London pre-open: Stocks seen down as investors eye US GDP, PCE
London stocks were set for more losses on Thursday following a downbeat session on Wall Street, after concerns that US rates will stay higher for longer led to a surge in bond yields.
The FTSE 100 was called to open around 40 points lower.
Investors were looking ahead to the release of US Q1 GDP figures at 1330 BST and the latest PCE numbers on Friday.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "All eyes are on the US GDP update due today, and the Fed’s favourite gauge of inflation - the core PCE number - due tomorrow. The US GDP is expected to have slowed significantly in the Q1, with - however - a significant rise in price pressures (that’s already priced in), while the core PCE print for April could hint at some easing in the latest pickup in inflation.
"The best outcome would be a reasonably soft growth coupled with easing price pressures, but we could realistically get a slowing growth coupled with an insufficient easing in price pressures, instead. To the Fed, the inflation number will matter more than the growth update as regardless of the deteriorating economic growth, the progress in inflation will determine whether the Fed could remain on path to cut rates this year.
"Therefore, it will be hard to interpret today’s GDP data before seeing tomorrow’s PCE print. And even then, Citigroup thinks that this week’s data will trigger limited price action; the upcoming US jobs and CPI updates in the next weeks will matter more."
She added that for now, rising bond yields are taking a toll on stock valuations in the absence of other catalysts.
In corporate news, troubled bootmaker Dr Martens posted a bigger-than-expected fall in annual revenue and operating profit as its US woes continued but held guidance for the current year and announced a cost savings target of up to £25m.
Revenue fell 12% to £877m against expectations of £900m, while operating profit plunged by a third to £122m compared with forecasts of £125m. Pre-tax profits were down 43% to £97m.
"Our 2024 results were as expected and reflect continued weak USA consumer demand. This particularly impacted our USA wholesale business and offset our group direct-to-consumer performance, where pairs grew by 7%,” said outgoing chief executive Kenny Wilson.
"For the first half, we expect a group revenue decline of around 20%, driven by wholesale revenues down around a third.”
Heat treatment and thermal processing services group Bodycote left its full-year outlook unchanged after reporting solid underlying growth since the start of 2024 against a "mixed picture of end market dynamics".
Group revenues declined to £268m, from £281m the year before, though organic growth at constant currency excluding surcharges would have been 2.7%. The company said that underlying growth was offset by surcharges, which halved to around £14m as energy prices fell, as well as a foreign exchange headwind of £10m compared with last year.