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London open: Stocks subdued ahead of inflation data, EU summit
London stocks nudged a touch higher at the open on Wednesday as investors kept their powder dry ahead of key UK inflation data and the EU summit in Brussels.
At 0850 BST, the FTSE 100 was up 0.1% to 7,065.50 – off its six-month lows but still some way from the 7,500 plus levels seen at the start of the month – while the pound was down 0.2% against the dollar at 1.3160 and flat versus the euro at 1.1383.
Despite very strong cues from Wall Street, where well-received earnings from the banking sector, Johnson & Johnson and Netflix underpinned the tone overnight, London markets were pretty subdued as Theresa May headed to Brussels for the EU summit, with the UK and the EU still struggling to agree over the issue of the Irish border.
Spreadex analyst Connor Campbell said: “There’s good reason for the currency’s tentative open. Not only does the morning bring September’s UK inflation reading, expected to slip from 2.7% to 2.6% month-on-month, there is also the small matter of the Brexit-focused EU summit in Brussels.
“The weekend’s developments, namely surrounding the issue of the Irish border, have made the mood between May and her European Union counterparts decidedly frosty, with Donald Tusk claiming there was ‘no grounds for optimism’ that a deal can be struck on Wednesday. Any updates and comments as the day goes on could play a big role in how the pound performs.”
The retail price, producer price and consumer price indices are due at 0930 BST.
In corporate news, Pearson rallied as the education publisher said it remained on track to hit full year profit targets and that earnings per share would be boosted by a one-off tax benefit.
Segro rose as the real estate investment trust said new leasing deals were up 43% in the nine months to September.
Capita was in the green as the outsourcer extended and expanded an existing contract in Germany, while Hochschild Mining gained after lifting its annual gold production target.
On the downside, housebuilders fell after Crest Nicholson warned that full-year profits will be lower than expected, while margins will be below previous guidance as it announced the departure of its chief financial officer. Berkeley Group, Persimmon and Taylor Wimpey were among the worst performers, while Barratt Developments slipped despite a solid trading statement.
Wealth manager Rathbone Brothers nudged down after the release of its third-quarter results and IT infrastructure provider Softcat was under the cosh despite a seemingly solid update.
Mediclinic was under pressure after a trading update, with revenues from the Middle East lower than expected and lower admissions in South Africa due to fewer cases of pneumonia and bronchitis.
BHP Billiton was a touch weaker as it said strong Chinese demand helped to boost first-quarter iron ore production, but cut 2019 copper production forecasts by 3% to 1.62m-1.71m tonnes, citing reduced production at its Spence and Olympic Dam mines in Chile and Australia, respectively.
On the broker note front, Hargreaves Lansdown was the standout gainer after an upgrade to ‘market perform’ from ‘underperform’ at Bernstein and Sophos was boosted by an initiation at ‘buy’ from Liberum.
Crest Nicholson was downgraded to ‘hold’ at Liberum. Fevertree was initiated at ‘hold’ by Deutsche Bank. Go-Ahead was lifted to ‘buy’ by HSBC and Stagecoach was cut to ‘hold’.
