London pre-open: Stocks seen higher in early deals

UK stocks are expected to open higher on Thursday as they continue to bounce back from a sharp sell-off earlier in the week on the back of escalating tensions in the Middle East and fading hopes of rate cuts by the Federal Reserve.

The FTSE 100 is being called to open around 38 points higher (+0.5%) than Wednesday's close of 7,847.99, when it gained just 0.4%. The index hit a four-week low on Tuesday after losing 1.8% of its value in a single trading session.

"The relentless selling pressure in bonds, which had been prevalent in the past, reversed on Wednesday, leading to a decline in yields. However, gold fell conspicuously, while oil experienced a notable 3% drop, marking its most substantial decline in over two months as tensions in the Middle East appear to be easing, at least at the headline level," said Stephen Innes, managing partner at SPI Asset Management.

"Despite the somewhat improved situation in the Middle East, stocks wobbled against the backdrop of Fed policy uncertainty."

Brent crude was up 0.2% at $87.47 a barrel in early deals, bouncing back after a sell-off dragged it down from the $90-plus level earlier in the week.

Things look relatively quiet on the economic data front for Thursday, with US jobless claims, the Philadelphia manufacturing index and national existing home sales being the only major releases of the day. However, speeches from a number of members of the European Central Bank and Fed will likely garner a lot of attention.

In equity news, budget airline easyJet said in an update that its winter losses narrowed by more than £50m over the six months through March, with its headline loss before tax expected to be between £340m and £360m. The FTSE 100 company said that despite challenges like fuel cost inflation and Middle East tensions impacting results, targeted capacity growth, productivity gains and flat year-on-year unit costs excluding fuel contributed to its improvement. Additionally, easyJet holidays saw significant profit growth of 206% compared to the first half of 2023, and a 42% increase in customers year-on-year, with strong bookings for the upcoming summer. (edited)

Rentokil Initial reported a 4.9% increase in group revenue for the first three months of 2024, with 3.1% attributed to organic revenue growth and continued pricing momentum. The FTSE 100 firm said growth in North America stabilised, with organic revenue up 1.5%, driven by early initiatives of its growth plan. It saw a positive performance across all regions and categories, with particular progress in technician sales leads participation rates, customer retention, and successful pricing strategies.