London pre-opening: Shares larger after Powell feedback

London stocks were expected to rise on Thursday after Wall Street’s open rally after Fed Chair Jerome Powell suggested the pace of rate hikes could slow as early as this month.

The FTSE 100 should open 40 points higher at 7,613.

Danske Bank said: “Following four straight hikes in the Fed fund’s target rate this year, Fed Chair Jerome Powell yesterday indicated that the forthcoming December hike will be on a smaller scale of 50 basis points.

“Powell reiterated the importance of risk management in setting Fed policy. While this rhetoric was previously used in the context of the risk of not tightening enough, it has now been used in the context of the risk of over-toning. The Fed’s confidence in cutting inflation appears to have increased and Powell expressed cautious optimism about the prospects for a soft landing for the US economy.”

On home shores, investors will be pondering the latest data from retail consultancy Springboard and the British Retail Consortium, which showed November’s footfall was boosted by Black Friday, although it is well below pre-pandemic levels.

Visitor attendance increased 4.3% year-on-year in the four weeks ended November 26.

However, once the effects of Black Friday were removed, the rise was closer to 2.5%. Headline growth has also slowed for four straight months since rising 15.6% in July.

On high streets, footfall rose 5.6% – after a jump of 7.8% in October – while in malls it rose 5% and in retail parks it rose 0.7%.

However, compared to the same month in 2019, the overall footfall decreased by 11.1%, after having decreased by 9.8% in September compared to the three-year comparison.

Rising inflation and higher interest rates have weighed on consumer confidence and prepared retailers for a difficult Christmas as squeezed households rein in spending.

In company news, component manufacturers essence said it had bought Wixroyd Groupa UK supplier of industrial parts to mechanical engineering, for an initial £29.5m, with a further £7m potentially payable on a deferred earn-out basis.

Elsewhere, Rotork said it had appointed Dorothy Thompson as an independent non-executive director and chairman-elect.

Thompson is joining the board effective immediately and will succeed Martin Lamb as chairman when he resigns after nine years on the board at the April 28, 2023 AGM.