Stocks called flat ahead of UK CPI, BoE

(Alliance News) - Stocks in London are set to open flat on Wednesday, with all eyes on UK inflation data due shortly.

IG says futures indicate the FTSE 100 to open up 2.3 points at 7,571.61 on Wednesday. The index of London large-caps closed down 19.17 points, or 0.3% at 7,569.31 on Tuesday.

The pound was stronger before UK inflation data at 0700 BST, which will set the stage for the Bank of England's interest rate decision on Thursday. The annual consumer price index is expected to cool to 8.4% in May from 8.7% in April.

Sterling was quoted at USD1.2759 early Wednesday, higher than USD1.2743 at the London equities close on Tuesday.

"Today's UK CPI numbers could make tomorrow's rate decision a much less complicated decision than it might be, especially if the numbers show a clear direction of travel when it comes to a slowing of price pressures. Nonetheless, whatever today's inflation numbers are, we still expect to see a 25 [basis point] rate hike tomorrow, however what we won't want to see is another upside surprise given recent volatility in short term gilt yields," said CMC Markets' Michael Hewson.

In April, CPI cooled by less than expected, and there was an upside surprise to core inflation, which accelerated to 6.8% - the highest level since 1990.

Inflation in the UK is proving stickier than in other major economies, with the headline rate in May having cooled to 6.1% in the eurozone, and 4.0% in the US.

The euro traded at USD1.0915, slightly higher than USD1.0909. Against the yen, the dollar was quoted at JPY141.84, up versus JPY141.26.

In the US on Tuesday, Wall Street ended in the red, with the Dow Jones Industrial Average down 0.7%, the S&P 500 down 0.5% and the Nasdaq Composite down 0.2%.

In Asia on Wednesday, the Nikkei 225 index in Tokyo was up 0.7%. In China, the Shanghai Composite was down 0.7%, while the Hang Seng index in Hong Kong was down 2.2%. The S&P/ASX 200 in Sydney was down 0.4%.

Gold was quoted at USD1,935.53 an ounce early Wednesday, flat from USD1,935.21 on Tuesday.

Brent oil was trading at USD76.31 a barrel, higher than USD74.86.

In Wednesday's UK corporate calendar, there are full-year results from Halfords, Esken and Berkeley.

In addition to UK consumer and producer price inflation data, the economic calendar has UK house price data at 0930 BST. US Federal Reserve Chair Jerome Powell will testify in front of Congress later in the day.

By Elizabeth Winter, Alliance News senior markets reporter

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