London pre-open: Stocks set for slightly weaker start

Stocks in London were set for a slightly weaker open on Monday as investors continue to mull over comments by Federal Reserve chair Janet Yellen last week amid a stronger dollar.

The FTSE 100 was called to open eight points lower than Friday’s close at 7,005.

On Friday, Yellen said in a speech that policymakers need to consider the potential for a “high pressure economy” and let inflation continue to rise.

Oanda’s Craig Erlam said: “European equity markets are expected to open a little lower on Monday, with investors looking ahead to a week filled with big economic reports and events and numerous companies reporting on the third quarter.

“We saw some late selling in equity markets on Friday, with the FTSE, Dow and S&P all experiencing a late dash for the exit into the close, potentially indicating an anxiety among traders and a lack of confidence in the markets. It will be interesting to see how they respond this week as there has been signs that markets are struggling to sustain themselves at these levels. Fortunately, the week is filled with potential catalysts that should trigger a reaction in the markets one way or another. The one that stands out is the ECB decision and press conference on Thursday, although no further stimulus is expected to be announced just yet. Inflation may still be well below the central banks 2% target, as is expected to be confirmed this morning, but it has not strongly signalled that it is prepared to act on this right away.”

In corporate news, underlying sales remained underwhelming at Pearson in the third quarter but it reported improving trends since September and that the weakness in the pound is likely to provide a material lift to full year numbers. Sales were down 7% at the underlying level in the nine months to the end of September but were down 3% at headline terms due to the dollar-sterling exchange rate, which could push earnings per share 4.5p higher for the calendar year.

Scottish energy company SSE is to sell a stake in Scotia Gas Networks to subsidiaries of the Abu Dhabi Investment Authority for £621m.

The company will sell 16.7% of its stake and retain 33.3% equity in SGN by the end of the October, with the proceeds used to return value for shareholders or invested, which will be announced on 9 November.

Bookmaker Ladbrokes announced on Monday that subsidiaries of both itself and merger partner Gala Coral Group have agreed to sell a total of 359 licensed betting offices to Done Brothers Cash Betting Limited - trading as Betfred - and StanJames Abingdon - trading as Stan James.

The FTSE 250 firm said Betfred will purchase 322 shops for a cash consideration of £55m, and Stan James will purchase 37 shops for a cash consideration of £0.5m.