LONDON MARKETS: FTSE 100 Steady Ahead Of U.K. Spring Statement, U.S. Inflation Data

By Carla Mozee, MarketWatch

Antofagasta shares higher after earnings report

U.K. stocks held steady Tuesday, as investors displayed caution before the release of the U.K. Treasury's Spring Statement on public finances and an update on U.S. inflation, which has been a major driver of moves across global markets this year.

How markets are moving

The FTSE 100 index was down 2 points at 7,212.79, as only the oil and gas group moved higher. The basic materials sector was down the most. On Monday, the benchmark shed 0.1% (http://www.marketwatch.com/story/ftse-100-struggles-to-keep-grip-on-gains-2018-03-12), breaking a five-session win streak.

The pound bought $1.3887, up from $1.3848 late Friday in New York.

What's driving markets

The small moves on the benchmark FTSE 100 comes as investors wait for the British government's Spring Statement, which should include the Office for Budget Responsibility's economic growth forecasts and a cut in the estimate for how much the government will need to borrow in 2017-2018.

In addition, the OBR is expected to provide an estimate on how public finances will be affected by payments the U.K. will make to the European Union as a result of Brexit. Chancellor of the Exchequer Philip Hammond is scheduled to speak in parliament at 12:30 p.m. London time, or 8:30 a.m. Eastern Time.

Attention should then swing to the U.S. consumer price inflation report, also due at 8:30 a.m. Eastern Time or 12:30 p.m. London time. The CPI is forecast to increase 0.2% in February, less than half as much as the 0.5% gain in January, owing to lower gasoline prices. Global equity markets went into meltdown mode in February on concern that a faster pace of U.S. inflation would prompt the U.S. Federal Reserve to raise interest rates four times this year, instead of the three anticipated.

But some questions about the rate of inflation and the pace of rate hikes were raised by Friday's U.S. jobs report, which showed a subdued rate of wage growth.

Read:What to watch in the CPI report (http://www.marketwatch.com/story/what-to-watch-in-the-cpi-report-2018-03-12)

What strategists are saying

"We would expect the OBR's GDP growth projections to be a little more upbeat than in November. This should be supported by a small, positive change of view on productivity trends, after the OBR's downgrade last autumn," said Philip Shaw, chief economist at Investec, in a note.

"Better news on the public finances should be announced as well. After expecting borrowing to rise this year, the OBR should acknowledge that the deficit in 2017/18 should narrow to around GBP40 billion from GBP46 billion last year. This would be equivalent to 2% of GDP, the lowest shortfall since 2001/02," he said.

Stock movers

Antofagasta PLC (ANTO.LN) shares rose 2.1%, topping the FTSE 100, after the copper producer posted a more than fourfold rise in 2017 net profit (http://www.marketwatch.com/story/antofagasta-2017-profit-soars-on-copper-price-rise-2018-03-13).

Direct Line Insurance Group PLC (DLG.LN) shares fell 1.2% after Deutsche Bank downgraded the car and property insurer's rating to hold from buy.

"We believe Direct Line is now entering a transitory phase where the capital management story is well understood by investors (hence reflected in the current share price), whereas the benefits of positive strategic initiatives may still be a couple of years away from showing tangible benefit," wrote Deutsche Bank analysts.

(END) Dow Jones Newswires

March 13, 2018 05:05 ET (09:05 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.