London pre-open: Stocks seen lower as investors digest Fed minutes

Stocks in London were set to open lower on Thursday as the recent rally begins to lose momentum, with investors digesting the latest Federal Reserve minutes.

The FTSE 100 was called to open 25 points lower than Wednesday’s close at 6,999.

Minutes of the Fed’s 20-21 September meeting late on Wednesday showed it was a close call to keep rates on hold, with policymakers generally of the view that a move higher could be on the cards within months if the economy keeps on track.

CMC Markets’ Michael Hewson said: “It would appear that rising inflation expectations, along with apprehension about the forthcoming earnings season is starting to gnaw away at sentiment, though markets in Europe aren’t being helped by the febrile atmosphere swirling around Europe as a result of the UK’s summer Brexit vote.

“The Fed minutes contained little in the way of surprises given the three dissenters it was pretty obvious that the decision was a close call and the minutes reaffirmed that.

“The belief beforehand that there may have been other members who harboured some doubts about dissenting, but were holding out a little bit longer, proved to be pretty accurate, as some members expressed concern that the Fed might fall behind the curve, and then have to tighten aggressively to slow any ensuing expansion.”

There are no major UK data releases due but US initial jobless claims are at 1330 BST.

In corporate news, subscription broadcaster and broadband provider Sky posted an update to its first quarter trading on Thursday, with group revenue up 7% to £3.1bn and like-for-like revenue up 5%.

The FTSE 100 firm reported positive growth in all markets, with revenue in the UK and Ireland up £101m to £2.1bn, or 5% at constant currencies.

Hargreaves Lansdown’s first quarter revenue increased but the financial services company was affected by low investor confidence in the wake of the Brexit result from the EU referendum as new business flows fell.

For the three months ended 12 October, the company reported a record net quarterly revenue of £90.6m, a 15% increase from the first quarter in 2015. New business inflows fell 22% to £1.11bn

As a storm broke over a supermarket pricing dispute over Marmite and several other of its brands, Unilever reported solid underlying sales amid tough third-quarter conditions though volumes were down.

Underlying sales grew 3.2% but turnover declined 0.1% in the three months to 30 September against a strong comparator last year as the company faced a deterioration of trading conditions in a number of countries, with consumer demand remaining widely weak.