London pre-open: Stocks to edge up ahead of inflation data
London stocks were set to edge up 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 seven points higher at 7,450.
Ipek Ozkardeskaya, senior market analyst at London Capital Group, said: "The second round of ballots confirmed that Boris Johnson is by far the favourite candidate to replace Theresa May as the Conservatives’ new leader and the UK’s next Prime Minister. Although Johnson’s leadership could jeopardise the past three years’ efforts to seal a suitable Brexit deal for both the UK and the European Union, the markets have already priced in the increased political uncertainties.
"Now, the attention shifts to the inflation figures due today, and the Bank of England’s (BoE) monetary policy decision due on Thursday. While the rising inflation in the UK opened a window of opportunity for a more hawkish policy stance, the actual dovish trend among the major central banks will likely force the BoE hawks to take a step back.
"In addition to this, today’s inflation data should confirm a softening in May. The British consumer price index is expected to have eased from 2.1% y-o-y to 2.0% in May, as the core inflation is seen at 1.6% y-o-y versus 1.8% printed a month earlier. A soft inflation read can only revive the BoE doves and increase the selling pressure on the pound."
The UK retail price index, consumer price index and producer price index are all due at 0930 BST.
In corporate news, first quarter like-for-like revenue per available room at Whitbread's Premier Inn division fell 6% as Brexit concerns and cost inflation continued to weigh.
The food and hotel company, which last year sold the Costa coffee chain to Coca-Cola for £3.9bn, said total UK like-for-like sales were 3.7% lower.
“The weaker business and leisure confidence has continued, as referenced at the start of the year, coinciding with ongoing political and economic uncertainty in the UK. This has impacted domestic hotel demand, particularly in the regional business market, where most Premier Inn hotels are located,” the company said in a trading update.
Berkeley Group posted a 20.7% decline in full-year pre-tax profits to reach £775.2m, which was nevertheless at the top end of market expectations, leaving it 18% ahead of its December 2016 plans for £3.0bn of profits for the five years ending on 30 April, despite the "extended macro and political uncertainty".
For over the year ahead, the luxury homebuilder guided towards a one third drop in pre-tax profits versus 2018/19, with return on equity anticipated to settle at about 15% thereafter. The company's net cash position at period end stood at £975.0m, which was 42% higher than a year before, although cash due on forward sales fell by roughly 18% to £1.8bn. The full-year dividend payout declined by £93.7m to £53.0m with the company opting instead to increase its share buybacks by £58.5m to £198.9m.
AstraZeneca announced three new drug approvals in Japan, first confirming that ‘Breztri Aerosphere’ (budesonide/glycopyrronium/ formoterol fumarate) has been approved there as a triple-combination therapy to relieve symptoms of chronic obstructive pulmonary disease (COPD).
The pharmaceuticals giant also said that ‘Lynparza’ (olaparib) had been approved as a maintenance treatment after first-line chemotherapy in patients with BRCA-mutated (BRCAm) advanced ovarian cancer, and that ‘Bevespi Aerosphere’ (glycopyrronium/formoterol fumarate) was approved as a fixed-dose, long-acting dual bronchodilator to relieve symptoms in patients with COPD.
Saga reported "early signs of progress" in the stabilisation of its retail broking operations and resilience in its cruise business, adding that overall trading for the past five months has been broadly on track.
However, the company continues to face strong headwinds in both travel and insurance as it implements a new strategy announced in April.