London pre-open: Stocks to gain ahead of BoE announcement

(Sharecast News) - London stocks were set to rise at the open on Thursday as investors eyed the latest policy announcement from the Bank of England and mulled the Federal Reserve's decision to hikes rates by 25 basis points, as expected.

The FTSE 100 was called to open around 15 points higher.

Danske Bank noted that Fed chairman Kevin Warsh highlighted that he and the monetary policy committee still see monetary policy as accommodating growth.

"The new 2026 dot points to one more hike, in line with consensus and our expectation, while the 2027 median signals no further tightening, although eight participants still see rates rising to 4.25-4.50%, consistent with our call," Danske said. "Growth was revised slightly higher for both this year and next, while inflation expectations were broadly unchanged. The statement was largely unchanged, with only a small addition noting that domestic spending has been resilient, and there were no changes to balance sheet policy as expected.

"The risk assessment was hawkish, as no participants now see risks tilted towards weaker GDP growth or labour markets, allowing the Fed to focus more clearly on upside inflation risks, which nearly all participants continue to highlight."

On home turf, the BoE is widely expected to stand pat on interest rates at 3.75% when it announces it decision at midday.

Kathleen Brooks, research director at XTB, expects a hawkish hold. "While we had a dovish hike from the Federal Reserve last night, we could get a hawkish hold from the BoE today," she said. "We expect Andrew Bailey will shift his rhetoric in today's press conference. After the July meeting, the governor tried to steer markets away from the prospect of a near term rate hike. We do not think that he can do this today."

Brooks said interest rate futures markets are pricing in four rate hikes by the end of next year, with a 25bp hike in November looking increasingly likely.

In corporate news, retailer Next delivered a materially betterthanexpected first half, prompting a £12m upgrade to its fullyear profit guidance and reinforcing confidence in its margin trajectory.

Next said fullprice sales rose 7.7% in the six months ended 1 August, taking total sales to £3.28bn, while total sales including markdowns climbed 8.9% to £3.54bn.

Pretax profits rose 10.5% to £569m, with net margins improving 0.3ppt to 16.1%, helped by higher boughtin gross margins, warehousing efficiencies and profitable digital marketing.

Galliford Try announced the launch of a £15m share buyback as it hailed a strong full-year performance, with profit ahead of market expectations.

In the year to 30 June, adjusted pre-tax profit rose 24.2% to £55.9m, with revenue up 3% at £1.9bn. Galliford said revenue was driven by a strong performance in Highways and a successful transition to AMP8 in Environment.