London pre-open: Stocks seen higher on dovish Fed comments; services data eyed
London stocks were set to rise at the open on Wednesday, taking their cue from strong gains on Wall Street as investors welcomed dovish comments from Federal Reserve Chair Jerome Powell.
The FTSE 100 was called to open 16 points higher at 7,231.
London Capital Group analyst Jasper Lawler said: "The Dow rallied 500 points in its second-best trading session of the year thanks to a more dovish Fed Chairman Jerome Powell. Asian markets followed suit and European bourses are pointing to a stronger start on the open in a clear case of central banks to the rescue, even if the effect is only short term.
"At an event hosted by the Federal Reserve Bank of Chicago, Jerome Powell signalled that the Fed stood ready to ease monetary policy, to support the US economy, in the case of a downturn amid a drawn-out US-Sino trade dispute. The three main US indices each gained over 2% with the Nasdaq climbing 2.7% paring losses from the tech rout earlier in the week.
"Powell gave the markets what they wanted to hear, and the result was a spectacular rally, as traders increased their bets of a rate cut happening before the year end. Jerome Powell’s speech followed similar comments from other Fed officials earlier in the week. This is usually a sign that the Fed wants to prepare investors for a shift in policy. Risk assets lifted as investors responded to the prospect of a lower interest rate environment. An environment which is more favourable to business owing to reduced borrowing costs."
On home shores, Markit's services PMI for May is due at 0930 BST, with a reading of 50.6 expected.
In corporate news, retailer Card Factory maintained full year profit expectations as it reported a positive start to the year with first quarter sales up 6.4%, despite Britons spending less due to Brexit worries.
The company said like-for-like sales were up 2.3% against "challenging consumer sentiment and negative footfall on the High Street".
Workspace said full-year pre-tax profit fell to £137.3m from £170.4m in 2018, as a strong rise in trading profit was offset by a lower uplift in property valuation and lower disposal profits than the prior year.