London pre-open: Stocks seen flat as BoJ disappoints

London stocks were expected to open little changed on Friday after the Bank of Japan’s latest policy measures left investors disappointed.

The FTSE 100 was set to open two points lower than Thursday’s close at 6,719.

The BoJ kept interest rates steady on Friday but said it would increase its purchases of exchange-traded funds to an annual pace of Y6trn from Y3.3trn. It also doubled the size of a lending programme for local companies.

Oanda’s Craig Erlam said: “Days like today once again make you question whether the central banks really are reaching the limits of what the markets consider to be effective monetary stimulus tools. With interest rates already negative and government bond purchases at or near the limit of what is feasible, central banks have had to pursue other unconventional tools which have failed to get the markets too excited.

“This isn’t necessarily a bad things and just because markets don’t get too excited by the prospect of ETF purchases rising by Y6 trillion compared to Y3.3 trillion before, or by a lending program for local companies doubling to $24 billion to provide support for overseas activities, it doesn’t mean they won’t be effective.”

On the data front, UK money supply and mortgage approvals are due at 0930 BST, In the US, the first release of second-quarter GDP is at 1330 BST, Chicago PMI is at 1445 BST and University of Michigan consumer sentiment is at 1500 BST.

In corporate news, half year pre-tax profits at Barclays fell 21% to £2.06bn, reflecting the costs of offloading its non-core business.

The bank's core business made pre-tax profits of £3.97bn, up 19% while the non-core business made a loss of £1.9bn.

The non-core loss was mainly due to a £372m writedown relating to the sale of its French business.

Barclays said 2016 core cost guidance of £12.8bn, excluding litigation and conduct charges, and subject to foreign currency movements1, remains unchanged

It added that the existing non-core income and operating expenses guidance for 2016 remains unchanged. 2017 Non-Core operating expenses are expected to be within the range of £400m to £500m excluding notable items. The Non-Core RWA guidance of around £20bn in 2017 remains unchanged.

Barclays said the result of the UK's decision to leave the European Union means that the long-term nature of the UK's relationship with the EU is “unclear and there is uncertainty as to the nature and timing of any agreement with the EU”.

“In the interim, there is a risk of uncertainty for both the UK and the EU, which could adversely affect the economy of the UK and the other economies in which we operate,” Barclays said.

British Airways owner International Consolidated Airlines Group presented its results for the six months to 30 June on Friday, with second quarter operating profit reaching €555m before exceptional items, up from €530m last year.

Excluding Aer Lingus, which IAG holds a 98.05% stake in, operating profit in the second quarter was €487m

The FTSE 100 firm said the net foreign exchange operating profit impact for the quarter was an adverse €148m.

Passenger unit revenue for the quarter dropped 10.2%, or 6.2 % at constant currency and 6.5% excluding Aer Lingus.

Operating profit before exceptional items for the half year was €710m, up 27.9% from €555 million, and excluding Aer Lingus it was €668m.