LONDON MARKET EARLY CALL: Stocks Firm Ahead Of UK Inflation Numbers

LONDON (Alliance News) - UK stocks are set to open higher Tuesday ahead of a key UK inflation report, with investors looking for more clues for the timing of a Bank of England interest rate hike.

UK consumer, retail and producer price readings are to be released at 0930 BST. Economists expect the consumer index to remain flat year-on-year in July, matching June's reading. On a monthly basis the expectation is for the figure to decline 0.3% in July from flat in June. Inflation will remain under pressure following another collapse in commodity prices in the last month, with low oil prices in particular weighing on CPI.

"Rate hike expectations have already been pushed back to the second quarter of next year and a more prolonged period of no inflation is only going to push it further. More unexpected price declines today could encourage investors to further revise their rate hike forecasts today which could weigh on the pound, a move that would probably be welcomed at this stage," says Craig Erlam, senior market analyst at Oanda.

IG says futures indicate the FTSE 100 to open higher at 6,563.7. The index closed flat at 6,550.30 on Monday, having traded in a narrow range for most of the session but dropping sharply before recovering after a big miss by the New York Empire State Manufacturing index.

Wall Street recovered from a weak open on Monday. The DJIA closed up 0.4%, the S&P 500 ended up 0.5%, and the Nasdaq Composite closed up 0.9%.

In Asia Tuesday, the Nikkei in Tokyo is down 0.2%, the Hang Seng trades down 0.6% and the Shanghai Composite is down 3.5%.

In the UK corporate calendar, there are half-year results from housebuilder Persimmon, oil and gas service company John Wood Group, and oil and gas company Cairn Energy. There also are interims expected from FTSE Smallcap constituents Diverse Income Trust, John Menzies, Mears Group and Chime Communications.

In the economic calendar later in the day are US housing starts and building permits, both at 1330 BST.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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