London pre-open: Stocks seen lower ahead of ECB, US GDP

(Sharecast News) - London stocks were set to fall at the open on Thursday after disappointing results from Tesla and ahead of a rate announcement by the European Central Bank and US GDP data. The FTSE 100 was called to open 19 points lower at 7,508.

CMC Markets analyst Michael Hewson said: "Today's focus for European markets which are set to open slightly lower, is on the ECB and the press conference soon after with Christine Lagarde, where apart from questions on timelines about possible rate policy, Lagarde could face some questions a little closer to home amidst dissatisfaction over her leadership style from ECB staffers."

He added: "Markets currently have the ECB cutting rates 4 times this year in increments of 25bps, starting in June, although given the data we could get one in April.

"This contrasts with the market pricing up to 6 rate cuts from the Federal Reserve despite the US economy being magnitudes stronger than in Europe.

"No changes are expected today with the main ECB refinancing rate currently at 4.5%, however Q4 GDP due next week, and January CPI due on 1st February calls for a March/April rate cut could start to get louder in the weeks ahead, especially since PPI has been in deflation for the last 6 months."

The ECB rate announcement is due at 1315 GMT. Investors were also eyeing fourth-quarter US GDP figures and US initial jobless claims at 1330 GMT.

In corporate news, bootmaker Dr Martens held full-year guidance after third-quarter revenues slumped by a fifth, driven by a poor performance in the US and from its wholesale channel.

The company, which issued a profits warning in November, posted revenues of £267m for the last three months of 2023, down 21%.

"Trading in the quarter was volatile and we saw a softer December in line with trends across the industry. Whilst the consumer environment remains challenging, we are taking action to continue to grow our iconic brand and invest in our business. We remain confident in our product pipeline for autumn/winter 2024 and beyond," said chief executive Kenny Wilson.

"The guidance for full year constant-currency revenue decline of high single-digit percentage year-on-year, remains unchanged. All other guidance for 2024 also remains unchanged."

Dr Martens added that the stronger pound since the end of the first half would result in a £5m forex headwind if current exchange rates persist, along with a non-cash balance sheet translation charge of approximately £5m.

Consumer health group Haleon, the company behind Sensodyne toothpaste, Panadol and Advil painkillers, has announced it is selling the ChapStick brand for $430m.

The divestment, to Suave Brands Company, a portfolio company of Yellow Wood Partners, will also see Haleon receive a "passive minority interest" in the purchasing entity.

Haleon's chief executive Brian McNamara said ChapStick was no longer a "core focus" for the company and the sale is "consistent with Haleon being proactive in managing our portfolio, and being rigorous and disciplined where there are opportunities for divestment".