London pre-open: Stocks seen flat after subdued Wall St close

The FTSE 100 was called to open four points lower at 7,547.

CMC Markets analyst Michael Hewson said: "After a poor start to the week European markets continued their rebound yesterday, led by the FTSE 100, which has led the way higher since the start of the year, driven higher by a combination of rising commodity prices, as well as higher yields.

"Yesterday’s outperformance saw the FTSE 100 hit its highest levels since late January 2020, led by the likes of BP, which has seen a gain of 15% so far this year, followed by Barclays, which is up by over 13%.

"US markets underwent a more subdued session, finishing the day higher although off their intraday highs although the Russell 2000 closed lower, after the latest US CPI report for December came in at its highest level in almost 40 years at 7%. Core prices came in a little lower but were still at 31-year highs of 5.5%, however bond market reaction to these numbers was surprisingly muted.

"This may have been because the numbers were broadly in line with expectations, and weren’t a surprise, while we also saw a modest decline in energy prices. An unexpected side-effect was some significant US dollar weakness, which saw the US dollar index slide to a one month low."

In equity markets, supermarket chain Tesco lifted annual profits guidance after better-than-expected third-quarter and Christmas sales.

The company said it now expected retail operating profit to be slightly above the top-end of previous £2.5bn - £2.6bn guidance, and forecast bank operating profit to be between £160m - £200m, due to the effect of more favourable economic forecasts on its provision for expected credit losses.

Pub operator Mitchells & Butlers said it had initially made "a strong start to the year", with like-for-like sales growth of 2.7% over the first eight weeks, but warned that renewed Covid-19 restrictions on hospitality venues impacted trading during the all-important holiday trading period.

Concerns regarding the emergence of the Omicron variant in December had resulted in further caution in socialising which, in turn, brought about a downturn in activity across the sector and, as a result, like-for-like sales then dropped 6.0% over the seven weeks since its last update, with the adverse impact of the new variant being "particularly felt in the most recent four weeks" as like-for-like sales over the key festive season were down 10.2%.