London pre-open: Stocks seen lower as investors eye BoE, ECB policy announcements
London stocks were set for a slightly weaker open on Thursday as investors digested a rate hike by the Federal Reserve and looked ahead to more policy decisions from the Bank of England and the European Central Bank.
The FTSE 100 was expected to open 16 points lower at 7,480.
On Wednesday, the Fed hiked rates by 25 basis points, as expected, marking the third increase this year. In addition, the US central bank projected three more rate hikes in each of 2018 and 2019.
UK retail sales are at 0930 GMT, while the BoE rate announcement is at 1200 GMT and the ECB policy announcement is at 1245 GMT.
The BoE is widely expected to stand pat on interest rates after last month's increase and there will be no press conference following the announcement this time.
CMC Markets analyst Michael Hewson said: "The UK central bank is unlikely to change its view of the UK economy so soon after last month’s inflation report, but the rise in CPI inflation to 3.1% earlier this week does vindicate the concern of some policymakers about the prospect of inflation starting to become entrenched. Given recent PMI data there is a risk that we could see a couple more months of CPI at around the 3% level, though wages do appear to be showing some signs of starting to tick higher.
"Today’s UK retail sales data for November are expected to pick up a little, from the 0.3% rise seen in October with a rise of 0.4% expected helped by some of the deals that were run in the lead-up to Black Friday at the end of last month."
The ECB is also expected to leave monetary policy unchanged, so investors will be eyeing President Mario Draghi's views on the eurozone economy.
Oanda analyst Craig Erlam said: "With the ECB having only announced a taper to its quantitative easing program at the last meeting, it’s extremely unlikely that further updates will come today and I doubt Draghi will make any promises regarding the end of bond buying from September. That said, with the economic recovery gathering momentum, Draghi is likely to be pushed on this and may offer small clues on the next steps, for example the timing of the first rate hike and how the central bank will approach raising rates and reducing its balance sheet. I don’t think we should expect too much though as Draghi detests being perceived to have committed to anything."
In corporate news, Bunzl said it was considering further acquisitions after the purchase of an industrial packaging company took its spending on takeovers this year to a record £600m.In a trading update the distribution and outsourcing group said it had bought Lightning Packaging, a UK supplier of boxes, tapes and other packaging products with annual revenue of £14m. It did not disclose the price.
Australia's competition regulator has warned that it is likely to block BP's proposed acquisition of Woolworths’ retail fuel business. BP management will consult with lawyers after the Australian Competition & Consumer Commission's decision as the oil giant believes it could sell off some of the outlets in order to avoid any competition issues.
Ocado reported strong but slightly slower sales growth in the fourth quarter as a lack of delivery drivers put the brakes on capacity, though previous falls in the online grocer's average basket size were arrested.
The FTSE 250 group generated revenue of £373.8m in the 14 weeks to 3 December, up 11.6% on the same period last year, which was a slowing from the 13.1% in the third quarter and 12% in the second.