London pre-open: Stocks to fall as investors mull inflation data

(Sharecast News) - London stocks were set to fall at the open on Wednesday, taking their cue from a weak session on Wall Street after a hotter-than-expected inflation print, as investors digest the latest UK inflation numbers. The FTSE 100 was called to open 50 points lower at 7,335.

CMC Markets analyst Michael Hewson said: "Despite posting their best levels in over a fortnight yesterday, European markets plunged sharply in the afternoon session after US CPI inflation fell back less than expected in August, while core prices jumped sharply.

"The effect on US markets was even more brutal with the S&P 500 posting its biggest one day fall in over two years after US core CPI for August surged from 5.9% to 6.3%, and which is likely to translate into further weakness in European markets when we open again later this morning."

On home shores, figures from the Office for National Statistics showed that inflation eased to 9.9% in August from 10.1% in July, but remained close to a 40-year high. This was below consensus expectations for an increase to 10.2%.

Lower petrol and diesel prices were the main reason for the decline.

"A fall in the price of motor fuels made the largest downward contribution to the change in both the CPIH and CPI annual inflation rates between July and August 2022," the ONS said.

"Rising food prices made the largest, partially offsetting, upward contribution to the change in the rates."

In corporate news, mining giant Rio Tinto has formed a joint venture with China Baowu Steel Group to develop the Western Range iron ore project in Western Australia's Pilbara region.

Rio Tinto, which will take up a controlling 54% stake in the project, will invest $1.3bn to develop the mine, with Baowu putting in an additional $700.0m. Construction was forecast to begin in early 2023, while first production from the site was projected to take place in 2025.

Exploration and production firm Tullow Oil said that sales revenues and gross profits had grown in the six months ended 30 June as the group's turnaround gained momentum throughout the period.

Tullow Oil said interim sales revenues had risen from $727.0m to $846.0m, while gross profits almost doubled from $321.0m to $620.0m and pre-tax profits shot up from $93.0m to $264.0m.