London pre-open: Stocks seen muted ahead of inflation data, Fed announcement

Wed 13 Jun 2018

LONDON (SHARECAST) - (Sharecast News) - London stocks were set for a muted open on Wednesday as investors eyed the latest UK inflation data and a policy announcement from the Federal Reserve.
The FTSE 100 was called to open two points higher at 7,705.

The Fed is due to make its latest policy announcement after the close of UK markets, at 1900 BST. With market participants expecting the central bank to hike rates by 25 basis points for the second time this year, the main event will be the quarterly economic projections and the press conference with chair Jerome Powell.

"The jury is still out whether the US central bank will hike interest rates in September and December or just December. The press conference could provide clues as to what the Fed will do at the back end of the year," said CMC Markets analyst David Madden.

Before that though, the main focus will be UK inflation data for May at 0930 BST .

The headline annual CPI rate is expected to rise to 2.5% from 2.4%, while the core CPI rate is seen holding steady at 2.1%.

"The British worker has been enjoying a rise in real income lately, as the average earnings have been outstripping the cost of living. Yesterday we saw average earnings grow at a slower pace, and a rise in the cost of living would be a double negative for consumers," said Madden.

In corporate news, Glencore's Katanga Mining subsidiary has settled a legal dispute with its state-owned joint venture partner in Democratic Republic of the Congo that threatened to dissolve Katanga's DRC operating subsidiary Kamoto Copper Company (KCC).

Katanga has agreed with its partner, La Générale des Carrières et des Mines (Gécamines), that $5.6bn (£4.2bn) of KCC's $9bn debt will be converted into new KCC equity. The effect is that, from 1 January 2018, KCC has $3.45bn of debt to KML Group.

British luxury brand Mulberry posted a drop in annual profit on the back of start-up costs for its operations in Asia, as it announced a new business agreement in South Korea.

In the year to 31 March 2018, reported pre-tax profit fell to £6.9m from £7.9m after accounting for the costs relating to Asia, but revenue edged up 1% to £169.7m. Retail sales rose 3%, with the UK broadly flat and international sales 20% higher.

Waste management company Biffa reported 10% growth in annual underlying profit and said it had taken action to cope with the "new norm" of tighter Chinese import regulations on recyclable commodities.

In the 53 weeks to end-March, the group generated £977.7m of revenue, up 8.4% with equal contributions from organic growth and acquisitions, feeding through to underlying EBITDA up 8.9% to £150m and underlying operating profit up 10% to £81.2m.

Independent video games developer and label Team17 announced that Overcooked 2, the sequel to the double BAFTA-winning cooking game in the "chaotic co-op" genre, would launch on 7 August on the Xbox One, PlayStation 4, Nintendo Switch and PC platforms.

The AIM-traded firm said the game was co-developed in partnership with indie developer Ghost Town Games, and the announcement of its launch was made at E3 - the industry conference currently being held in Los Angeles. The game was now available immediately for pre-order.
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