LONDON (Alliance News) - UK stocks are set to open broadly flat Tuesday ahead of a key UK inflation report, with the market 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.
Ahead of the London open oil prices remain under pressure, with US benchmark West Texas Intermediate matching its recent six-and-a-half year low at USD41.61 a barrel, while Brent oil trades at USD48.46 a barrel.
"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 flat at 6,554.2. 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 closed down 0.3%, the Hang Seng trades down 0.6% and the Shanghai Composite is down 3.4%.
On the UK corporate front, FTSE 100-listed housebuilder Persimmon posted a 31% rise in first-half pretax profit as the company sold more houses at higher prices, driving its total revenue higher, and increased its gross margin substantially.
The group said its pretax profit for the six months to the end of June was GBP272.8 million, up from GBP208.9 million a year earlier, as the group's total revenue rose to GBP1.33 billion from GBP1.20 billion and its underlying operating margin rose to 20.5%, a 280 basis point rise year-on-year from 17.7%. The group said it sold 6,855 new homes in the half, up from 6,408, with the average selling price of those homes up by 4% to GBP194,378.
John Wood Group reported a fall in profit in the first half of 2015 as expected, but the company reaffirmed its commitment to grow the dividend and reiterated its full year outlook remains unchanged.
The oil engineering services company reported a expected fall in profit before tax and exceptional items of USD156.3 million in the first half of 2015, compared to a USD182.4 million profit a year earlier as revenue dropped to USD3.06 billion from USD3.80 billion. Earnings before interest, tax and amortisation came in at USD225.9 million from USD243.9 million.
Fellow FTSE 250-listed oil engineering services company Amec Foster Wheeler said it has won an extension on its project management consultancy contract for the UZ750 project in the Upper Zakum field in Abu Dhabi.
It said the contract has been awarded by the Zakum Development Co, which operates the oil field in a joint venture involving Abu Dhabi National Oil Co, US major ExxonMobil Inc and the Japan Oil Development Co Ltd. No financial details on the contract were disclosed.
Technology and outsourcing company Quindell said that the UK Financial Conduct Authority has opted to discontinue its investigation into the company in light of a separate investigation that has been launched by the Serious Fraud Office.
The FCA had been undertaking an investigation into the insurance technology and outsourcing company's accounts for 2013 and 2014, and on August 5 the SFO informed the company it had opened an investigation into its past business and accounting practices.
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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Wood Group (J) (WG.)
Persimmon (PSN)