London pre-open: Stocks set to edge up ahead of BoE rate decision

by | Aug 3, 2023

(Sharecast News) – London stocks looked set for a slightly higher start as investors waited on the Bank of England’s latest policy decision at noon.
Economists were divided among those anticipating a 25 basis point interest rate hike to 5.25% and those who thought it would raise by 50bp.

The latter was a possibility due to wage growth having accelerated past core CPI growth, but Michael Hewson, chief market analyst at CMC Markets UK, thought that would be a mistake.

“Such an aggressive move would be a mistake given that a lot of the pass-through effects of previous rate increases haven’t fully filtered down with some suggesting that the Bank of England should pause,” he said.

As of 0746 BST, FTSE 100 futures were advancing by 7.50 points to 7,540.0.

In the background, Wall Street equity futures were pointing to a mixed open.

Asia Pacific stocks were trading mostly lower but Chinese issues outperformed after it was reported that services sector activity in the Asian giant picked up unexpectedly last month.

Survey compiler Caixin’s services sector Purchasing Managers’ Index improved from 53.9 for June to 54.1 in July (consensus: 52.4).

In Japan, authorities were reportedly again intervening in country’s the government debt market.

Final readings for comparable services PMIs were also due out in the euro area and UK at 0900 BST and 0930 BST, respectively.

They would be followed by the US Institute for Supply Management’s services PMI at 1500 BST.

Also due out were weekly initial jobless claims figures in the U.S. at 1330 BST.

Wizz Air sees soaring demand, Rolls-Royce delivers higher revenues and profits

Low-cost carrier Wizz Air swung to a first-quarter profit on the back of soaring demand for travel and record passenger numbers. The company on Thursday reported an operating profit of €79.9m, compared with a loss of €284.5m. Revenue climbed 53% to €1.2bn, while passenger numbers were up by a quarter to 15.3 million. However, chief executive officer, Jozsef Varadi, said he downgraded first-half seat kilometre growth to 25% versus previously guided 30% due to continued infrastructure, supply chain limitations facing the industry and engine inspections.

Rolls Royce was firing on all cylinders during the front half of 2023. For the six months ending on 30 June, Rolls Royce delivered a 31% jump in underlying revenues to reach £6.95bn. Underlying operating profits more than quintupled to £673m and Rolls Royce turned cash flow positive to the tune of £356m after an outflow of -£68m in the year earlier period. Management attributed the improvement to continued growth in its end markets, commercial optimisation and cost efficiencies.

Paper and packaging group Mondi reported a sharp fall in interim earnings due to weaker demand, customer destocking and higher input costs. Pre-tax profit for the six months to June 30 more than halved to €418m from €933m a year ago. “So far in 2023, demand and prices have declined sequentially with the exception of containerboard prices which stabilised in the later part of the half year. We saw some benefit from lower input costs which continue to ease as we progress into the third quarter of the year,” said chief executive Andrew King.

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