London pre-open: Stocks seen lower ahead of inflation figures

Michele Maatouk WebFG News | 14 Nov, 2017 07:37 - Updated: 07:37 | | |

London Stock Exchange AIM LSE shares

London stocks were set to edge lower at the open on Tuesday as investors eyed some key inflation data.

The FTSE 100 was expected to open 10 points lower at 7,405, with the retail price index, producer price index and consumer price index all due at 0930 GMT.

CMC Markets analyst Michael Hewson said the October CPI number is expected to see inflation push above the 3% level for the first time since April 2012 and prompt the Governor of the Bank of England to write a letter to the Chancellor of the Exchequer to explain why the central bank has missed its inflation target of 2% by more than 1%.

“While inflation is expected to remain sticky the UK economy has still managed to post some fairly decent numbers in manufacturing as well as services in the past month or so, as the economy continues to prove itself fairly resilient to all the hyperbole uncertainty surrounding the ongoing Brexit discussions. Core CPI is expected to rise to 2.8%, an almost 5 year high.

“On the RPI measure prices are also expected to rise further and move above 4%, however there are signs that this may well be the high water mark for prices if recent falls in producer prices are any guide. These do appear to be showing signs of slowing down and given that they are forward looking indicators could well suggest that a slowdown in prices could start to come as we head towards 2018. Input prices are expected to drop back from 8.4% in September to 4.7% in October.”

In corporate news, Vodafone reported a 4.1% drop in group total revenue in its first half on Tuesday, to €23.1bn, which it said was primarily due to the deconsolidation of Vodafone Netherlands and foreign exchange movements. The FTSE 100 mobile and broadband operator said operating profit was still ahead 32.5% in the six months to 30 September at €2bn, with profit for the financial period of €1.2bn. Its board declared an interim dividend per share of 4.84 euro cents, up 2.1% year-on-year.

Aviva has reached agreement to acquire Irish insurer Friends First Life Assurance Company for a cash consideration of €130m. The FTSE 100 firm said that as a result of the acquisition, Aviva will become one of the largest composite insurers in Ireland, with its market share in life insurance increasing to 15%, alongside its existing leading 15% market share in general insurance.

Diversified engineer Smiths Group reported a drop in revenue for the first quarter on Tuesday but reiterated its expectations for the full year. In an update for the three months to 31 October, the company said revenue fell 2% on an underlying basis, mostly due to order timing. Nevertheless, management expectations for the full year remain unchanged, and the group expects to return to growth for FY2018.

Tesco's controversial takeover of wholesaler Booker has been given provisional clearance by the UK competition authority after an in-depth review. Britain's largest supermarket group first announced the £3.7bn addition on 27 January but the Competition & Markets Authority referred the deal to an in-depth 'level 2' probe as it felt the combination could damage competition in more than 350 local areas.

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