London pre-open: Stocks to edge up; BP in focus

Sharecast - The FTSE 100 was called to open nine points higher at 7,845.

CMC Markets analyst Michael Hewson said: "European markets took a step back yesterday in the aftermath of Friday’s bumper US payrolls continued to reverberate through the market, with the FTSE 100 also retreating from its record highs on Friday.

"Hawkish talk from the likes of ECB governing council member Robert Holzmann, followed by the Bank of England’s Catherine Mann saw the move higher in bond yields that we saw on Friday, accelerate further yesterday, further undermining market expectations of potential rate cuts by year end.

"In reality these expectations were always wishful thinking given how resilient core CPI prices already appear to be, it’s just a pity that it took a blowout US payrolls report and a sharp rebound in US services activity in January to ram home that message.

"Nonetheless there still appear to be those who are holding on to the hope that we can still see a sharp decline in headline inflation that will result in central banks being forced to cut rates by year end."

Investors were digesting industry data showing that UK retail sales growth slowed last month as the festive boost faded.

According to the latest BRC-KPMG Retail Sales Monitor, total sales rose 4.2% year-on-year in January, or by 3.9% on a like-for-like basis.

It was a marked slowdown on January 2022, when retail sales strengthened 11.9% on both a total and like-for-like sales basis. It was also down on December, when total sales rose 6.9% and underlying sales by 6.5%.

Helen Dickinson, chief executive of the British Retail Consortium, said: "As Christmas cheer subsided, retailers felt the January blues as sales growth slowed.

"Many retailers discounted heavily to entice consumer spend, and while there were bargains to be had in the January sales, retailers continue to be hit by lower margins and falling volumes.

"The coming months will continue to be challenging for retailers and their customers. Consumer confidence remains stubbornly low and looming rises in household bills and mortgages mean discretionary spending will remain weak."

Food sales increased 7.9% in the three months to January on a like-for-like basis, while non-food sales rose 2.9%.

In equity markets, BP (LON:BP) more than doubled annual profits to a record $27.6bn as it cashed in on soaring gas prices, fuelling more calls for the government to change windfall tax arrangements on energy companies as consumers face a 40% rise in household bills in April.

The full-year result compares with $12.8bn a year earlier. In the final three months of 2022 underlying replacement cost profit - its preferred measure - came in at $4.80bn, missing estimates of $5.04bn and well below $8.15bn in the third quarter.

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BP's results follow those from rival Shell (LON:RDSa), which last week posted record yearly profits of almost $40bn.

Manufacturing company Morgan Advanced Materials said that it was still "managing the consequences" of a cyber security incident after having detected unauthorised activity on its network back in January.

The FTSE 250 group said a "small number of systems" had proven "irrecoverable" and that it was also accelerating the implementation of a new cloud-based enterprise resource planning solution at the affected sites.

Exceptional costs associated with the incident were said to potentially amount to approximately £8.0m-12.0m, comprising specialist professional fees, as well as costs associated with recovering a number of systems

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