London pre-open: Stocks to fall ahead of US inflation data

by | Nov 10, 2021

London stocks were set to fall at the open on Wednesday as investors eye the latest US inflation reading.
The FTSE 100 was called to open 14 points lower at 7,260.

CMC Markets analyst Michael Hewson said: “As we look ahead to this morning’s European open, the focus remains very much on company earnings, against a backdrop of rising prices, with apprehension rising that the inflation genie still has some way to go in terms of further upward pressure, as we look ahead to this afternoon’s latest US CPI numbers for October.

“Asia markets have seen a bit of a dive after Chinese PPI prices rose more than expected again in October, this time, pushing up to 13.5%, well above expectations of 12.2%, and herein lies the worry.

“While official CPI measures appear to be absorbing the worst of the price rises, PPI measures aren’t, begging the question as to how long these can be absorbed by companies in their margins, or consumers in their wallets.

“Despite the continued resilience shown in yesterday’s US PPI numbers, and the increases seen in last week’s ISM prices paid numbers, the last few months US CPI numbers have shown signs of stabilisation, and may well have peaked, assuming you believe what the numbers are showing.”

In corporate news, food and clothing retailer Marks & Spencer said annual profits would be ahead of expectations as interim earnings rose above pre-pandemic levels.

The company said full-year profit before tax and adjusting items would be around £500m. Earnings for the six months to October 2 rose 17.9% to £187.3m compared with the same period two years ago.

M&S added that it expected headwinds from Brexit and supply-chain constraints to continue into next year.

Ibstock has completed the refinancing of its March 2023 £215m revolving credit facility, it said, diversifying its credit sources at attractive rates, while also achieving a significant extension of its debt maturity profile.

The FTSE 250 brickmaker said the existing facility had been replaced with the issue of £100m of private placement notes from Pricoa Private Capital, with maturities of between seven and 12 years at an average total cost of funds of 2.19%, and a £125m revolving credit facility with a syndicate of five banks.

It said the facility was for an initial four years, with a one-year extension option, at a margin of between 1.60% and 2.60%, and also included an additional £50m uncommitted accordion.

Based on current leverage, Ibstock would pay interest under the facility initially at a margin of 1.60%, compared to 2.00% under the previous revolving credit facility agreement.

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