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London stocks were poised to rise at the start of trading on Friday, with a focus on Federal Reserve Chairman Jerome Powell's upcoming speech at Jackson Hole.
The FTSE 100 was forecasted to open approximately 35 points higher.
Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, predicted that Powell’s speech would likely temper expectations for substantial rate cuts. Ozkardeskaya suggested that the Fed is unlikely to implement significant rate reductions without clear evidence of severe economic downturns or market crises.
She noted that current market pricing reflects an anticipated cut of around 95 basis points from the Fed between September and year-end, implying frequent rate reductions and a substantial cut in at least one meeting. However, Ozkardeskaya indicated that such a scenario appears less probable. She advised that markets may need to adjust their expectations to reflect a more modest 75 basis point cut by year-end. The potential risk for market optimists is if the Fed begins cutting rates in September but then pauses, similar to the European Central Bank’s approach in July. This could result in a lower cut overall, potentially dampening risk appetite and strengthening the US dollar.
On the domestic front, a survey by GfK showed stable consumer confidence for August. The GfK Consumer Confidence Barometer remained at -13, consistent with July and an improvement from -25 in August of the previous year. While personal finance sentiment showed gains, economic expectations declined, marking the first drop in six months.
Significant improvements were noted in sentiment towards personal finances, with the relevant sub-index rising to +6, potentially influenced by recent Bank of England rate cuts. The major purchase index also improved, reflecting increased consumer confidence in making significant purchases.
In corporate news, Direct Line Insurance (LSE:DLG) reported a correction in its 2023 Solvency II own funds due to a reinsurance arrangement miscalculation. The revised year-end solvency capital ratio was adjusted from 197% to 188%, though it remains above the company's risk appetite range.
Evoke announced the acquisition of New Gambling Solutions (NGS), operator of Winner.ro, positioning it as the fourth-largest online betting and gaming operator in Romania. The €10 million transaction involves a 51% stake with an option to increase ownership to 100% after three years, aligning with Evoke's strategy to expand in high-growth, regulated markets.
