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London pre-open: Stocks seen lower as investors eye jobs data
London stocks were set for a weaker open on Wednesday, taking their cue from a negative close on Wall Street as investors eyed key UK jobs data.
The FTSE 100 was called to open 22 points lower at 7,224.
UK average earnings, the claimant count and the ILO unemployment rate are due at 0930 GMT, while Bank of England governor Mark Carney is due to make a speech at 1415 GMT. In the US, the latest FOMC minutes are out at 1900 GMT.
London Capital Group analyst Jasper Lawler said: "Expectations are for earnings growth to remain constant in the three months to December at 2.5%. Given that inflation is elevated at 3%, wage growth data takes on an even more important role in the eyes of the market. As inflation moved higher following the weakening of the pound, post Brexit referendum, wage growth hasn't kept pace. This means that wages have actually been falling in real terms, squeezing the UK consumer, which in turn is leading to a slowdown in spending.
"Negative real earnings growth is a key factor as to why the BoE has shown caution over raising interest rates. Hiking too quickly can actually dampen wage growth further, the opposite effect of what the central bank is looking for. Therefor investors will be watching the figures carefully to see whether the squeeze on the consumer is increasing or receding."
Jasper said that should wages surprise on the upside, the possibility of the BoE raising rates in spring - which currently stands at 65% - will increase. This would support GBP/USD and send it back over$1.40 towards resistance at $1.4025.
In corporate news, Lloyds Banking Group announced a £1bn share buyback and increased its annual dividend by a fifth as the bank reported full-year profit short of expectations.
Pre-tax profit for the year to the end of December rose 24% to £5.3bn, less than the £5.7bn average analyst forecast. Underlying profit rose 8% to £8.5bn, slightly below expectations for £8.6bn.
Lloyds said it would buy back up to £1bn of shares to increase capital returns to investors. The bank also announced a 20% increase in the full-year dividend - an important measure for its army of small shareholders.
Housebuilder Barratt Developments posted its interim results on Wednesday, reporting strong operational and financial performance driven by customer demand.
The 100 company remained the UK's largest housebuilder, with total completions for the six month period to 31 December standing at 7,324 plots, while it also saw good growth in profit before tax, up 6.8% to £342.7m with return on capital employed improving 1.3 percentage points to 28.3%.
Glencore declared a $2.9bn dividend to be paid out in two equal instalments in 2018 after profits surged higher and it looked confidently to the future.
The FTSE 100 commodities giant, which had already provided a detailed financial and production guidance update in December and earlier this month, confirmed the numbers investors still awaited: two $0.20 dividends to be paid in May and September.