London pre-open: Stocks to fall amid recession fears
London stocks were set to fall at the open on Monday as recession fears continue to weigh on sentiment.
The FTSE 100 was called to open 28 points lower at 6,988.
CMC Markets analyst Michael Hewson said: "As we start a new week and the mixed finish last week, European markets look set to start the week on the back foot.
"At the end of last month there had been some optimism that the US economy might be able to achieve some form of soft landing. This prompted a sharp decline in US treasury yields and a rebound in US markets from their lows, as markets started to price in the prospect of a rate pause in September.
"The May CPI numbers upended that mindset quite abruptly, sending yields sharply higher, and stock markets back down again, a trend that was exacerbated by a policy pivot by the Federal Reserve, as well as the Swiss National Bank last week.
"Not only did the US central bank hike rates by 75bps but more surprisingly the SNB hiked rates as well, choosing to hike by 50bps and move its headline rate from -0.75% to -0.25%.
"Last week’s events appear to have prompted a sharp re-evaluation by central banks that far from being a temporary phenomenon that inflation is becoming more entrenched, it is starting to be much more persistent than originally thought, and that radical action is needed to tackle it."
In corporate news, low-cost airline easyJet said it was "consolidating" flights this summer and faced higher-than-expected costs as a result of staff shortages across the industry that has led to travel chaos at most British airports.
The company said it expects fourth-quarter capacity to be around 90% of pre-Covid pandemic levels.
Food processing company Associated British Foods said recent trading had been in line with expectations, with revenues up across all of the group's key verticals due to both price hikes aimed at recovering input cost inflation and a marked volume increase in its ingredients division.
Associated British Foods posted a 32% increase in group revenues to £.3.03bn for the three months ended 28 May, with a 24% improvement in ingredients revenue leading the way. The FTSE 100-listed firm also highlighted that all of its Primark stores traded during the period, compared to the same time in 2021 when most stores were closed until the middle of April.