London pre-open: Stocks to fall as oil surges; BoE, ECB in focus

(Sharecast News) - London stocks were set to fall at the open on Thursday as oil prices surged, with all eyes on policy announcements from the Bank of England and European Central Bank as investors mulled a slew of US tech earnings.

The FTSE 100 was called to open 25 points lower. At 0730 BST, Brent crude was up 5.2% at $124.12 a barrel following a report the US military is due to brief president Donald Trump on potential action against Iran.

According to Axios, citing two sources with knowledge of the matter, the US Central Command (CENTCOM) will present Trump with plans for possible military action. Trump reportedly told Axios he is going to keep Iran under a naval blockade until the regime agrees to a deal that addresses US concerns about its nuclear program.

It was understood that CENTCOM has prepared a plan for a "short and powerful" wave of strikes on Iran in hopes of breaking the negotiating deadlock.

Axios said that after the strikes, which would likely include infrastructure targets, the US would press the regime to come back to the negotiating table and show more flexibility.

Trump told Axios he saw the blockade as "somewhat more effective than the bombing," and sources said he had yet to order any kinetic action as of Tuesday night.

Away from the war, investors were digesting results from four of the 'Magnificent Seven' across the pond, after Microsoft, Meta, Alphabet and Amazon reported overnight.

Kathleen Brooks, research director at XTB, said Alphabet was "the clear winner".

"Overall, the US's AI hyperscalers showed robust Q1 performance, Alphabet's profits soared by 81% on strong search performance and the fastest rate of cloud revenue growth since 2020," she said.

"Microsoft also beat Q1 revenue projects, with growth of more than 18% YoY, and Azure cloud growth was 40%. Amazon also exceeded revenue expectations, posting $181.5bn in sales, up from $155.7bn a year ago. Despite these strong results, there has been a divergence in stock price performance in after-market trading on Wednesday. Alphabet has surged by more than 6%, Meta is lower by more than 5%, Microsoft is down 2% and Amazon's share price has reversed earlier losses and is now higher by 1%."

The Fed's latest policy announcement was also in focus after it left rates on hold as widely expected, but with the highest level of dissent since 1992.

Looking ahead to the rest of the day, the BoE and ECB are both due to announce their latest policy decisions amid expectations they will stand pat at 3.75% and 2.0%, respectively.

In corporate news, consumer goods giant Unilever reconfirmed its outlook despite heightened macroeconomic activity, following a robust start to the year.

First-quarter turnover fell 3.3% to �12.6bn. However, underlying sales growth - which strips out the impact of currency fluctuations - was 3.8%. Volumes rose 2.9% and prices by 0.9%.

The owner of Dove, Lynx and Hellmann's said its leading power brands had performed particularly well, with broad-based momentum in emerging markets.

Rolls-Royce held guidance after making a strong start to the year across all three divisions as it moved quickly to mitigate the impact of the Iran war.

The military and civil supplier still expects �4.0bn-�4.2bn of underlying operating profit and �3.6bn-�3.8bn of free cash flow.

Elsewhere, DCC said it had rejected a 5,800p per share cash takeover proposal from US investment firms Energy Capital Partners and KKR.

"The board of DCC has carefully reviewed the proposal with its advisers and unanimously concluded that it fundamentally undervalues the company and its future prospects," it said.

As a result, the proposal was unanimously and unequivocally rejected on Tuesday.