(Alliance News) - Stocks in London are called higher on Wednesday, ahead of US inflation data.
The US consumer price index is released at 1330 BST.
According to FXStreet-cited marked consensus, on an annual basis, the headline inflation figure is expected to cool to 3.1% in June from 4.0% in May. The core figure - which excludes food and energy - is expected to ease to 5.0% from 5.3%.
"Unfortunately, it won't be enough to prevent the Federal Reserve from further rate hikes, because the further fall in headline inflation to 3% is due to a favourable base effect on energy prices, while core inflation is expected to remain sticky at around the 5% mark - still more than twice the Fed's 2% policy target," said Swissquote Bank senior analyst Ipek Ozkardeskaya.
The pound continued to extend its recent highs, nearing the USD1.30 mark. This follows Tuesday's red-hot wage inflation data, which pushed up expectations for interest rate hikes from the Bank of England.
The pound's strength is likely to hold back the FTSE 100 somewhat, given many of its large constituents earn in dollars.
In early UK company news, the Bank of England said the UK's major banks would be resilient to a "severe stress scenario". JD Wetherspoon said recent trading was ahead of last year, and the same period before the pandemic. Shoe Zone upgraded annual profit expectations after an "exceptional" month of trading.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 22.8 points, 0.3%, at 7,305.32
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Hang Seng: up 0.9% at 18,825.49
Nikkei 225: closed down 0.8% at 31,943.93
S&P/ASX 200: closed up 0.4% at 7,135.70
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DJIA: closed up rose 317.02 points, 0.9%, at 34,261.42
S&P 500: closed up 0.7% at 4,439.26
Nasdaq Composite: closed up 0.6% at 13,760.70
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EUR: up at USD1.1033 (USD1.0987)
GBP: up at USD1.2962 (USD1.2890)
USD: down at JPY139.45 (JPY140.66)
Gold: up at USD1,938.98 per ounce (USD1,931.42)
Oil (Brent): up at USD79.48 a barrel (USD79.28)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
10:00 EDT Canada interest rate announcement
10:00 CEST EU long term interest rates statistics
07:00 EDT US MBA weekly mortgage applications survey
08:30 EDT US CPI
13:10 EDT US Fed Atlanta President Raphael Bostic speaks
14:00 EDT US Federal Reserve Beige Book
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The Bank of England announced the results of its most recent stress test. "UK banks would be resilient to a severe stress scenario that incorporated persistently higher advanced-economy inflation, increasing global interest rates, deep and simultaneous recessions in the UK and global economies with materially higher unemployment, and sharp falls in asset prices," the BoE said. This reflects the "resilience" built up by banks in recent years, it added.
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UK Chancellor Jeremy Hunt took questions from consumer expert Martin Lewis on his ITV show, as he defended the prime minister's previous use of the phrase "hold our nerve" amid rising interest rates. He said: "I think the prime minister's comments was taken out of context. It was never advice for an individual person making a decision about their mortgage. He was really saying what our approach as a government is… and to say we shouldn't be defected from the course of action that we know will work." Asked if more practical help could be coming, he pointed to ongoing work by the Financial Conduct Authority looking into how rising interest rates can be passed onto savers.
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BROKER RATING CHANGES
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Deutsche Bank cuts International Consolidated Airlines to 'hold' (buy) - price target 165 (200) pence
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UBS raises AstraZeneca to 'buy' (neutral) - price target 13,000 (12,500) pence
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RBC cuts Bunzl to 'underperform' (sector perform) - price target 2,550 (2,850) pence
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COMPANIES - FTSE 100
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Two ads for Ladbrokes, which is owned by Entain, have been banned for "strongly" appealing to under-18s by featuring well-known Premier League managers. The bookmaker told the Advertising Standards Authority it has taken steps to ensure that such content will be reviewed more thoroughly to ensure compliance with advertising rules. Outlining its reason for banning the ads, the ASA said a very significant proportion of under-18s participate frequently in football.
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COMPANIES - FTSE 250
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JD Wetherspoon said it expects profit for its soon-to-conclude financial year to be in line with market expectations. The pub chain said like-for-like sales in the first 10 weeks of its final quarter were up 11% on the same period of pre-pandemic financial 2019. Year-to-date sales were 7.4% ahead of the pre-pandemic comparators. On the previous year, like-for-like sales were up 12% in the final quarter. It also sought to clarify that recent disposals of pubs were not a "money raising exercise", but were mostly a result of having another Wetherspoon pub nearby. Looking ahead to the next financial year, it expects an "improved outcome", due to lower expectations for cost increases.
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International Distributions Services said late Tuesday members of the Communication Workers Union have backed a deal on pay and changes to working practices. The owner of Royal Mail said 76% of eligible CWU members voted in favour of the three-year agreement, bringing months of industrial action and disruption to UK postal services to an end. IDS said the agreement provides Royal Mail with a platform for the next phase of stabilising the business whilst continuing to drive efficiencies and change.
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OTHER COMPANIES
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Shoe Zone said it saw an "exceptional" month of sales since its early June update. The shoe retailer said trading "significantly exceeded" management's expectations, with volumes seeing a double digit rise on the previous year. Margins also improved thanks to lower container rates and favourable foreign exchange rates, which management expects to continue. It now expects adjusted pretax profit for the financial year ending October 2 to be no less than GBP13.5 million. In June, it had guided for GBP10.5 million. It brought in GBP11.2 million in adjusted pretax profit in financial 2022.
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Budget airline Ryanair has resigned from the UK Aviation Council and branded it as a "talking shop" which does not deliver benefits or reform for the sector or passengers. Ryanair's chief executive Michael O'Leary accused the organisation, led by Parliamentary Under-Secretary of State in the Department for Transport Charlotte Vere, of being "useless and ineffective" on a range of issues in recent months. The council was set up to bring industry and government together to help the UK retain its spot as one of the world's strongest aviation sectors.
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Tharisa said its platinum group metal production declined for the first nine months of its financial year as it grappled with depressed prices and low volumes. The Cyprus-headquartered platinum miner reported a 15% drop in PGM output to 114,000 ounces for the nine months that ended June 30 from 133,900 ounces in the same period last year. Year-on-year, PGM production fell by 12% to 37,000 ounces in the third quarter, compared to 42,100 ounces in the corresponding quarter last year. But PGM output rose by 7.8% to 37,000 ounces in the first quarter from 34,300 ounces in the second quarter. The company warned that PGM output will remain subdued for the remainder of the financial year ending September 30 as it focuses on what it calls mining flexibility for sustainable reef operations.
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By Elizabeth Winter, Alliance News senior markets reporter
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