London pre-open: Stocks to gain ahead of expected BoE rate cut
London stocks were set to gain at the open on Thursday following a positive session on Wall Street, as investors eyed an expected rate cut by the Bank of England.
The FTSE 100 was called to open around 65 points higher.
Kathleen Brooks, research director at XTB, said: "The Bank of England is due to cut interest rates for the first time since November on Thursday. Interest rates are expected to be cut by 25 basis points to 4.5% from 4.75%. This move is widely expected, and we do not expect a shock decision from the BOE. This meeting will also include the BOE's latest forecasts for growth and inflation, and the BOE Governor's press conference.
"The market is fully priced for a rate cut from the BOE, with a 98% chance of a cut currently priced in by the GBP overnight index swaps market. What the BOE's updated forecasts tell us will determine if the OIS market is right to expect a further two cuts later this year, or if the market is underpricing the prospect of further cuts from the BOE."
The BoE announcement is due at midday.
In corporate news, engineering company IMI said it had been hit by a cyber attack on its computer systems.
In a short statement, it added that it "engaged external cyber security experts to investigate and contain the incident".
"In parallel, the company is taking the necessary steps to comply with our regulatory obligations. An update will be provided as and when appropriate."
Catering giant Compass delivered a strong start to its new financial year, with organic revenues rising by 9.2% in the first quarter ended 31 December, comfortably ahead of the full-year guidance for at least 7.5% growth.
However, the company warned that, if current foreign exchange rates persist for the remainder of the year, they would have a $558m negative impact on revenues, compared with a hit of just $69m last year.
Defence contractor Babcock upgraded full-year expectations on the back of double-digit organic growth in its nuclear operations and strong growth in the marine division.
The company said it now expects revenue in the year to 31 March to come in at £4.9bn compared with forecasts of £4.51bn - £4.78bn and underlying operating profit to beat the top end of a £327.1m - £339.7m range.
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