London pre-open: Stocks seen higher after US gains; jobs data in focus

London stocks were set to rise at the open on Tuesday following a positive session on Wall Street, as investors mulled the latest UK jobs data.

The FTSE 100 was called to open around 25 points higher.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: “The S&P 500 hit its 46th record high of the year on Monday, defying the recent and uncomfortable combination of stronger-than-expected jobs and higher-than-expected inflation numbers that hint that the Federal Reserve (Fed) should slow down the pace of whatever policy easing plan it had in head a month ago.

“The index traded at 5871, Nvidia erased all the summer weakness and flirted with ATH levels as well after the company CEO Jensen Huang said that the next generation Blackwell chip – which suffered some delay – is now ‘in full production’ and that the demand for it ‘is insane’. Nvidia is probably not done surprising and thriving. The bad news is that we must wait one more month before finding out its Q3 results, but the good news is that the earnings from TSM will give a first hint on the strength of the upcoming numbers already this week.

“And speaking of surprising, the earnings season kicked off well for the big US banks that announced their earnings so far. And beyond banks, around 6% of the S&P500 companies revealed their earnings and nearly 80% reported a positive EPS surprise according to FactSet. And positive vibes could continue as we dive deeper into the earnings season. If nothing, analysts cut their earnings expectations for the Q3 gradually to around 4% growth, whereas this expectation was near 8% in summer. Yet the companies themselves have a guidance for about 16% growth in earnings. The gap hints that the actual earnings could easily beat estimates. And better-than-expected estimates is the valuations’ best friend.”

On home shores, figures released earlier by the Office for National Statistics showed that the unemployment rate unexpectedly fell in August, while wage growth slowed.

The unemployment rate fell to 4% in the three months to August, from 4.1% in the previous quarter.

Total pay, which includes bonuses, rose by 3.8%, marking the slowest pace of growth since November 2020.

In corporate news, housebuilder Bellway reported a slump in annual profits, reflecting weaker demand due to higher mortgage rates, but said its forward order book had increased as economic conditions eased.

The company said pre-tax profit for the year to July 31 fell 62% to £183.7m as completions slumped by a third to 7,654 homes.

Its forward order book at the end of September was 5,109 homes, up from 4,636 a year ago and had a value of £1.43bn compared with £1.23m in 2023.