London pre-open: Stocks seen muted ahead of ECB, US GDP
London stocks were set for a muted open on Thursday ahead of the latest policy announcement from the European Central Bank and the US third-quarter GDP reading.
The FTSE 100 was called to open unchanged at 7,253.
CMC Markets analyst Michael Hewson said: "European markets underwent a modest pullback yesterday with modest losses across the board, however there was little in the price action to suggest that the declines were anything other than a brief pause in the overall move higher, with shares set to open unchanged later this morning, despite a sell-off in Asia markets."
Hewson noted that in September, the ECB announced it was slowing the pace of its monthly PEPP bond buying programme, over the next three months, which is currently at €80bn a month.
"There will be a wider discussion on its future in December, which means today is likely to be a placeholder, although it was made clear that the PEPP number could be moved in either direction if required.
"While the ECB looks a long way from acting to significantly pare back its current monetary policy stance, today’s US Q3 GDP numbers, even as they come in weaker than Q2 should still support the narrative of the Federal Reserve starting the process to slow down its own asset purchase program when they meet next week.
"US Q3 GDP is expected to slow to 2.6% from the 6.7% seen in Q2, as a combination of rising delta variant cases, weaker demand, and supply chain disruptions act as a brake on the economic rebound."
In corporate news, Royal Dutch Shell reported lower-than-expected third-quarter adjusted earnings after taking a $400m hit from Hurricane Ida’s impact on operations.
The company said earnings fell by 25% quarter on quarter to $4.13bn, below analyst forecasts of $5.31bn and compared with $955m a year ago.
Lloyds Banking Group improved its full-year guidance after reversed bad debts contributed to a near doubling of third-quarter profit.
Pre-tax profit for the three months to the end of September rose to £2.03bn from £1.04bn a year earlier as net income increased 20% to £4.08bn. The bank released £84m of impaired loans compared with a charge of £301m a year earlier.
Lloyds said based on its performance and the improved UK economic outlook it expected its 2021 net interest margin to be slightly above 250 basis points and for operating costs to be about £7.6bn. Impairments will be a net credit and the return on tangible net equity will exceed 10% excluding a benefit from tax rate changes.