London pre-open: Stocks to nudge lower ahead of jobs data, Fed
London stocks were set to nudge lower at the open on Wednesday as investors eyed key UK jobs data and the latest rate announcement from the Federal Reserve.
The FTSE 100 was expected to open five points lower at 7,495.
The ILO unemployment rate, average earnings and claimant count are at 0930 GMT.
CMC Markets analyst Michael Hewson said: "The costs of last year’s premature rate cut and dovish forward guidance by the Bank of England continue to make themselves felt even now, over 12 months after the fact.
"The hope now is that wages data starts to make inroads into filling some of that gap, and there is growing evidence this may well be starting to happen. In some of the more recent data we’ve started to see increasing evidence that wages at the lower end of the income scale are rising at rates faster than inflation, as the effects of increases in the minimum and living wage help pull up wages at the bottom of the pay scale.
"In London wages have risen in excess of 4.5% while elsewhere in the country we’ve seen rises of up to 3.6%, for up to 150k workers. This should help pull up wages higher up the income scale, which in turn should now start to show up in the rolling 3 month average earnings numbers for October, which are expected to show an increase to 2.5% from 2.2%. This would then narrow the gap down to -0.5% and half of what it was in the middle of the summer.
"The latest unemployment numbers for the three month period of October are expected to see another decline in the headline rate from 4.3% to a new 42 year low of 4.2%."
Meanwhile, the Fed will make its rate announcement at 1900 GMT amid expectations of a 0.25% hike.
In corporate news, quality assurance provider Intertek Group has acquired Maryland, US-based security certification solutions provider Acumen Security for an undisclosed consideration, it announced.
The company described Acumen as a “leading provider” of product security certification and its service portfolio includes FIPS 140-2 validation, Common Criteria evaluation and related assurance services. It said Acumen was a trusted partner to many of the world's leading IT solutions providers, who relied on the company's security expertise to validate their existing products.
British American Tobacco is continuing to perform well with trading in line with expectations, it said in its pre-close trading update for the second half of the year on Wednesday. The FTSE 100 cigarette giant said it remained confident of another year of good earnings growth at constant currency, with continued market share growth, driven by its ‘global drive brands’.
It said second half organic operating profit growth would reflect the benefit from the phasing of volume shipments, offset by a more difficult pricing environment in some markets, adding that the Reynolds American integration was on track, with the businesses performing strongly, driven by good share growth and pricing.
Profits at Dixons Carphone crumpled in the first half as UK mobile customers held onto their handsets longer, though the retailer clung onto its market share and intends to maintain its interim dividend.
Group headline profit before tax of £61m was down 60% on the equivalent period last year, mostly due to an expected one-off £58m accounting change.
TUI Group said it expects to achieve at least 10% earnings growth in 2018 after reporting a healthy increase for last year.
The tour operator said there was strong demand for its holidays and that its UK business was holding up well despite uncertainty over Brexit.
Underlying earnings before interest, tax and amortisation rose 12% to €1.1bn (£970m) in the year to the end of September.