London open: Focus on UK CPI, Fed's Yellen

Stocks began Tuesday's session moving lower, with traders in a defensive crouch ahead of key risk events scheduled for later in the day.

Without a doubt, the day's key event was to be the US central bank chief's testimony at 1500 GMT before the US Senate Banking Committee, though UK traders will be focused on inflation data due mid-morning.

As of 0823 GMT the Footsie was down by 0.23% or 16.71 points at 7,260.07.

For Michael Hewson, chief market analyst at CMC Markets UK: "With Fed chief Janet Yellen due on Capitol Hill later today to testify to US lawmakers, markets appear to be betting that she won’t say anything too substantive one way or the other on the US economy, playing the data dependence card and in the process keeping the Fed’s options open for a March rate rise."

Also weighing on sentiment perhaps at the start of trading was news that Donald Trump's national security adviser Michael Flynn had stepped down from his post overnight amid allegations of improper contacts with the Russian embassy in Washington DC before he took up his new position.

His resignation came as the new US administration was in the midst of preparations of key summits with other countries, beginning with Europe that same week.

Closer to home, Tuesday's other key event would be the January monthly inflation report from the Office for National Statistics, which economists expected would show consumer price inflation rising from 1.6% in December to 1.9% last month.

Hewson weighed in on that too, saying: "Today’s inflation data will once again reopen the debate as to the wisdom of the Bank of England’s emergency rate cut in August, particularly since inflationary pressures were already rising in the lead-up to that decision and the central bank easing policy served to amplify them.

"One of the more surprising features to come from the Bank of England’s recent quarterly inflation report was the reluctance of the Monetary Policy Committee to raise its inflation forecast from the current 2.8%, despite once again raising its growth forecast for 2017, this time by another 0.6% to 2%."

Acting as a backdrop, consumer prices in China picked up from a 2.1% year-on-year pace in December to 2.5% (consensus: 2.4%) in January - a 32-month high.

"Consumer and producer price inflation both accelerated last month. But we expect both to peak soon and think hopes for a sustained reflation in China will be disappointed," commented Julian Evans-Pritchard, China economist at Capital Economics.

Change underway at Rolls Royce

Rolls-Royce posted a record £4.6bn pre-tax loss but revealed better than expected underling profits and said its transformation programme was well underway with cost-cutting at the top end of expectations. For 2017 the engine maker said it expected "modest" performance improvements and targeted free cash flow to be "similar to 2016".

TUI’s first quarter loss narrowed and revenue grew as the Anglo-German travel group said this left it confident of growing underling earnings 10% for the full year. The company plans to make further disposals as part of its growth strategy, as on Monday TUI announced it would sell Travelopia, its portfolio of specialist travel brands to KKR for around £325m, and is talks with Etihad for the sale of TUI Fly.

Anglo American said its Kumba Iron Ore operation would report underlying earnings of $438m for the year ended 31 December 2016 compared with $238m a year earlier. The operation was put up for sale last year as part of a restructuring.

Retailer Next has announced that John Barton will be retiring as non-executive chairman and stepping down from the board on 1 August, to be succeeded by Michael Roney, the former chief executive of Bunzl. Barton, who became a member of the board in 2002, was appointed deputy chairman in 2004 and chairman in 2006. The company said he has made “an outstanding contribution” over the last 15 years and “his leadership, experience and wise counsel have been tremendously valuable over that time”.

Acacia Mining returned to profit in the final quarter of 2016 as it said 2017 gold production would increase to between 850,000-900,000 ounces at lower costs of $880-$920 per oz. The final dividend of 8.4 cents a share for a total dividend of 10.4 cents, was more than double 2015's 4.2 cents and came as fourth quarter pre-tax profits rose to $62m compared with a loss of $131.9m last year.

Productivity-enhancing instrumentation and controls company Spectris announced its full year results for the 12 months to 31 December on Tuesday, with 13% growth in reported sales to £1.35bn, though sales growth was only 1% at constant exchange rates, with a 2% like-for-like sales decline.The FTSE 250 firm’s adjusted operating profit improved 11% to £200.8m, though currency again had a major influence, with operating profit down 2% at constant exchange rates and off 6% on a like-for-like basis. Spectris’ board confirmed a 5% increase in the full-year dividend to 52p.

Market Movers

FTSE 100 (UKX) 7,256.52 -0.31%
FTSE 250 (MCX) 18,706.66 -0.28%
techMARK (TASX) 3,338.69 -0.30%

FTSE 100 - Risers

TUI AG Reg Shs (DI) (TUI) 1,181.00p 2.07%
Antofagasta (ANTO) 898.50p 1.70%
Capita (CPI) 521.00p 1.46%
BHP Billiton (BLT) 1,390.50p 0.76%
Fresnillo (FRES) 1,535.00p 0.72%
Convatec Group (CTEC) 240.60p 0.67%
Randgold Resources Ltd. (RRS) 7,455.00p 0.61%
Pearson (PSON) 654.50p 0.54%
Marks & Spencer Group (MKS) 336.70p 0.48%
Mediclinic International (MDC) 832.00p 0.42%

FTSE 100 - Fallers

Rolls-Royce Holdings (RR.) 725.50p -1.96%
AstraZeneca (AZN) 4,595.00p -1.19%
Anglo American (AAL) 1,393.00p -1.17%
CRH (CRH) 2,755.00p -1.08%
Hargreaves Lansdown (HL.) 1,379.00p -1.08%
Burberry Group (BRBY) 1,621.00p -0.98%
BAE Systems (BA.) 610.00p -0.97%
Taylor Wimpey (TW.) 174.20p -0.91%
Barratt Developments (BDEV) 509.00p -0.88%
Associated British Foods (ABF) 2,518.00p -0.87%

FTSE 250 - Risers

Acacia Mining (ACA) 495.60p 6.65%
Spectris (SXS) 2,488.00p 2.64%
Shawbrook Group (SHAW) 264.40p 2.16%
Drax Group (DRX) 386.60p 2.03%
Hochschild Mining (HOC) 275.30p 1.66%
Kaz Minerals (KAZ) 591.50p 1.11%
Virgin Money Holdings (UK) (VM.) 332.40p 1.03%
AO World (AO.) 160.90p 1.00%
Polymetal International (POLY) 992.00p 0.97%
Brown (N.) Group (BWNG) 225.10p 0.72%

FTSE 250 - Fallers

Mitchells & Butlers (MAB) 245.30p -4.29%
John Laing Group (JLG) 264.30p -2.83%
Ted Baker (TED) 2,790.00p -2.48%
Rank Group (RNK) 205.30p -2.42%
Greggs (GRG) 1,013.00p -1.94%
Keller Group (KLR) 870.00p -1.86%
SSP Group (SSPG) 403.20p -1.71%
Daejan Holdings (DJAN) 6,495.00p -1.59%
Millennium & Copthorne Hotels (MLC) 430.30p -1.51%
Greene King (GNK) 648.00p -1.44%