London pre-open: Stocks seen muted amid firmer pound
London stocks were set for a muted open on Thursday amid a firmer pound, as investors mulled the latest policy announcement from the Federal Reserve.
The FTSE 100 was called to open just one point higher at 7,331. Meanwhile, sterling was up 0.3% against the dollar at 1.2938.
CMC Markets analyst David Madden said: "Last night the Fed cut rates for the third time in four months, but it seems like the Fed could be in for a period of sitting on their hands and allowing the interest rate cuts to trickle down to the economy.
"Jerome Powell, the head of the Fed, said ‘the current stance of monetary policy is likely to remain appropriate’. The update from the Fed suggested rates won’t increase until inflation ticks up. Seeing as the unemployment rate in the US in at a fifty year low, you’d image after three rate cuts of 0.25%, now would be the time to cool it on the cuts."
Market participants will also be digesting the latest data releases out of China.
The final readings of Chinese manufacturing and non-manufacturing PMIs came in at 49.3 and 52.8 respectively, for October, falling short of economists' expectations of 49.8 and 53.7 respectively.
In corporate news, Royal Dutch Shell reported a 15% fall in current cost of supplies (CCS) earnings in its third quarter, to $4.8bn, which the board said reflected lower realised oil, LNG and gas prices, as well as weaker realised refining and chemicals margins.
The FTSE 100 energy giant said that was partly offset by significantly stronger contributions from LNG and oil products trading and optimisation, as well as higher realised margins in retail and global commercial. Compared to the third quarter of 2018, Shell said cash flow from operating activities excluding working capital movements was $12.1bn, reflecting lower earnings, higher pension contributions and lower dividends received.
BT Group saw a 1% fall in its reported revenue to £11.47bn in its half-year results, which the board said mainly reflected the impact of regulation, declines in legacy products, and the strategic reduction of its low margin business.
The telecoms provider said reported profit before tax was £1.33bn for the six months ended 30 September, which was “broadly flat” year-on-year, while adjusted EBITDA fell 3% to £3.92bn, due to lower revenues, increased spectrum fees, content costs and investment to improve competitive positioning partly offset by cost savings from transformation programmes.
International Airlines Group reported an operating profit of €1.42bn before exceptional items for the first nine months of the year, compared with €1.53bn in the same period last year, after British Airways pilots launched industrial action.
Together with other disruption, the airline said this resulted in an adverse operating profit impact of €155m.