London pre-open: Stocks to rise as inflation eases more than expected

London stocks were set to rise at the open on Wednesday following a positive session on Wall Street, and as data showed that UK inflation slowed more than expected in November.

The FTSE 100 was called to open 22 points higher at 7,660.

Figures released earlier by the Office for National Statistics showed that consumer price inflation eased to 3.9% in November from 4.6% in October. This marked the lowest reading since September 2021 and was below analysts’ expectations of 4.4%.

The ONS said the largest downward contributions came from transport, recreation and culture, and food and non-alcoholic beverages.

Ashley Webb, UK economist at Capital Economics, said: "Looking ahead, our forecast is that the recent downward trends in CPI and core inflation will stall over the next few months before starting to decline more decisively again in February.

"And the recent string of softer-than-expected wage and inflation data mean the Bank may not wait as long as our forecast of late in 2024 to cut rates."

In corporate news, Chile-based copper miner Antofagasta said it was going ahead with the $4.4bn construction of a second concentrator at its Centinela operation to boost production.

The concentrator is expected to produce an additional 170,000 tonnes of copper equivalent tonnes a year, comprising of 144,000 tonnes of copper production, 130,000 ounces of gold and 3,500 tonnes of molybdenum, with a 36-year mine life.

Construction is expected to commence after definitive project finance documents have been executed during the first quarter of 2024.

Anglo American said it is finally seeing signs of a rebalancing in the diamond market after De Beers' final tender of the year saw a pick-up in revenues following a huge slide in sales over 2023.

The value of rough diamond sales from its 10th sales cycle of 2023 amounted to $130m, up from $86m in cycle nine and $80m in cycle eight. However, that still remains more than two thirds lower than the $417m generated in the 10th sales cycle of 2022.

"As the end-of-year holiday season progresses, we are seeing signs that the diamond industry is regaining its balance between wholesale supply and demand," said De Beers chief executive Al Cook.

"Polished diamond prices look to have stabilised as inventory levels have decreased, though we expect improvements in rough diamond trading conditions to be gradual."