London pre-open: Stocks seen down as investors eye US inflation

(Sharecast News) - London stocks were set to fall at the open on Thursday as investors eye the latest US inflation data. The FTSE 100 was called to open 11 points lower at 6,815.

CMC Markets analyst Michael Hewson said: "Today's US CPI numbers for September aren't likely to alter the dial that much when it comes to a 75bps rate move in three weeks' time, given the way the US dollar reacted with respect to the higher-than-expected August numbers.

"Even though headline CPI slipped back to 8.3% from 8.5%., a surge in core prices saw a big move higher in the US dollar as well as yields, after core prices rose sharply from 5.9% to 6.3%, a bigger than expected increase.

"The big rise in core prices would appear to suggest that inflation is likely to be much stickier over the next few months that markets had originally been hoping, thus adding to the risk we could see the Federal Reserve not only be much more aggressive on rate hikes, but keep those rates higher for longer."

Hewson noted that Fed chair Jerome Powell has already gone on the record that the US central bank will keep at it until there is clear evidence that inflation is on a sustainable downward path, and while consumer price inflation is expected to fall again in September to 8.1%, core prices are expected to rise from 6.3% to 6.5%.

"It will take a sizeable miss on both numbers to the downside to alleviate the upward pressure on yields and downward pressure on stocks," said Hewson, adding that this was unlikely.

In corporate news, low-cost airline easyJet said it expected to report annual pre-tax losses of £170m to £190m as it flew 88% of pre-Covid capacity in the fourth quarter.

The company said it expected to fly around 20 million seats in Q1 of FY23, more than 30% up year on year with UK capacity during the peak travel periods, such as October half term and Christmas week, back to pre-pandemic levels.

Ladbrokes owner Entain said it was on track to post full-year 2022 net gaming revenue of more than $1.3bn as it reported a 2% jump in third-quarter NGR.

Chief executive officer Jette Nygaard-Andersen said: "Our business continues to perform well with good underlying momentum across the group, including in BetMGM.

"This illustrates the effectiveness of our growth strategy, the unique capabilities of the Entain platform, and the underlying strength of our diversified global business."