London pre-open: Stocks seen lower amid earnings deluge

The FTSE 100 was called to open 25 points lower at 7,827.

CMC Markets analyst Michael Hewson said: “While tech earnings continue to beat expectations, the broader market has continued to underperform, and today’s European open looks set to be a negative one with today’s focus shifting to Amazon’s (NASDAQ:AMZN) numbers after the bell and the US Q1 GDP numbers.”

“Having seen the US consumer recover strongly in January with a retail sales surge of 3.2%, the edge has come off a little in recent months as consumer spending slowed in February and March, by -0.2% and -1% respectively.”

“The instability caused by the banking turmoil will also have affected economic output at the end of the quarter, although we probably won’t know the full extent of that until we get later revisions during May.”

“The strong labour market and resilience in wage growth seen in the first part of the quarter are likely to offer a strong personal consumption component.”

“Expectations are for the US economy to slow slightly from 2.6% in Q4 to 2%, while personal consumption is expected to rebound strongly from the 1% seen in Q4.”

“Weekly jobless claims are expected to come in at 248k, up slightly from 245k, with continuing claims set to post another 52-week high of 1,868k.”

In corporate news, Barclays (LON:BARC) said it was on track to meet full-year guidance as it posted a 16% jump in pre-tax profits driven by growth across all its businesses.

The bank said group income rose 11% to £7.2bn, with pre-tax profit coming in at £2.6bn, generating a group return on tangible equity of 15% and earnings per share of 11.3p.

Bad debt provisions increased to £524m from £141m reflecting higher US cards balances and the continuing normalisation anticipated in US cards delinquencies.

Income at the bank’s consumer, cards and payments division surged 47% to £1.3bn, thanks to rising credit card balances driven partly by its acquisition of a portfolio from retailer Gap (NYSE:GPS) last year.

Supermarket chain J Sainsbury (LON:SBRY) lifted guidance for the current fiscal year after posting a fall in 2022/23 profits.

The group posted an underlying profit before tax of £690m, down 5% and at the top end of the £630-690m guidance range, with the decline attributed to the annualisation of COVID-19-driven grocery volume and operating cost inflation, partially offset by operating cost savings and lower finance charges.

On a statutory basis, profits fell to £327m against £854m last year, impacted by non-cash asset impairments, a higher discount rate and one-off income from legal settlements in the prior year.

For the 2023-24 Sainsbury’s forecast profit of £640 -700m, ahead of an average forecast of £631m.