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London pre-open: Stocks seen higher ahead of inflation data

Tue, 13th Feb 2018 07:39

(ShareCast News) - London stocks were set for a firmer open on Tuesday following an upbeat session on Wall Street, although investors were likely to be a little cautious ahead of the release of key UK inflation data.

The FTSE 100 was called to open 19 points higher at 7,196, with the retail price index, producer price index and consumer price index all due at 0930 GMT.

CMC Markets analyst Michael Hewson said headline inflation is expected to start to slide back after the 3.1% peak seen in November.

"Headline CPI is predicted to slip back to 2.9% for January, however we could see an upside surprise given that January tends to be a month when travel fares see sizeable increases, rail fares being one such example, while commodity prices are also higher than a year ago. One plus point is that the pound is now over 12% higher against the US dollar than it was in mid-January last year, which should help in keeping a lid on rising prices.

"Core prices are predicted to rise to 2.6% from 2.5%, while producer input prices for January are expected to remain sticky with an expectation that they will fall back to 4.1% from 4.9%.

"The Bank of England will be hoping that UK wages show the sort of resilience shown by US wages at the most recent US employment report."

In corporate news, tour operator Tui jetted off to a strong start for its financial year with sales and underlying earnings both much improved on last year.

Turnover of 3.55bn in the three months ending 31 December was up 8.1% or 9.1% at constant currency rates, while losses before interest, tax, depreciation and amortisation of 24.9m was halved from the 60.3m loss a year ago.

BHP said it would book a $1.8bn charge due to cuts in the US corporate tax rate.

The miner said it would record a non-cash re-measurement of deferred taxes of $898m and a non-cash impairment of foreign tax credits $834m.

The tax reform will have a positive impact on the group's US attributable profits in the longer term mainly due to the lower corporate tax rate.

Computacenter posted the results of its tender offer, which was initially set out in a shareholder circular on 23 January and closed on 9 February.

The FTSE 250 company said a total of 44,089,779 ordinary shares were validly tendered, with the strike price determined to be 1170p.

As a result, 8,546,861 ordinary shares would be purchased at that price, for a total cost of 99.998m, representing approximately 6.97% of the issued share capital of the company.

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