London pre-open: Stocks seen up ahead of BoC, ADP report

London stocks were set to rise at the open on Wednesday following losses in the previous session and a firmer close on Wall Street.

The FTSE 100 was called to open around 50 points higher, as investors eyed the latest US ADP jobs report and a rate announcement by the Bank of Canada, while the ECB will make its policy announcement on Thursday.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "The next few hours could bring two rate cut announcements from two major central banks. The Bank of Canada (BoC) and the European Central Bank (ECB) are expected to announce a 25bp cut to their rates today and tomorrow respectively.

"A 25bp cut from the BoC could throw a floor under the recent pullback in Canadian stocks, while the ECB’s 25bp cut may not suffice to cheer up investors depending on what the chief Christine Lagarde says at her press conference regarding the bank’s position concerning further cuts."

On the macro front, the S&P Global CIPS UK services PMI for May is due out at 0930 BST, while the ADP report for May is at 1315 BST.

Ozkardeskaya said: "Today, the ADP report is expected to print around 173K new private job additions to the US economy last month. That’s a soft but not a disastrous figure. If the ADP report comes in line with expectations or softer-than-expected, we may see the Fed doves gain more traction and the US yields ease more.

"Equities, on the other hand, will likely react positively to a figure that doesn’t look too soft, as a significant negative surprise on the jobs front could fuel recession worries and prevent equity investors from fully benefiting from potentially rising dovish Fed expectations."

In corporate news, British Gas owner Centrica said current year trading was in line with expectations against the backdrop of a more “normalised” environment, with all retail supply and optimisation businesses to be within their medium-term sustainable adjusted operating profit ranges in 2024 - two years ahead of schedule.

In a trading statement ahead of the company’s annual general meeting, Centrica reaffirmed earnings forecasts for British Gas residential energy supply of £150m-£250m, British Gas services & solutions £100m-£200m, Centrica Energy £250m-£350m and Bord Gáis and Business Energy Supply £100m-£200m.

Annual operating profits and sales at discount retailer B&M European Value Retail grew in the double digits, helped by the opening of 78 gross new stores across the group, with earnings at the top end of guidance.

Adjusted EBITDA totalled £629m in the year to 25 March, up 10.9% on the year before, helped by higher volumes and strong cost control. This was at the top end of the company’s forecast of £620m to £630m. Group revenues rose by 10.1% to £5.5bn, with 19.2% growth in B&M France, 15.3% in Heron Foods and 8.5% in B&M UK.