London pre-open: Flat start expected as earnings flood in

(Sharecast News) - UK stocks are expected to open flat on Thursday, holding close to the record highs seen earlier in the week, as investors digested a barrage of corporate earnings and awaited some key economic data.

The FTSE 100 is tipped to open around Wednesday's closing level of 8,040.38, marginally below the current all-time closing high of 8,044.81 reached on Tuesday.

A negative reaction to seemingly strong results from Meta after the closing bell in New York was weighing on sentiment in London, as investors continue to question sky-high valuations following the strong performance of tech stocks so far this year.

"So far, we observe that the high expectations have played tricks on stock valuations and the first set of earnings reactions warn that even strong results from Big Tech may not suffice to send their stock prices higher - if we start seeing growth expectations level out (I am looking at you Microsoft and Nvidia)," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Markets will be keeping their eyes on economic data on Thursday, with the first reading of US gross domestic product for the first quarter. Consensus is that the economy expanded at a quarterly annualised pace of 2.5%, down on 3.4% at the end of 2023.

Ozkardeskaya said: "The macroeconomic landscape is complex, with investors balancing between robust GDP growth and high earnings expectations for the Big Tech companies, all while considering the fading expectations for a Federal Reserve's (Fed) rate cut. A strong GDP reading would suggest that the US economy is sufficiently strong to support corporate earnings, but it could also delay expectations for a Fed rate cut."

Back in London, in corporate news, Anglo American confirmed late on Wednesday that it had received an unsolicited non-binding and highly conditional all-share takeover proposal from Australia's BHP Group. The London-listed miner, which did not disclose any financial details, said it was reviewing the proposal.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "The buyout offer from BHP, the world's largest publicly listed miner, for Anglo American, won't just shake up the mining industry, but will send a fresh chill through the City of London.

"There are concerns that if the deal goes through it could be the tip of the iceberg and more giants could leave the exchange. It comes hot on the heels of speculation that Shell might up sticks and leave for New York, rumours that Ocado may be considering leaving for the Big Apple, and follows the crushing disappointment of home-grown chip designer Arm choosing the Nasdaq over the FTSE 100."

Meanwhile, Barclays Bank reported a 12% fall in first-quarter profit on lower income as customers shopped around for better savings rates. Pre-tax profit for the first three months of the year fell to £2.2bn from £2.6bn a year earlier and slightly better than its own consensus forecast of £2.195. Group income fell 4% to £7bn, while net interest margin - the difference between what the bank charges for loans and savings - fell to 3.09% from 3.18%.