London open: Stocks inch higher ahead of August CPI data

London stocks edged up at the start of trading, taking their cue from gains overnight on Wall Street, on the back of dovish remarks from a top US central bank official.

As of 0813 BST the FTSE 100 was higher by 13.31 points at 6,714.21.

Speaking to the Chicago Council on Monday evening, US Federal Reserve Governor Lael Brainard said that there was no rush to move ahead on raising rates, or in her more abstruse words, that "asymmetry" in risks "counsels prudence in the removal of policy accommodation".

CMC Markets’ Michael Hewson commented: “Despite all the recent softness in both stock and bond markets in recent days over concern about a more hawkish Federal Reserve the fact remains that a Fed rate rise this month still remains a fairly low 22% probability.

“Though yesterday’s decline in European markets may have been a direct result of Friday’s sharp US selloff, today’s higher European open is set to come about as a result of last night’s sharp rebound in US markets after permanent Fed member Lael Brainard reinforced earlier comments from non-voting member, and Minneapolis Fed President Neal Kashkari that there was no rush to move ahead on raising rates, pulling US stocks sharply off their intraday lows."

Brainard warned that with inflationary pressure continuing to remain benign, against a backdrop of slowing ISM data and continued global uncertainty, this "counsels prudence in the removal of policy accommodation" ahead of the central bank's blackout period ahead of next week’s policy meeting.

Also overnight, Chinese industrial output and retail sales figures for August came in ahead of economists´ forecasts.

Production from the country´s industrial sector grew by 6.3% year-on-year (consensus: 6.2%), while retail sales accelerated from a 10.2% year-on-year pace to 10.6% (consenus: 10.2%).

"The upshot is that today’s data fits with our long-running view that the delayed impact of earlier policy easing means that a stronger second half to this year is likely," Julian Evans-Pritchard, China economist at Capital Economics said in a research note sent to clients.

On the data front, UK CPI, RPI and PPI are all due at 0930 BST.

Headline CPI was expected to accelerate from a 0.6% year-on-year pace in July to 0.7%, with the core rate rising from 1.3% to 1.4% alongside it, with a further pick-up expected in the months ahead as the weakness in sterling fed through into companies' pricing decisions.

Consumer price inflation in Germany on the other hand was steady at 0.4% over the year in August, data released by the Federal Office of Statistics before the start of trading showed, but the core rate - which strips out food and energy - slowed from 1.3% to 1.2%.

European Central Bank president Mario Draghi was scheduled to deliver a speech at 1000 BST.

In corporate news, internet and telephone based insurer Esure plans to demerge financial services comparison website Gocompare.com from the company.

The FTSE 250 company said the demerger has the potential to enhance business growth, performance and shareholder value for the website, after a strategic review. Analysts see a potential value for GoCompare of between £400m and £650m.

Ocado claimed its best quarterly volume growth in four years, although a slight acceleration in group revenue growth in the third quarter thanks to the Morrisons deal masked a sight slowdown in own-brand sales.

Average order size also continued its decline and there remained "sustained and continuing margin pressure", said chief executive Tim Steiner.

Sports, fashion and outdoor brand retailer JD Sports Fashion posted its interim results for the 26 weeks to 30 July on Tuesday, with revenue up 20% to £970.57m compared to the first half of last year.

The firm reported a gross profit margin of 48.1%, ahead of the 47.4% margin last year, with operating profit before exceptional items improving 63% to £77.65m.

Profit before tax rose 73% to £77.41m, with basic earnings per ordinary share 69% higher than a year ago at 29.83p.

JD’s board declared an interim dividend of 1.25p per share, just ahead of the 1.2p payout announced at the 2015 interim results.

CYBG, the holding company of the Clydesdale and Yorkshire Bank, was lower in early trade despite announcing that has hit its targets for the first year since flotation and upped its guidance for the next three years thanks to bigger cost cuts.

The FTSE 250 bank said it expects the promised double-digit return on tangible equity will arrive one year earlier than planned, by September 2019, and now expects in the same year to deliver mid-single-digit annual loan growth.

Market Movers

FTSE 100 (UKX) 6,719.57 0.28%
FTSE 250 (MCX) 17,784.58 0.31%
techMARK (TASX) 3,457.20 0.42%

FTSE 100 - Risers

Dixons Carphone (DC.) 378.80p 1.64%
Berkeley Group Holdings (The) (BKG) 2,665.00p 1.41%
Ashtead Group (AHT) 1,234.00p 1.23%
Shire Plc (SHP) 4,805.00p 1.16%
Barratt Developments (BDEV) 491.00p 1.13%
Persimmon (PSN) 1,815.00p 1.11%
Coca-Cola HBC AG (CDI) (CCH) 1,647.00p 1.10%
WPP (WPP) 1,768.00p 1.09%
Carnival (CCL) 3,407.00p 1.04%
International Consolidated Airlines Group SA (CDI) (IAG) 421.20p 0.98%

FTSE 100 - Fallers

Associated British Foods (ABF) 2,759.00p -1.99%
Intu Properties (INTU) 291.80p -1.22%
BHP Billiton (BLT) 979.00p -1.21%
easyJet (EZJ) 1,141.00p -0.95%
Rio Tinto (RIO) 2,278.50p -0.70%
Royal Dutch Shell 'A' (RDSA) 1,851.00p -0.32%
Tesco (TSCO) 162.85p -0.28%
Anglo American (AAL) 817.30p -0.27%
HSBC Holdings (HSBA) 564.30p -0.23%
London Stock Exchange Group (LSE) 2,660.00p -0.11%

FTSE 250 - Risers

JD Sports Fashion (JD.) 1,436.00p 7.73%
Allied Minds (ALM) 330.50p 3.22%
Cairn Energy (CNE) 191.50p 2.74%
Morgan Advanced Materials (MGAM) 294.30p 2.19%
CMC Markets (CMCX) 234.40p 2.05%
NCC Group (NCC) 332.30p 1.96%
NMC Health (NMC) 1,357.00p 1.95%
Man Group (EMG) 118.90p 1.71%
Hochschild Mining (HOC) 268.30p 1.71%
International Personal Finance (IPF) 281.80p 1.66%

FTSE 250 - Fallers

Ocado Group (OCDO) 303.50p -5.75%
CYBG (CYBG) 260.00p -4.38%
Marshalls (MSLH) 290.40p -2.71%
Genus (GNS) 1,875.00p -2.60%
Spectris (SXS) 1,892.00p -2.02%
Amec Foster Wheeler (AMFW) 545.50p -1.45%
Tullett Prebon (TLPR) 372.60p -1.22%
Metro Bank (MTRO) 2,721.00p -1.16%
Barr (A.G.) (BAG) 499.00p -0.99%
Renishaw (RSW) 2,600.00p -0.73%