London pre-open: Stocks to edge up ahead of jobs data, Fed announcement
London stocks were set to edge higher at the open on Wednesday as investors eyed key UK jobs data and the latest policy announcement from the Federal Reserve.
The FTSE 100 was called to open 11 points higher at 7,072.
Average earnings, the ILO unemployment rate and the claimant count rate are all due at 0930 GMT. In the US, the Fed's rate announcement is at 1800 GMT, along with a speech by chair Jerome Powell and the central bank's economic projections.
UK wage growth in the three months to January is expected to have increased 2.6%, highlighting the struggle of falling wages in real term faced by households, said Jasper Lawler, market analyst at London Capital Group.
"Yet when compared to February’s inflation print of 2.7% or 2.4% for core inflation, suddenly the picture is much more palatable for the UK consumer.
"Any signs of stronger than expected earnings growth is likely to send the pound comfortably back over $1.40 towards $1.4110. This would indicate that 'good' inflation is on the rise, as opposed the 'bad' pound devaluation, induced inflation that the BoE has been battling against since the Brexit referendum. But let’s not forget, wage growth has shown itself to be a tough nut to crack (just think US) so should it fail to materialise, it will almost certainly dampen rate hike expectations knocking some wind out of sterling. GBP/USD could fall back to $1.39."
As far as the Fed is concerned, market participants are pricing in a 25 basis points rate hike, so the main focus will be on the dot plot projections to see how many more rate increases are on the cards this year.
In corporate news, Kingfisher reported an 8% fall in annual profits on flat sales as chief executive Véronique Laury completed a significant second year of her five-year overhaul of the B&Q and Screwfix owner.
Sales of £11.7bn in the 12 months to 31 January were up almost 4% thanks to currency swings but down 0.3% at constant currencies or 0.7% lower on a like-for-like due to store closures.
Elsewhere, GKN branded suitor Melrose Industries a "novice" operator with no plan in the latest round of accusations between the companies locked in a hostile bid battle. The FTSE 100 engineering company published a series of rebuttals to what it described as misleading statements made by Melrose, which is trying to buy GKN against the will of GKN’s board.
Inhaled products design and development business Vectura Group announced its preliminary results for the year ended 31 December on Wednesday, posting full year reported revenue of £148m, which was in line with board expectations and down from 2016's full-year proforma revenue of £183.6m.
The company said 2017 reported revenue was lower due to reduced revenues from non-recurring sources of £16.6m in 2017 compared to £57.3m in the 2016 proforma. Vectura did see "strong" annual in-market net sales growth from its key products, with flutiform up 11.8% and Ultibro Breezhaler ahead 20.6%, both at constant exchange rates.