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

London stocks were set to fall at the open on Wednesday as investors eyed key UK inflation data and the latest policy announcement from the Federal Reserve.

The FTSE 100 was called to open 10 points lower at 7,310.

On the data front, producer price inflation, retail price inflation and consumer price inflation are all due at 0930 BST.

CMC Markets analyst Michael Hewson said: "Last week UK wages rose at their fastest rate for 11 years, rising 3.8% in the three months to July, which when combined with unemployment being at 45-year lows shows that, despite all the doom and gloom which accompanied the slowdown in Q2, real wages are once again heading back to levels last seen before the 2016 Brexit referendum.

"The release of CPI inflation numbers for August could well also offer some further good news on the consumer front, if as expected headline CPI falls back sharply from 2.1% to 1.9%, while core prices are expected to come in at 1.8%, down slightly from 1.9%. These forecasts seem slightly counterintuitive when set against the recent decline in the value of the pound to multi year lows last month, however the effect of the recent fall in sterling may well come out in the wash as we head into the end of the year.”

As far as the Fed is concerned, he said it seems indisputable that the US central bank won’t cut by another 25 basis points. "However the bigger story will be in how it manages its message without appearing even more divided than it was in July, against a backdrop of an oil price spike, which if sustained could see inflation move higher.

"Signalling further cuts in the teeth of a possible oil price shock would not be a wise move.

In corporate news, half year profits at DIY retailer Kingfisher fell on Brexit worries and the move to a low-price strategy at its French Castorama business as the company warned of a “mixed” full-year outlook.

Like-for-like sales fell 1.8% to £5.9bn with growth in Screwfix, Poland and Romania offset by B&Q in the and France as pre-tax profits came in 12.5% lower at £245m.

Medical products and technologies provider ConvaTec Group has signed an agreement to purchase the assets of Southlake Medical Supplies - a Texas-based provider of catheter-related supplies - for an undisclosed consideration.

The FTSE 250 company said that for the year ended 31 December, Southlake delivered revenues of around $5m (£4m). It said the acquisition was expected to close on 30 September, subject to usual formalities.

AstraZeneca will fully manage the development, manufacture and commercialisation of irritable bowel syndrome treatment Linzess in China, Hong Kong and Macau after amending a 2012 agreement with Ironwood Pharmaceuticals.

The pharmaceutical giant will pay Ironwood $35m over the next five years and up to $90m in milestone payments depending on the achievement of sales targets.