London pre-open: Stocks seen muted ahead of US inflation
London stocks were set for a muted open on Wednesday as investors eyed the latest US inflation report.
The FTSE 100 was called to open two points lower at 7,762.
US consumer price inflation data for April is due at 1330 BST.
CMC Markets analyst Michael Hewson said: "With the Federal Reserve having raised rates again last week by 25bps today’s April CPI numbers are the next key benchmark feeding into whether the next meeting will see the Federal Reserve hit the pause button and keep rates unchanged after several meetings of consecutive hikes.
"While headline CPI fell to 5% in March from 6% in February, the picture for core prices did little to offer encouragement that inflation would continue to fall sharply, and it is in this area which the Fed is keen for markets to focus their attention on.
"On the core measure in March, prices rose on an annual basis to 5.6% from 5.5%, putting core inflation above headline inflation for the first time since January 2021.
"It is this stickiness in core prices as well as the resilience in the US jobs market that is making the Fed’s job so difficult, even allowing for the fact we’ve seen the US central bank hike rates at every meeting over the last 12 months.
“Of course, if we start to see core prices plateau at the current level that might give weight to the argument that prices are close to peaking. The expectation for today’s inflation report is for headline CPI to remain steady at 5%, while core prices are forecast to slip back from 5.6% to 5.5%.
"Even if we don’t see a sharply weaker number today, we still have the May inflation and jobs numbers between now and the next Fed meeting, and there are grounds for optimism when it comes to lower prices given how US core PPI has been behaving in recent months, falling to 3.4% in March, having been as high as 9.6% a year ago."
In corporate news, holiday giant Tui reported narrower losses and an increase in revenue as travel rebounded from the Covid pandemic.
Second-quarter underlying losses before interest and tax came in at €242.4m, compared with a €330m loss a year ago.
Group revenue surged to €3.2bn, up from €2.1bn in 2002 "reflecting the strength of demand for our products in a restriction free travel environment" with sales above pre-pandemic levels at improved prices, Tui said.
Elsewhere, Melrose Industries said it was trading "materially ahead" of expectations, with significant growth in revenue, profit and margin being achieved, as it issued new guidance for the full year.
In the first four months of this year, revenue was up 19% on the same period a year earlier, with Engines showing the fastest momentum, up 28%, and Structures up 14%.