FTSE 100 seen opening around 10,423 on Thursday

Improving consumer sentiment provided a modest boost to the outlook for the UK economy over the past month, reflecting the positive impact of lower energy prices. UK retail sales data came in at -42 points, outperforming market expectations and suggesting that the stabilisation trend seen in recent months remains intact. The data indicate that consumer confidence may be finding a floor after a prolonged period of pressure.

Investors, however, continue to favour defensive sectors and are likely to remain cautious ahead of the summer trading period. This preference has already become evident through the increased focus on real estate stocks within the FTSE 100 in recent sessions. While market momentum remains broadly supportive, there is also a growing awareness that valuations have become more demanding and that risks remain elevated. In many respects, the music is still playing, but the lights in the room have already been switched on.

Further direction for markets is expected from this afternoon's key US macroeconomic releases, which could provide additional insight into the strength of economic activity and the outlook for monetary policy.