London pre-open: Stocks seen down after inflation data, ahead of Fed

18th Sep 2024 07:36

(Sharecast News) - London stocks were set to fall at the open on Wednesday as investors mulled the latest UK inflation reading and looked ahead to a policy announcement from the US Federal Reserve.

The FTSE 100 was called to open down around 26 points.

Figures released earlier by the Office for National Statistics showed consumer price inflation was unchanged at 2.2% in the year to August, in line with expectations and above the BoE's 2% target.

Core CPI - which excludes energy, food, alcohol and tobacco - rose to 3.6% from 3.3% in July. This was a touch above expectations of 3.5%.

Ruth Gregory, deputy chief UK economist at Capital Economics, said: "Overall, a pause on interest rate cuts was already expected tomorrow and today's release cements that view.

"We continue to assume the next 25 basis point rate interest rate cut will take place in November and that rates will be cut at alternative BoE meetings until June."

Still to come, the Fed will make its latest policy announcement at 1900 BST.

Danske Bank said: "We expect a 25 basis point cut of the Fed Funds Rate target (to 5.00-5.25%). This morning markets price in a 65% probability for an even bigger 50bp rate cut.

"Even though the Fed will now initiate its rate cutting cycle, we do not expect changes to the pace of QT. We expect the updated rate projections to signal a total of 3x25bp rate cuts in 2024 (previously 1) followed by 6x25bp cuts in 2025 (previously 4)."

In corporate news, Legal & General Group said it had sold UK house builder CALA Group for £1.35bn to Ferguson Bidco, an entity owned by funds managed by Sixth Street Partners and Patron Capital.

The insurer said it would receive cash proceeds of £1.16bn, of which £500m will be paid at closing with the remaining consideration being paid over the next five years.

PZ Cussons reported a 10.6% drop in revenue to £527.9m for the year ended 31 May, with a significant impact from the devaluation of the Nigerian naira.

Despite that, like-for-like revenue grew by 4.4%, driven by price increases in Nigeria, although overall profit before tax fell 39.7% to £44.7m.

The company said it was continuing its strategic focus on portfolio transformation, including plans to sell its St Tropez business and potential divestment of its Africa operations, while also seeing positive revenue growth early in the new financial year.