London pre-open: Stocks to start lower ahead of MPC, commodities in focus

Stocks were being called to start the session slightly lower with investors’ attention squarely on the recent gyrations in global commodity and high-yield debt markets and their implications for next year’s financial markets outlook.

Both asset classes benefited enormously from central bank liquidity injections post the great financial crisis, which are now starting to go into reverse.

Against that backdrop, the Footsie was being called to start the session lower by up to 31 points.

“It's certainly an uncomfortable December so far for risk. The commodity super cycle that occurred post the GFC continues to unravel fairly spectacularly. The problem being that a fair amount of debt was raised on the back of it which is why US high-yield and emerging markets in particular are now in focus,” Michael Reid at Deustche Bank said in a research note sent to clients.

Investors will also focus on today’s policy decisions from the Monetary Policy Committee. However, no change in rates or in the size of the Bank’s asset purchases is expected.

Michael Hewson, chief market analyst at CMC Markets UK, had this to say: “Having surprised the markets in November with a dovish inflation report and given that CPI inflation is in negative territory it would be unexpected to say the least if there were any significant changes to either the minutes or the voting patterns.

“It is still likely that Ian McCafferty will continue to dissent and argue for a rise in rates, with the recent decline in commodity prices much more likely to keep the remainder of the MPC cautious, particularly given some of the weaker readings from recent manufacturing data.”

Glencore cuts debt target, Sports Direct profits jump

Sports Direct International posted a 25% jump in first half pre-tax profit on flat revenue amid an increase in investment income. For the 26 weeks to 25 October, pre-tax profit came in at £187.3m from £149.7 on revenue of £1.4bn, up just 0.1% from the same period last year. Chief executive Dave Forsey said: "The group has delivered another excellent set of results particularly given the strong comparable sales generated in the build up to the FIFA 2014 World Cup and after a generally mixed summer for the retail sector."

Glencore has increased its planned target of reducing debt and preserving capital to the tune of $13bn (£8.6bn). It follows the FTSE 100 mining company’s debt reduction initiatives announced in September, which included a target of $10.2bn. In a trading update issued Thursday, it said it has already locked in $8.7bn of its target. It is also planning to bring net debt down to between $18bn and $19bn, with the previous target being in the low $20bns.

Centrica said its full year earnings would in-line with forecasts in a pre-close statement at the end of a what the company admitted was a difficult year. Following a strategic review during the period that put a renewed focus on adjusted operating cash, the British Gas owner confirmed it remained on track to deliver a baseline level of over £2bn in 2015 despite recent commodity price weakness.