London pre-open: Stocks seen flat as investors eye Fed

(Sharecast News) - London stocks were set for a muted open on Tuesday following a negative close on Wall Street, as investors continued to eye the latest policy announcement from the Federal Reserve. The FTSE 100 was called to open flat at around 9,645.

Michael Brown, senior research strategist at Pepperstone, said: "As the FOMC begin their two-day policy meeting, focus has, almost solely, now pivoted to the commentary and guidance that will accompany the announcement of a 25bp fed funds rate cut tomorrow evening.

"Once more, anticipation ahead of the 'main event' of the week will likely lead to conviction being capped throughout today.

"That said, we do have the latest US JOLTS job openings data to get through, with openings expected at 7.15m in October, and with the September report to be released at the same time, having been delayed as a result of the government shutdown."

On home turf, data released earlier by the British Retail Consortium and KPMG showed that retail sales growth slowed to its lowest in six months in November as cautiousness ahead of the Autumn Budget resulted in an underwhelming Black Friday promotional period.

Total retail sales increased at a year-on-year rate of 1.4% last month, down from 1.6% in October and 2.3% in September.

The slowdown came despite inflation remaining elevated, reflecting "pre-Budget jitters among shoppers", according to Helen Dickinson, chief executive of the BRC.

Food sales were up 3.0% over last year, slowing slightly from the 3.% year-on-year growth seen in October.

Meanwhile, non-food sales rose just 0.1%, in line with the previous month, with 0.5% growth online offsetting a 0.3% decline in-store.

"Not unexpectedly, online dominated, with the proportion of non-food bought online reaching its highest level since 2022. Many consumers took advantage of promotions, with homeware and upholstery selling well ahead of festive hosting. Fashion lagged, especially with the mild first half of November dampening demand for winterwear," Dickinson said.

Linda Ellett, UK head of consumer within the retail and leisure division of KPMG, said macro concerns and rising household costs are continuing to hold back discretionary spend among consumers.

"Retailers will be hoping that Budget clarity has now provided more certainty for consumers about their ability to spend in the months ahead. And as the Christmas decorations go up, hopefully retail sales growth does too, ending 2025 with some festive cheer for the sector," Ellett said.

In corporate news, British American Tobacco reaffirmed guidance, boosted by strong demand in the US.

Updating on second-half trading, the blue chip said it expected group revenues to grow by around 2% at constant rates in the current year, despite a 2% decline in global tobacco industry volume.

It also reaffirmed guidance for 2026, and announced plans to return £1.3bn to shareholders in the next financial year.

Tadeu Marroco, chief executive, said he had been particularly pleased with the firm's performance in the US.

Defence group Chemring reported a sharp jump in annual profit as governments increased military spending amid the growing threat from Russia and dwindling support from the US under the Trump administration.

Pre-tax earnings for the year to 31 October surged 31% to £67.7m with Chemring's order book up by a fifth to £1.34bn as heightened geopolitical uncertainty drove increased expenditure across its target markets, particularly within NATO countries.

Mining giant BHP said it has entered into a $2bn infrastructure agreement with BlackRock subsidiary Global Infrastructure Partners in relation to its share of Western Australia Iron Ore's inland power network.

Under the agreement, a new trust entity will be set up, with BHP holding a 51% controlling stake and GIP providing $2bn in funding for the remaining 49%. BHP added that it will pay the entity a tariff linked to its share of WAIO's inland power over a 25‑year period.