London pre-open: Stocks seen up as Fed cuts rate by 50 basis points; BoE eyed

London stocks were set to gain at the open on Thursday after the US Federal Reserve cut rates by 50 basis points and as investors eyed the latest policy announcement from the Bank of England.

The FTSE 100 was called to open around 80 points higher.

Kathleen Brooks, research director at XTB, said: "The US may have experienced whipsaw price action on the back of yesterday’s Fed rate cut, but there has been a straightforward welcome to the Fed’s dovish leap into its rate cutting cycle in Asia and Europe. The Nikkei is higher by 2.5% and the Hang Seng is higher by more than 1.8%. European futures markets are also pointing to a higher open later this morning, the FTSE 100 is expected to open up 0.7%.

"US futures are also higher on Thursday morning. The gold price initially rallied to a fresh record high on the back of the 50bp rate cut from the Fed, before faltering at this level, however the price of gold is rising once more as we move towards the European open."

The Bank of England decision is due at midday, with no change to rates expected.

Brooks said traders will be parsing the Bank’s statement and minutes to see what it could do next.

"There are two things worth watching: 1, if the BoE sounds concerned about the UK’ s growth outlook, this could take the shine off sterling. 2, The BoE could increase the size of its quantitative tightening programme to reduce the size of its bloated balance sheet. If this happens then it looks like the BoE will be giving with one hand (expected future rate cuts) and taking away with another (reducing the money supply)."

In corporate news, clothing retailer Next once again upgraded annual earnings guidance as full price sales in the first six weeks of the second half of the year "materially exceeded" expectations, rising 6.9%.

It lifted 2024/25 pre-tax profits forecasts £15m to £995m, up 8.4% on last year, after interim profits for the six months to July surged 7.1% to £452m.

Online grocer and logistics group Ocado upgraded its revenue guidance following a strong third-quarter performance which saw retail revenues jump 15.5%.

The company is now targeting low double-digit percentage growth in sales over the year to 3 December, from the £2.8bn generated last year. That’s up from earlier guidance for mid-high single-digit growth given in July.