London pre-open: Stocks seen up ahead of busy interest rates week

(Sharecast News) - London stocks were set to rise at the open on Monday following losses at the end of last week, as investors eye a week of key rate announcements and the latest US inflation reading. The FTSE 100 was called to open 30 points higher at 7,592.

The Federal Reserve, European Central Bank and Bank of Japan are all due to make rate announcements this week.

CMC Markets analyst Michael Hewson said: "This week's central bank decisions could go a long way in determining how much further central banks are prepared to go before they can offer any insight into when they expect to stop raising rates.

"If the markets don't like what they hear, we could see a sharp move lower."

Last week, the Reserve Bank of Australia and the Bank of Canada both hiked interest rates.

Hewson said: "Last week's rate hikes have also shifted the narrative about the longevity of the current level of interest rates with markets now only realising that rate cuts aren't coming this year and may well have to wait until well into next year.

"Sticky core inflation is proving to be a rather intractable problem for central banks, and last week's hikes have got people thinking that a Fed "pause" this week may not be the slam dunk they think it is.

"With the European Central Bank all but certain to go with another 25bps this week, likely to be followed next week by the Swiss National Bank and the Bank of England, the Federal Reserve could well turn out to be an outlier."

In corporate news, Mike Ashley's Frasers Group said it has taken an 18.9% stake in electrical retailer AO World for £75m.

The owner of Sports Direct, House of Fraser and other retail clothing chains said it bought 109.4 million shares at 68p each.

"The investment is the culmination of productive talks over the last two years about establishing a strategic partnership," AO World said in a statement.

Frasers Group chief executive Michael Murray said AO "is a fantastic business with a clear strategy which is leading the market in online-only electricals".

"Through this investment, Frasers will benefit from AO's valuable know-how in electricals and two-man delivery, helping us to drive growth in our bulk equipment and homeware ranges. In turn, AO will have the opportunity to benefit from Frasers' expertise and ecosystem."