London pre-open: Stocks to edge up ahead of earnings deluge

(Sharecast News) - London stocks were set to edge higher on Thursday following a positive US close, as investors braced for a deluge of earnings news.
The FTSE 100 was called to open 14 points higher at 6,145.

Overnight, the Federal Reserve left interest rates unchanged, as expected, and signalled that policy would be kept loose well into next year.

CMC Markets analyst Michael Hewson said: "While the decision to keep rates unchanged was not unexpected, the Fed also went further in announcing that it would be extending its central bank and US dollar repo and swap lines until the end of March next year, as a precautionary measure to ensure the smooth functioning of financial markets. This helped weaken the US dollar further, sending it to new two year low against the euro, while gold prices set a new record close.

"The Fed's decision on this also appeared to be an acknowledgement that current events are likely to remain largely out of their hands, and dependent not only on the overall course of the virus, but also on any further fiscal action from US politicians, a factor which Fed chair Jay Powell made reference to in his post meeting press conference.

"US stocks also finished the session higher helped by the Fed's dovish message and this effect is likely to manifest itself into a similarly positive start for European stocks."

In corporate news, Lloyds Bank increased its provision for bad debts by £2.4bn in the second quarter as it braced for a "significant deterioration" in the economic outlook amid the coronavirus pandemic and swung to a heavy first-half loss.

That took impairment charges to £3.8bn in the first half, up from £579m in 2019, with the bank forecasting a full-year figure of between £4.5bn - £5.5bn.

The lender booked a pre-tax loss of £602m compared with a profit of £2.9bn a year ago. Net income fell 11% to £5.4bn.

"There have been early signs of recovery in the group's core markets, mainly in consumer spending and the housing market, but the outlook remains highly uncertain and the impact of lower rates and economic fragility will continue for at least the rest of the year," Lloyds said.

Standard Chartered increased bad loans provision to almost $1.6bn in the first half as it braced for the impact of the coronavirus pandemic across its economies.

The London-based bank on reported credit impairments of $611m in the second quarter, up from $176m a year ago and in addition to $956m reported in the first quarter.

Net profit fell 30% to $339m in the quarter, compared with $482m a year earlier.