London pre-open: Stocks to rise ahead of unemployment data
London stocks were predicted to rise 20 points on Wednesday ahead of UK labour market data and after US stocks rose overnight in the wake of unexpectedly hawkish comments from Federal Reserve chair Janet Yellen.
After the inflation numbers on Tuesday, the first focus will be on the unemployment and wages data.
"We know from yesterday's CPI reading that inflation has picked up steam and it is important in this context that wages are keeping up with inflation," said analyst Naeem Aslam at Think Markets.
"We need to see the slack in the UK's economy diminishing and this could just push the wage number to 3%."
The consensus is forecasting average earnings will stay put at 2.8% including bonuses, or 2.7% excluding.
Yellen, who will testify before the House Financial Services Committee later on Wednesday, said that a "rate increase will likely be appropriate in upcoming meetings" if the economic recovery stays on course, which saw the dollar rally and US stocks hit new records.
"Although the Chair did not mention whether the increase would come in March or June, the hawkish tone revived the risk-on traders in New York," said analyst Ipek Ozkardeskaya at London Capital Group.
Overnight, the market gave a 34% probability for a Fed rate hike in March, 73.5% probability for June.
On UK stocks, Qinetiq, the defence technology specialist, said on Wednesday that underlying trading was as expected during the third quarter and that its aspirations for the full year to end-March were unchanged.
The FTSE 250 group said revenue under contract at its smaller division, Global Products, was slightly ahead of this time last year thanks to a greater flow of orders at the North America business
FTSE 250 financial broker NEX Group posted a rise in revenue for the third quarter as Donald Trump’s US presidential win lifted trading activity, although the company warned it was still too early to assume that a period of subdued market conditions had come to an end.
In the quarter to the end of December, revenue was up 11% on a like-for-like constant currency basis, and 26% higher on a LFL reported basis.