London pre-open: Stocks seen higher ahead of BoE announcement
London stocks were set to edge higher at the open on Thursday following a positive session on Wall Street, as investors eyed the latest policy announcement from the Bank of England, with oil still very much in focus.
The FTSE 100 was called to open up 15 points at 7,677.
CMC Markets analyst Michael Hewson said: "While interest rates are now expected to be left where they are, at 0.5%, it is also quite likely that the Bank may well have to guide its growth expectations lower, given that today’s March industrial and manufacturing production data for March is likely to reinforce that economic weakness, though most of it is likely to be cold weather related. Inflation expectations could also be revised lower, which in term could see the pound come under further pressure.
"This isn’t something the bank will want in terms of drilling down on inflation, which is now starting to come down, so the guidance will need to be carefully balanced in order not to upend the pound too much. This is something that Mr Carney hasn’t always been particularly good at, while the votes of Saunders and McCafferty will also be scrutinised.
"Will they remain wedded to their calls to push rates up, despite the softer data, and what do policymakers make of the recent surge in the oil price and its impact on the growth outlook, as well as the inflation outlook?"
The BoE rate decision is at 1200 BST. Before that, industrial and manufacturing production figures and the trade balance will be eyed at 0930 BST.
Oil prices were also likely to remain in focus after surging on the back of US President Trump’s decision to withdraw from the Iran nuclear deal.
Hewson said: "The rise in the oil price, now up over 50% since September last year hasn’t as yet prompted a re-evaluation in this year’s economic forecasts but as can be seen from recent weak consumer data, in Europe, the UK, as well as the US, it could well be starting to have an effect in some of the more recent retail sales numbers. Paying more to fill up your vehicle leaves a lot less room for those consumer discretionary items."
Elsewhere, the monthly RICS survey released earlier showed that house prices dipped in April as sentiment in the London market dropped to a low not seen since the UK was in recession.
The balance of estate agents reporting rising or falling prices was -8% in April after two flat months. Though the decline was slight, it was the most negative figure since November 2012, RICS said.
On the corporate front, Royal Bank of Scotland has agreed to pay $4.9bn (£3.6bn) to settle a long-running investigation by the US Department of Justice into the bank’s dealing in mortgage-backed securities before the financial crisis.
Chief executive Ross McEwan said settling the case was a milestone and that removing uncertainty over the size of the fine had made RBS’s investment case clearer.
House builder Barratt Developments said total forward sales were up 2.5% in the calendar year to May 6 to £3.3bn, adding that current trading was in line with expectations.
The company said it expected its net cash position at 30 June 2018 to be better than previous guidance at around £550m.
BT Group announced 13,000 back office job cuts as part of a new operating strategy that aims to cut £1.5bn of costs within three years, launch 'converged' products and increase full-fibre broadband.
The former UK telecoms monopoly also revealed a £11.3bn pension funding deficit and final results showing revenue down 1% after a 3% decline in the fourth quarter.