London pre-open: Stocks to slide after Wall Street losses; BoE eyed

(Sharecast News) - London stocks were set to slide at the open on Thursday following heavy losses on Wall Street, as investors mulled results from Meta and Microsoft and looked ahead to the latest policy announcement from the Bank of England.

The FTSE 100 was called to open down around 77 points.

Stocks in the US tanked on Wednesday after the Fed kept the funds rate unchanged at 3.5% to 3.75%, as expected, but with three policymakers having voted for a 25 basis points hike.

"This means that speculation about a hike will resurge in the coming weeks," said Rabobank. "We still think that the most likely outcome is that the Fed remains on hold through 2026. We expect the FOMC to talk extensively about the case for rate hikes, while ultimately refraining from taking action.

"However, the three dissents today indicate that the risk of a hike in the coming months has increased."

On home shores, the Bank of England is widely expected to leave Bank Rate unchanged at 3.75% when it makes its policy announcement at midday.

ING said the rise in energy prices poses a fresh dilemma for the BoE, but it still doesn't think the bar for a rate hike has been met and is expecting another 7-2 vote.

On the corporate front, there was a deluge of earnings releases for investors to sink their teeth into.

Lloyds Banking Group held annual guidance after a 23% jump in half-year profits driven by higher net interest income and announced a �1bn share buyback.

Pre-tax profit rose to �4.3bn in the six months to 30 June, benefiting from higher total income and controlled costs, which were partially offset by higher charges for operating lease depreciation and impairment.

Energy major Shell said it was launching a $3bn share buyback after more than doubling profits in the second quarter as oil prices soared and upstream production hit record levels in Brazil.

The company reported adjusted earnings of $9.84bn for the three months to 30 June, ahead of the $6.92bn recorded in the first quarter and the $4.26bn reported the year before. The results reflect "strong operational performance across the businesses despite Middle East outages, with record upstream production in Brazil and record refinery utilisation", the company said.

Aerospace firm RollsRoyce delivered another strong first-half performance, leading it to raise fullyear guidance, with the group saying its transformation programme continued to drive a sharp improvement in both its operational and financial performance.

Rolls-Royce said underlying operating profits had jumped 46% to �2.5bn in the six months ended 30 June, lifting margins to 22.5% as all three divisions - civil aerospace, defence and power systems - posted increased profitability. Free cash flow rose to �2.0bn, supported by stronger earnings and increased investment.

As a result of its H1 performance, RollsRoyce upgraded its FY26 guidance, with the firm now expecting �4.7bn to �4.9bn in underlying operating profits and �3.8bn to �4bn of free cash flow, up from previous ranges of �4.0bn to �4.2bn and �3.6bn to �3.8bn, respectively.