking is a good thing, one can’t help thinking as far as Russia is concerned, they are going through the motions, while Ukraine will insist on cast-iron security guarantees of the type Russia might find difficult to live with.

"Markets appear content to look past these inconsistencies and new Russian atrocities, as have oil markets, and we also didn’t get any surprises from the Federal Reserve, which has set us up for a positive European open later this morning, with Asia markets also having another strong session, after yesterday’s China inspired surge."

As far as the BoE rate decision is concerned, Hewson said another 25 basis point rate hike is expected.

"In some respects, despite its muddled guidance over the last few months, the Bank of England has been ahead of the game when it comes to rate rises," he said.

"Two rate rises since December has put base rates back to 0.5%, still below the levels they were pre-pandemic. With unemployment still low, and average wages still subdued the central bank must be looking with some concern over how much further this run high in inflation is likely to go."

In corporate news, paving company Marshalls said it had delivered record sales and adjusted profitability in 2021, reflecting sustained heightened demand post Covid-19 lockdowns.

Marshalls saw a 26% year-on-year increase in revenues to £589.3m, while adjusted underlying earnings were up 86% at £107.1m and adjusted pre-tax profits surged 180% to £76.2m. Adjusted earnings per share were a whopping 233% higher at 28.6p.

Film theatre operator Cineworld narrowed losses as Covid lockdowns eased globally and said it expected a strong return to trading in March after a hit from the Omicron strain of the virus at the start of 2022.

Pre-tax losses for calendar 2021 came in at $708m compared with a loss of $3bn a year earlier. Revenue more than doubled to $1.8bn.

The company said January and February trading was impacted by Omicron and lack of major movie releases but it anticipated "strong trading starting March 2022 supported by a strong and full film slate".

Ocado's retail revenue fell in the first quarter of 2022 as the online grocer warned about uncertainty caused by the rising cost of living.

Revenue fell 5.7% in the 13 weeks to the end of February as customer orders rose 11.6%. The average basket size at the business, a joint venture with Marks & Spencer, fell 15%. Ocado said the figures reflected a return to more normal shopping patterns as pandemic restrictions were eased and people returned to work. Revenue was 31.7% higher than two years earlier before the pandemic hit.

The FTSE 100 group said food price inflation and the effect on demand caused by the rising cost of living were hard to predict. Revenue growth for the full year is likely to be close to 10% and profit margins will be squeezed, Ocado said.