London pre-open: Stocks to nudge lower after China inflation data

London stocks were set to nudge down at the open on Wednesday as investors digest Chinese inflation figures.

The FTSE 100 was called to open six points lower at 7,089.

CMC Markets analyst Michael Hewson said: "This morning’s China inflation data for May is another example of rising inflationary pressure in the global economy. In February headline CPI came in at -0.2%, with today’s number coming in at 1.3%, up from 0.9% in April.

"In an even starker contrast, factory gate prices for May came in at 9%, a huge increase from where they were at the end of last year, when they were at -0.4%, and the highest since 2008. While some of the rise can be attributed to base effects due to the huge slide in commodity prices that we saw in March and April last year which saw PPI decline -3.7%, there is increasing evidence that various supply side issues are starting to create a situation where rather than being transitory, inflation pressures could become more persistent.

"It is certainly something Chinese business is becoming more concerned about, along with Chinese authorities given recent steps to curb the recent sharp rise in commodity prices.

"This is a situation that central bankers appear to be remarkably relaxed or complacent about, depending on which side of the fence you happen to be on."

Hewson said the European market open looks set to be another cautious one, with stocks set to pick up from where they left off on Tuesday, "drifting gradually higher on a lack of interest more than anything else, although the FTSE100 could well open lower".

In corporate news, Upper Crust owner SSP reported wider interim losses as Covid travel restrictions saw most of its outlets closed, but said it had seen an improvement in trading in the UK and North America since the end of March.

The company posted a pre-tax loss of £299.7m, compared with a £34m loss a year ago as the pandemic started to hit global travel. Revenue plunged 78.8% to £256.7m.