London pre-open: Stocks seen flat after US markets give up gains

The FTSE 100 was called to open unchanged at 7,573.

CMC Markets analyst Michael Hewson said: "After last night's subdued US finish, today's European open looks set to be a cautious one, after US stocks once again failed to hold onto to their early day gains."

Investors will be digesting a survey showing that retail sales jumped last month, as shoppers sought out purchases ranging from watches to furniture.

According to the latest BRC-KPMG Retail Sales Monitor, total sales increased by 11.9% in January, compared to a 1.3% decline in January 2021, when the UK was in lockdown. On a year-on-two-year basis, total retail sales grew by 7.5%.

On a like-for-like basis, sales increased 8.1% compared to January 2021, when they rose 7.1%.

The British Retail Consortium said household appliances, electronics and homeware had performed well, as had furniture. Footwear and clothing, along with jewellery and watches, also performed strongly.

In comparison, food sales were muted, as restrictions brought in to tackle the spread of the Omicron variant were eased and people started eating out again.

In the three months to January, food sales decreased by 0.5% on a like-for-basis and by 0.1% on a total basis. That was below the 12-month total average growth of 2.4%.

Helen Dickinson, chief executive of the BRC, said: "It is encouraging to see such strong sales in January, even once inflation has been accounted for. Furniture was the stand-out performance, after transport delays in the Christmas period began to ease."

However, looking ahead she cautioned: "Retailers and consumers face challenges in the coming months.

"Retailers face competition from other spending opportunities, as the public flood back to restaurants, cafes and live events. Furthermore, rising inflation - driven by higher costs of production, higher energy and transport prices as well as other looming price hikes - will mean consumers will have to tighten their purse strings."

In corporate news, energy giant BP said it swung to a huge annual profit, driven by surging oil and gas prices, but warned of lower production and flat refining margins in the first quarter of the current year.

The UK company said underlying replacement cost profit came in at $12.8bn compared with a net loss of $5.7bn a year ago.

Ocado's annual loss grew as increased investment in its solutions business more than offset higher revenue at the online retailer and technology group.

The statutory pre-tax loss widened to £176.9m in the year to the end of December from £52.3m a year earlier as revenue increased 7% to £2.5bn. Earnings before interest, tax depreciation and amortisation fell to £61m from £73.1m. Analysts had on average expected earnings of £60m.

Energy company SSE upgraded its full-year adjusted earnings per share guidance from 83.0p to 90.0p, citing the "strength and stability" provided by its balanced mix of regulated and market facing businesses.

SSE said a good financial performance from its flexible thermal and hydro plant was more than offsetting lower than planned renewables output and, as a result, now intends to recommend a full-year dividend of 81.0p per share plus RPI for the current trading year.