London pre-open: Stocks seen lower on weak Wall St cues

London stocks were set for a lower open on Thursday, taking their cue from a weak finish on Wall Street.

The FTSE 100 was called to open down 52 points at 7,180.

CMC Markets analyst Michael Hewson said: "Despite a late rebound in the last couple of weeks equity markets still finished the month in pretty much the same way they started it, on the back foot, as the selloff that started in the wake of new Fed chair Jerome Powell’s testimony on Capitol Hill continued yesterday as investors began to reassess the prospect that we could well see four rate increases from the Federal Reserve by the end of this year.

"Mr Powell returns for a second round today with US lawmakers and markets will be looking to see whether he rows back a little from Tuesday’s hawkish interpretation of his remarks or whether he reaffirms them. If he does the latter then we could well see further gains for the US dollar and increased pressure on stock markets."

Sterling will be in focus after falling to its lowest level since mid-January on Wednesday after Prime Minister Theresa May rejected the EU’s latest draft text on the Irish border issue, which stated that in the absence of any agreement to the contrary, Northern Ireland stays in a customs union after Brexit and is subject to all EU rules and regulations. The text also left out any reference to an extended transition period, which the UK has asked.

"The problem for PM May is trying to obtain a consensus view in cabinet with some concerns that the inability to make a decision will result in a political crisis that could undermine the government’s stability," said Hewson.

Investors will be digesting the latest survey from Nationwide, which should UK house prices unexpectedly fell in February.

House prices were down 0.3% on the month following a 0.8% increase in January, missing expectations of a 0.2% gain.

On the year, house prices were up 2.2%, slowing down from a 3.2% jump the month before and well below the 2.6% rise expected.

Nationwide’s chief economist, Robert Gardner, said: "Month-to-month changes can be volatile, but the slowdown is consistent with signs of softening in the household sector in recent months. Retail sales were relatively soft over the Christmas period and at the start of the new year, as were key measures of consumer confidence, as the squeeze on household incomes continued to take its toll.

"Similarly, mortgage approvals declined to their weakest level for three years in December, at just 61,000. Activity around the year end can often be volatile, but the weak reading comes off the back of subdued activity in October and November (approvals were around 65,000 per month compared to an average of 67,000 over the previous 12 months). Surveyors report that new buyer enquiries have remained soft in recent months."

Still to come, Markit’s manufacturing PMI and mortgage approvals are due at 0930 GMT, along with net lending to individuals. The manufacturing PMI is expected to slip back to 55.1 in February from January’s 553.

In corporate news, asset manager Schroders posted a 23% jump in full-year pre-tax profit on as assets under management and net inflows rose amid growth across the group.

In the year to the end of December 2017, pre-tax profit increased to £760.2m from £618.1m in 2016, as assets under management and administration rose 13% to £447bn and net inflows came in at £9.6bn, up from £1.1bn. The company lifted its full-year dividend by 22% to 113p per share.

WPP blamed technological disruption and squeezed marketing budgets for flatlining revenue as the world’s biggest advertising company reported profit in line with muted market expectations.

Pre-tax profit, excluding gains and losses on disposals and other items, rose 5.4% to £2.09bn in the year to the end of December - matching analysts’ average forecast. Excluding currency swings, profit rose 1.9%.

Rentokil said full year ongoing operating profit, which excludes the results of disposed businesses, increased by 14.8% to £294.7m, reflecting growth in all regions but offset by lower profits in France.

Irish building materials group CRH generated an acceleration in profits growth towards the end of the year and saw good potential for more in the US and Europe in 2018.

Sales of €27.6bn were reported for 2017, 2% ahead on the prior year and 2% on a like-for-like basis, while earnings before interest, tax, depreciation and amortisation rose 6% to €3.3bn, or 3% LFL.

PureCircle announced on Thursday that its US division and Sweet Green Fields have settled a dispute before the International Trade Commission on the importation of products that were alleged to infringe PureCircle's patents.