London pre-open: Stocks seen muted ahead of BoE, ECB rate announcements
London stocks were set for a muted open on Thursday as investors eyed policy announcements from the Bank of England and European Central Bank.
The FTSE 100 was called to open just two points higher at 7,585.
CMC Markets analyst Michael Hewson said: "It’s hard to say which of the two has the harder task, Andrew Bailey, who has insisted that it’s not the central banks job to steer financial markets, or Christine Lagarde who once famously said it’s not the ECB’s job to close spreads, a faux pas which she quickly had to rectify.
"Either way, both will have to adopt a degree of linguistic legerdemain to stop markets from over interpreting their intentions when they take questions over their respective decisions this afternoon.
"Starting with the Bank of England, the expectation is that the MPC will pull the trigger on a 0.25% hike to 0.5% today, while at the same time not giving too much away about their intentions for March, or for the rest of the year. This reluctance in giving too much away will be due to the difficulties in determining the effect of the fiscal and energy price squeeze that is coming in April.
"As things stand markets are already pricing in five rate hikes for this year, so it’s likely that Bailey will push back on that, however we could also see the central bank also stop reinvestments of bond purchases, which would be passive Quantitative Tightening."
In corporate news, BT said it was in talks with Discovery Inc about forming a sports joint venture as the company reported a 3% drop in profit for the first nine months of the year.
Pre-tax profit for the nine months to the end of December fell to £1.54bn from £1.59bn a year earlier as revenue declined 2% to £15.68bn. BT said it expected revenue to fall 2% for the full year.BT said it was in exclusive discussions to combine its sports business with Discovery's Eurosport UK operation to forge a 50/50 joint venture. The companies are targeting to complete talks in the first quarter for the new company to become operational later in 2022.
The Playtech takeover saga continued as a fresh potential bid for the gambling software maker emerged, hours after a £2.7bn offer from Australia’s Aristocrat Leisure collapsed.
TT Bond Partners, which advised on an earlier bid for Playtech from Gopher Investments, has been given consent by UK-listed Playtech to release it from restrictions that would stop it from tabling a further offer.
"There can be no certainty as to whether this will result in an offer for the company, nor as to the terms on which any offer might be made. However, any offer, if made, is likely to be in cash," Playtech said.
Media firm Future said it continued to perform well in the four months ended 31 January, with ongoing momentum in digital advertising more than offsetting exceptional year-on-year comparators in audience and eCommerce.
Future said trading in the period was in line with expectations, with good conversion to both profit and cash, and underpinned its upgraded full-year outlook, despite continued macro uncertainties and inflationary pressures.