MARKET COMMENT: UK Stocks Set To Open Flat Ahead Of UK Inflation Data

Tue, 12th Nov 2013 07:49

LONDON (Alliance News) - UK equities are set to open close to flat Tuesday as investors react to German data just released, and await the release of UK inflation numbers at 0900 GMT.

Figures released by the Federal Statistical Office have shown Germany's EU harmonized inflation weakened in October, a slightly faster deceleration than forecast.

The harmonized index of consumer prices advanced 1.2% in October from the same month of last year, slightly slower than the 1.3% gain the government had expected. In September, prices had recorded a 1.6% increase. Month-on-month, the HICP decreased by 0.3% in October, more than the 0.2% fall forecast. In September, prices had remained unchanged month-on-month.

The statistical office also said that the country's year-on-year CPI eased to 1.2% in October from 1.4% in September, in line with expectations, according to FXStreet.com. The CPI declined by 0.2% month-on-month in October, again in line with estimates, having stayed flat in September.

Alongside this, data released by Destatis has revealed that Germany's wholesale trade prices have declined at the fastest rate since late 2009 in October. The wholesale price index fell 2.7% year-on-year, following a 2.2% drop in September. The index dropped for the third successive month and the rate of decline was the biggest since November 2009, when prices decreased 3.7%, the agency said.

"While concerns about falling prices appear to be raising concerns in Europe, there is no such concern in the UK, with the latest October CPI numbers expected to show a year-on-year drop to 2.5% from 2.7%," says Michael Hewson, chief market analyst at CMC Markets. The month-on-month figure is expected to come in at 0.3%.

UK retail prices are forecast to show a rise of 3%, slightly down from 3.2%, with a month-on-month rise of 0.4%.

IG indicates that the FTSE 100 will open flat at 6,729.0, while CMC Markets is calling the index to open fractionally higher, up 9 points at 6,737.

Also ahead in the data calendar Tuesday, Italian consumer price data is released at 0900 GMT, ahead of the much-anticipated UK CPI, PPI and RPI information at 0930 GMT. In the US, the Chicago Fed National Activity index is expected at 1330 GMT. Redbook index numbers are scheduled for 1355 GMT.

Alongside this, China's ruling Communist Party plans to issue a blueprint on Tuesday to guide its economic reforms over the next decade, state media said. At the conclusion of the four-day meeting, the party's Central Committee will "sketch a new blueprint for reform," says People's Daily, the party's official newspaper.

CitiFX Wire's Nishtha Asthana warns that "this has a huge potential to move markets. In the past, such meetings have been used to signal far-reaching changes in how China does business. The market is expecting some major reforms from the meeting."

In a busy day in the UK corporate calendar, blue-chips Vodafone, Babcock International and Land Securities have been joined by FTSE 250-listed BTG, John Menzies, Oxford Instruments, Synergy Health and TalkTalk, amongst others, in releasing interim results.

By James Kemp; jameskemp@alliancenews.com; @jamespkemp