London pre-open: Stocks seen up as investors eye US inflation data

(Sharecast News) - London stocks were set to rise at the open on Friday following gains on Wall Street, as investors eyed the latest US inflation data. The FTSE 100 was called to open 30 points higher at 7,559.

US PCE figures for December are due at 1330 GMT.

CMC Markets analyst Michael Hewson said: "At the moment markets seem convinced that the Fed might spring a surprise in March and slip in an early rate cut if inflation shows further signs of slowing.

"That might make sense if the US economy was struggling but this week's economic numbers clearly suggest it isn't, and if anything is still growing at a decent clip. There is a danger that in cutting rates in March they drive market expectations of further cuts into overdrive, something they have been keen to push back on with recent commentary.

"In any case with the Federal Reserve due to meet next week markets are continuing to try and finesses the timing of when the first rate cut is likely to occur, after Powell's surprisingly dovish shift when the central bank last met just before Christmas.

"That means today PCE numbers are likely to be a key waypoint for markets and the central bank, after the PCE core deflator slowed to 3.2% in November, slipping from 3.4% in October, and the lowest level since April 2021."

On home shores, investors were digesting the latest survey form GfK, which showed that consumer confidence continued to improve in January to its best level in two years.

GfK's consumer confidence index increased three points to -19 in January, with shoppers more optimistic about their personal finance situation.

"Consumer confidence has started the year well with all measures up...the best since January 2022. Importantly, the view on our personal financial situation for the coming year has gained two points and now stands at zero," said Joe Staton, client strategy director at GfK.

"This is exciting as it ends 24 consecutive months of negative scores for this measure and this significant change is the best single indicator for how the nation's households feel about their income and expenditure."

Staton added that despite the cost-of-living crisis still hitting many households across the UK, consumers appeared to be encouraged by the positive news about falling inflation, currently at 4%.

Among GfK's key measures, the personal finances index for the last year was up two points at -12, 19 points better than January 2023, while the index for the general economic situation rose three points to -41; 30 points higher year on year.

The index for expectations for the general economic situation over the next 12 months increased by four points to -21; a 33-point improvement on the year.

In corporate news, WH Smith posted an 8% jump in total group revenues for the 20 weeks to 20 January 2024, as it hailed strong momentum in the travel business.

Chief executive Carl Cowling said: "I am pleased with the start to the financial year. Our travel business is growing strongly across all our divisions and we have seen a notably strong performance in the UK, our largest division, with total revenue up 15% and like-for-like revenue up 14%."

FirstGroup said it had signed a deal to buy York Pullman Bus Company for an undisclosed sum.

York Pullman provides home-to-school and college contracted services and private hire operations including rail replacement services, and operates a small number of local bus routes on behalf of several local authorities.

It has a mixed fleet of more than 130 vehicles with varying passenger capacity which has enabled it to build a broad range of customers. For the year ended to December 2022, York Pullman reported revenues of around £10m and profit before interest and tax of £2m.

Paragon Banking, the FTSE 250-listed mortgages, savings accounts and business finance provider, delivered a confident outlook for the current financial year as it reiterated guidance following a solid first quarter.

New lending across the business for the quarter to 31 December was significantly down at £610.7m, from £861.7m the year before, though the bulk of that decrease comes from buy-to-let lending which was expected.

"The board's FY24 guidance for margins, new business flows, operating costs and RoTE remain unchanged, although margins are currently running slightly ahead of expectations," the company said.