Flat CPI data sees FTSE edge lower

In mid-morning trading the FTSE 100 is broadly unchanged as the UK inflation data remains flat on the month.

City of London
Source: Bloomberg

The London market pulled back when the latest CPI figures showed the cost of living stood still at zero percent. This would usually boost the equity market, but there is a sense of disappointment that the UK is teetering on the edge of deflation. Eurozone equity markets are focused on Greece as speculation of either a default or a fresh election could spark another round of selling.

Poundland shares have pushed higher this morning after the retailer revealed annual sales that exceeded £1 billion. The firm warned that the last few weeks of this fiscal quarter were ‘tough’, and this could be a sign that competition between the deep discount retailers is heating up. Poundland is on the march at home and abroad, and while its takeover attempt of the 99p store is still under review the firm plans to open 60 new stores across the UK and Ireland this year.

Shares in Ashmore Group are higher this morning despite announcing a drop in assets under management in the third quarter. The emerging markets-focused fund manager is feeling the pinch as the slowdown in the Far East and the standoff between Ukraine and Russia is prompting an outflow of funds.

Sterling sunk on the back of the news that UK inflation remained at zero percent, and the country is dangerously close to heading down the deflation route.

We are expecting the Dow Jones to open 40 points higher, at 18,020, as the US market gears for the first round of US banks to announce their numbers. JPMorgan and Wells Fargo & Co will kick start the financial reporting season, and lower trading revenues from the banks is on the cards.

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