London pre-open: Stocks seen up after Fed minutes

Pre-open Market Report
06:35, 8th April 2021

(Sharecast News) - London stocks were set to rise at the open on Thursday after the Federal Reserve signalled it will keep monetary policy loose.
The FTSE 100 was called to open 22 points higher at 6,907.

CMC Markets analyst Michael Hewson said: "The minutes from the March meeting showed that while Fed officials seemed happy with the direction of travel of the US economy, they wanted to see much clearer evidence of further progress before dialling back on the stimulus button.

"This adherence to what the Fed now calls 'outcome-based guidance' is all part and parcel of the US central bank's new policy of not reacting to perceptions of a direction of travel, but waiting until both goals of higher inflation and full employment has been achieved.

"While this is all well and good for now with US 10-year yields retreating from their recent highs it should be remembered that last night's minutes came before last week's bumper payrolls report and very positive ISM updates.

"These reports bode well for further strength in Q2, and while the Fed wants to give the impression of a central bank that is prepared to be patient, waiting too long also presents dangers."

On the data front, Markit's construction PMI for March is due at 0930 BST.

In corporate news, homewares group Dunelm reported a 16.8% fall in third quarter sales, reflecting the impact of the latest national Covid lockdown, adding that it expected to finish the year "modestly ahead" of expectations.

The company said total sales fell to £236.6m in the three months to March 27 as the pandemic shuttered all its stores, although declines were offset by a rise in online shopping, which now represented 92.4% of the total figure, up 70 points on 2020.

Dunelm said it the current range of pre-tax profit estimates was £120m - £125m.

Johnson Matthey said operating performance in the year to the end of March would be around the top end of market expectations as it announced a strategic review of its health business. Consensus for annual operating profit is £469m with a range of £405m to £502m.

The company said it benefited from stronger demand and tight cost control in the second half.

Anglo American announced the demerger of its thermal coal operations in South Africa on Thursday, subject to the approval of shareholders.

The mining giant said the separation would take place through the transfer of its thermal coal operations in the country to a new holding company, Thungela Resources, the demerger of the Thungela shares to shareholders, and the listing of those shares in Johannesburg and London.

It said it would provide Thungela with an initial cash injection of ZAR 2.5bn (£124.95m), and further contingent capital support until the end of 2022 if thermal coal prices in South African rand fall below a certain threshold.

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The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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