London pre-open: Stocks seen flat; inflation falls more than expected

(Sharecast News) - London stocks were set for a flat open on Wednesday as investors mulled the latest UK inflation data and looked ahead to a policy announcement from the US Federal Reserve. Figures released earlier by the Office for National Statistics showed that inflation fell a little more than expected in February, to its lowest level since September 2021.

The consumer price index declined to 3.4% from 4% in January, versus expectations for a drop to 3.5%.

ONS chief economist Grant Fitzner said: "Food prices were the main driver of the fall, with prices almost unchanged this year compared to a large rise last year, while restaurant and cafe prices also slowed."

Core CPI - which excludes energy, food, alcohol and tobacco - rose 4.5% in the 12 months to February, down from 5.1% the month before.

Paul Dales, chief UK economist at Capital Economics, said the easing in inflation "probably won't make the Bank of England sound any more dovish when it leaves interest rates at 5.25% tomorrow".

"But our view that inflation will fall below 2% in April and then ease towards 1% suggests the BoE may have to start cutting rates in the summer and reduce them to 3.00% next year."

In corporate news, Johnson Matthey said it was selling its medical device components business to Montagu Private Equity for $700m (£550m).

The business makes parts for medical device manufacturers globally with a focus on precious metal alloys and nitinol. It operates manufacturing sites in the US, Mexico, and Australia.

Johnson Matthey said it had now finished the divestment programme announced in May 2022, bringing aggregate net proceeds from sales to "significantly more" than our target of £300m.

Prudential said it was "increasingly confident" in meeting its long-term targets after a strong set of results for 2023, with new business profits rising by almost a half on the back of its ongoing strategic shift to Asian and African markets.

The insurance giant reported new business profit of $3.13bn, up 45% year-on-year, helping the company to swing to an IFRS profit after tax of $1.71bn, compared with a loss of $1.0bn in 2022.

Computacenter reported a record year in its final results , with revenue up 6.9% at £6.92bn and adjusted profit before tax increasing 5.1% to £278m, driven by strong growth in both technology sourcing and services.

The FTSE 250 company described a robust operational performance across its geographic diversity, with notable profit increases in Germany and North America, as it invested £28.1m in strategic initiatives to enhance future growth and productivity.

Looking ahead, Computacenter anticipated further progress in 2024, expecting growth to be more pronounced in the second half of the year due to more challenging comparisons in the first half.