London pre-open: Stocks seen higher after BoE move as investors eye payrolls

Stocks in London were expected to open higher on Friday following the Bank of England’s decision to cut interest rates to 0.25% and increase the size of its asset purchase programme, as investors awaited the release of the US non-farm payrolls report.

London’s FTSE 100 was set to open 27 points higher than Thursday’s close at 6,765.

CMC Markets’ Michael Hewson said: “Yesterday’s surprise move by the Bank of England to cut interest rates, increase QE, and launch its own medium term financing program along the lines of the ECB’s LTRO appears to be an attempt to assure the markets it will do whatever it takes to not only support the UK economy, but also reassure the markets it is not out of ammunition, with respect to monetary policy.

“While it may well have done that the measures announced yesterday do give the impression of overkill. The contrast between what the MPC did yesterday and what they did in July was quite stark and the fact that the additional QE measures found dissent from three policymakers does appear to suggest some division on the MPC.”

The US non-farm payrolls report and the unemployment rate are at 1330 BST, along with trade balance figures for the US.

Rabobank said the headline number in the payrolls report is seen rising by a healthy 180,000, but average earnings are seen up just 2.6% year-on-year, which it said was “yet another structural issue that monetary policy can’t change, apparently”.

In corporate news, RBS reported an attributable loss of £2.045m at the half-year stage, compared to -£179m of red ink for the same period one year ago.

That figure included £1.3bn in litigation and conduct charges, the bulk of which, £1.2m, was incurred during the second quarter. The lender also booked £630m in restructuring costs. For the three months ending in June, RBS reported a net loss of £1bn versus a profit of £280m for the comparable period of one year ago.

The bank led by Ross McEwan said it continued to be on track to deliver its target of £800m in cost reductions for 2016.

Home builder Bellway said it expected full year housing revenue to increase by around 27% to £2.2bn with a 12.5% increase in the number of housing completions to 8,721.

In a trading statement, the company said it also a record pre-exceptional operating margin, which is expected to rise by around 150 basis points to approach 22%.

The forward order book also looks positive, with 4,644 homes with a value of £1.1bn compared with 4,568 homes valued at 1.08bn last year.

Inhaled airways disease focused company Vectura Group announced on Friday that a sales milestone receipt of $8m has been triggered following confirmation by Pacira Pharmaceuticals, Inc. that worldwide annual net sales of EXPAREL, on a cash received basis to 30 June, were above $250m.

The FTSE 250 firm said that on 4 August, Pacira announced net sales of EXPAREL of $65.8m in the second quarter, an increase of 15% compared with the first quarter of 2015.

It also confirmed that preparations in support of the launch of EXPAREL in oral surgery in September are on track.