London pre-open: Stocks seen lower after US losses; Sainsbury's, Persimmon in focus

(Sharecast News) - London stocks were set for a weaker open on Wednesday following a mostly negative close on Wall Street.

The FTSE 100 was called to open 18 points lower at 7,666, as investors continued to eye the release of the US consumer price index for December on Thursday.

CMC Markets analyst Michael Hewson said: "After US markets gave up some of its Monday gains with a negative finish yesterday, today's European open looks set to another lacklustre affair with a lower open, despite the Nikkei 225 powering on with a fresh 33 year high."

He added: "Since the end of last year and the strong gains leading up to the end of last month markets have exhibited none of the same enthusiasm to carry the momentum higher, with trading activity subdued and a relatively negative bias so far year to date.

"It's hard to assign a singular reason for the lack of enthusiasm so far month to date apart from a great deal of uncertainty around the prospects for the global economy and the timeline for central bank rate cuts."

In corporate news, strong volume growth helped lift Christmas grocery sales at UK supermarket chain Sainsbury's by 8.6%, offsetting the impact of inflation, as the company held full-year profit guidance.

It expects underlying profit before tax in 2023/24 of between £670m - 700 million, with a strong grocery performance offsetting weaker general merchandise and financial services contributions.

The company also expects to generate retail free cash flow in 2023/24 of at least £600m.

Persimmon was able to beat guidance with new home completions in 2023 after a decent fourth quarter, and said it has entered 2024 in a strong position with private forward sales ahead of last year.

New home completions totalled 9,922 last year, down 33% on 2022 on the back of challenging market conditions with the whole industry being impacted heavily by rising mortgage rates. However, that was ahead of the 9,500 target given in November.

The current forward sales position stood at £1.06bn at the end of December, up 2% on 2022, with private forward sales rising 4%.