London pre-open: Stocks to gain on positive US, Asian cues

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Sharecast News | 07 Aug, 2024

London stocks were set to rise again on Wednesday following positive US and Asian sessions.

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

Stephen Innes, managing partner at SPI Asset Management, said: "Asia-Pacific markets bounced back impressively on Wednesday, catching a wave from Wall Street’s rally that ended a tense three-day losing streak. The market mood seems as changeable as the weather, with a dramatic shift sparked by a major rally in Japanese stocks on Tuesday.

"The Nikkei 225, behaving much like a phoenix rising from the ashes, soared by an impressive 10.2- marking its best performance since the heady days of October 2008. This came just a day after the index experienced its most chilling plunge since 1987, nosediving by 12.4% due to deepening recession worries.

"On Wednesday, Bank of Japan Deputy Governor Uchida Shinichi took to the stage, not to announce a magic show but to reinforce that the central bank’s monetary easing will stay the course amid the rollercoaster ride in global financial markets. His reassurance acted like a financial security blanket, calming jittery markets and effectively signalling continued protective intervention."

On home shores, investors were mulling the latest data from Halifax, which showed that house prices rose in July after three flat months.

Prices were up 0.8% on the month, coming in comfortably ahead of expectations for 0.3% growth.

On the year, house prices rose 2.3% in July following a 1.9% increase in June. This marked the highest annual growth rate since January 2024.

The average house price stood at £291,268 compared to £289,042 in June.

Amanda Bryden, head of mortgages at Halifax, said: "Last week’s Bank of England’s Base Rate cut, which follows recent reductions in mortgage rates, is encouraging for those looking to remortgage, purchase a first home or move along the housing ladder. However, affordability constraints and the lack of available properties continue to pose challenges for prospective homeowners.

"Against the backdrop of lower mortgage rates and potential further Base Rate reductions, we anticipate house prices to continue a modest upward trend throughout the remainder of this year."

In corporate news, financial services and asset management group Legal and General reported flat interim core operating profit, in line with expectations.

The company said profit for the half rose 1% to £849m, adding that it expected 2024 core operating earnings to grow by mid-single digits year-on-year. It also lifted its interim dividend by 5% to 6p a share.

Property portal Rightmove announced that it is recruiting an internal replacement for its outgoing chief financial officer.

Alison Dolan, who announced in May that she was jumping ship to join Marks & Spencer, will be succeeded by Ruaridh Hook, currently head of commercial finance and financial planning and analysis. Hook, who has been in that role since 2020, joined Rightmove back in 2016.

Glencore posted a sharp decline in operating and net profits at the half-year stage, but sounded an optimistic note on the outlook for shareholder returns.

The natural resource outfit reported a 9% rise in revenues to approximately $117.1bn. Yet adjusted operating profits shrank by a third in EBITDA terms to $6.3bn. The company also swung to a net loss of $233m from a profit of $4.6bn one year before. That was partly the result of $1.7bn of significant items. Even so, net debt reduced by $1.3bn to $3.6bn.

Chief executive officer Gary Nagle also noted the annualised free cash flow generation of about $6.1bn during the period. Nagle said that it "augers well for potential top-up shareholder returns, above our base cash distribution, in February 2025."

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