London pre-open: Stocks seen up amid earnings avalanche

by | Jul 27, 2023

(Sharecast News) – London stocks were set to rise at the open on Thursday as investors wade through an avalanche of earnings and mull the latest policy announcement from the Federal Reserve, with the European Central Bank due to announce its decision later.
The FTSE 100 was called to open 18 points higher at 7,695.

CMC Markets analyst Michael Hewson said: “European markets underwent a disappointing session yesterday, while US markets also underperformed after the Federal Reserve raised interest rates by 25bps as expected, pushing them to their highest level in over 20 years.

“At the ensuing press conference chairman Powell reiterated his comments from June, that additional rate rises will depend on incoming data.

“In the statement it was restated that inflation remained elevated, and that the committee was highly attentive to the risks that prices might remain high. Powell was non-committal on whether the Fed would raise rates again in September, merely restating that if the data warranted the central bank would do so.

“US yields finished the day mixed, as did US stocks with little in the way of surprises from last night’s meeting, as we look ahead to today’s ECB rate meeting.

“If the Fed is close to the end of its rate hiking cycle which appears to be looking increasingly likely, despite Powell’s determination to keep markets guessing, the pressure on the ECB to be more aggressive in its own battle against inflation, is also looking as if it might recede.”

In corporate news, Barclays became the second bank to post surging profits on the back of higher interest rates and lift its provisions for bad loans.

The bank posted a 22% rise in pre-tax profit for the six months to June 30 to £4.5bn. Bad loan charges increased to £900m from £341m.

Net interest margin – a key metric charting the difference between loan and savings rates – soared to 3.2% from 2.67% as savers continued to receive feeble returns on their deposits amid mounting accusations of “profiteering” in the sector.

Barclays said it now expected NIM to be less than 3.20%, with a current view of around 3.15%.

Elsewhere, Segro reported a 2.6% improvement in adjusted pre-tax profit in its first-half results, on the back of an average rental uplift of 20% at lease events during the period.

Despite a slight decrease in adjusted net asset value per share due to valuation adjustments, the company said it remained confident in its ability to deliver attractive growth and returns, supported by a strong balance sheet and a promising pipeline. As a result, Segro hiked its interim dividend by 7.4% to 8.7p.

Results were also out from the likes of BT, Shell, Schroders, Drax, Frasers Group, Informa, Centrica and many more.

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