London pre-open: Stocks seen lower ahead of May speech, inflation data
Stocks in London were set to open a little lower on Tuesday as investors eyed the release of UK inflation data and a speech by Prime Minister Theresa May on her plans for Brexit.
The FTSE 100 was called to open down 12 points from Monday’s close at 7,315.
The UK producer price index, consumer price index and retail price index are due at 0930 GMT, while May’s speech is reported to be at 1145 GMT.
IG’s Joshua Mahony said: “Theresa May is caught between a rock and a hard place, where support for a soft Brexit is required for business confidence yet further talk of a hard Brexit helps strengthen our hand during trade negotiations. Ultimately, May has to show a willingness to take the hard Brexit approach to avoid single market access becoming the EU’s number one tool within trade negotiations.”
As far as the inflation figures are concerned, CMC Markets’ Michael Hewson said they are likely to show further evidence of rising inflation pressure, with the latest December CPI numbers expected to show a rise from 1.2% to 1.4%.
“This could well increase further in the January numbers when they are released next month given that it was 12 months ago that crude oil prices bottomed out at $27 a barrel and now they are double that.”
Core prices are expected to remain unchanged at 1.4%, while retail prices are expected to edge up to 2.3%.
In corporate news, Provident Financial said full year results would be in line with market expectations as the non-standard lender grew customer numbers 9% at its Vanquis Bank arm.
"I am pleased to report that each of our businesses continued to trade well through the final quarter of the year," said chief executive Peter Crook.
Big Tobacco consolidated further on Tuesday morning as British American Tobacco confirmed it was acquiring the remaining 57.8% of Reynolds American it does not already own in an agreed cash-and-shares offer worth $49.4bn.
The company said the transaction has been unanimously approved by the transaction committee of independent Reynolds directors established to evaluate the BAT offer, and has also been approved by the boards of Reynolds and BAT.
Mining giant Rio Tinto experienced a “strong” operational performance in 2016 with increases in iron ore, bauxite and aluminium production in the fourth quarter.
In 2017, Rio Tinto's share of production from its mining projects is expected to be between 48m to 50m tonnes of bauxite, 8m to 8.2m tonnes of alumina and 3.5 to 3.7m tonnes of aluminium.