London pre-open: Stocks seen up after Friday's losses

(Sharecast News) - London stocks were set to rise at the open on Monday following heavy losses at the end of last week. The FTSE 100 was called to open up around 28 points.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "Last week marked the end of my myopia and the beginning of the end of the Federal Reserve's (Fed) tightening cycle. The Fed started lowering its rates by 50bp - a bold decision that raised many questions across investment communities regarding the necessity of a jumbo size cut while the US economy, though slowing, hasn't necessarily given signs of plunging toward recession. The idea here is to ensure a soft-landing but if, instead, the aggressive rate cut - and the message that it sent to the market that the Fed is on track to do more - revives the inflationary pressures, then we could see optimism fade quickly.

"This week, the US will reveal the latest PMI figures, the third estimate of its Q2 GDP growth and the core PCE index. The US economy is expected to have grown near 3%, with improving corporate profits but slowing price pressures. While the Fed's favourite gauge of inflation is expected to show signs of stabilization a touch above the 2% policy target. The combination of good growth and slowing price pressures could well boost optimism that the Fed will get the soft-landing right, and send the US stocks to fresh highs.

"A stronger-than-expected data could - maybe - revive concerns that inflation could come back very rapidly. But the good news is that it will take at least a few months before the Fed's policy loosening affects the inflation data, whereas the fact that the Fed has started loosening policy will temper the negative surprises.

"As such, we are certainly entering a sweet period with the Fed loosening before the bill comes in. US and European futures are preparing to start the week on a positive note."

On the UK macro front, the preliminary S&P Global/CIPS manufacturing and services PMIs for September are due at 0930 BST.

In corporate news, Rupert Murdoch's REA Group has taken its third tilt at Rightmove with an increased offer for the UK housing portal valuing it at £6.1bn.

REA's offer is worth 770p per Rightmove share, made up of 341p in cash and 0.0422 new REA shares. The first approach on 5 September of 705p per share, or £5.6bn, was rejected by Rightmove which said it "fundamentally" undervalued the company. On Friday the offer was sweetened by £300m.

AstraZeneca announced that a phase three trial with Daiichi Sankyo for datopotamab deruxtecan in metastatic HR-positive, HER2-low or negative breast cancer did not show a statistically significant improvement in overall survival compared to chemotherapy, although earlier results had indicated a benefit in progression-free survival and patient-reported outcomes.

The pharmaceuticals firm did report, however, that Fasenra had been recommended for approval in the EU for treating eosinophilic granulomatosis with polyangiitis (EGPA) based on a phase three trial that demonstrated that nearly 60% of patients achieved remission and 41% fully tapered off oral corticosteroids.