Footsie set to start lower after China inflation data, ahead of MPC

LONDON (ShareCast) - (ShareCast News) - Stocks were being called to start the day lower following overnight losses on Wall Street and in Asia, ahead of today's MPC (KOSDAQ: 050540.KQ - news) decision and minutes. Much as in the US, derivatives markets are more sceptical than economists when it comes to pricing in the first hike in interest rates in the current cycle.

Whereas futures point to a first increase in Bank Rate towards September 2016 the MPC has been guiding towards a rise nearer to the start of next year. On Wednesday, that pushed the difference in yields between 10-year Gilts and similarly dated US government debt to a nine-year high.

Nonetheless, some analysts, such as those at Morgan Stanley (Xetra: 885836 - news) , believe the market may be underpricing the risk of an earlier rate move by the BoE (Shenzhen: 200725.SZ - news) .

However, at today's meeting the MPC is seen voting to keep interest rates steady by a margin of 8 to 1, according to the market consensus, with Ian McCafferty set to be the lone dissenter. The latter is expected to cast his ballot in favour of an increase today.

"The key giveaway could be whether Ian McCafferty votes for a rate hike again or not. If he doesn't and the vote is unanimous then surely it would suggest that policy makers are keen to see [recent volatility in markets] play out before making a judgement call, a view likely to be shared by their counterparts across the pond. Of course the minutes should shed further light on this," said Oanda Senior (Other OTC: SNIRF - news) market Analyst Craig Erlam.

Consumer prices in China advanced at a 2% year-on-year clip in August, moderately ahead of forecasts for a 1.8% rise thanks to food prices, particularly for pork.

At the wholesale level on the other hand inflation fell by 5.9% stoking worries of deflation at some point in the future.

The Shanghai Stock Exchange's Composite Index ended the session 0.85% lower at 3,215.58 points this morning.

Next (Other OTC: NXGPF - news) rings up rise in first half profits Clothing retailer Next reported a 7.1% jump in first-half pre-tax, with revenue up as the company sold more items at full price than it had expected. Profit came in at £347.1m from £324.2m in the first half of last year, while total sales were up 2.7% at £1.91bn.

Supermarket retailer Wm Morrison posted a drop in underlying first-half pre-tax profit as revenue declined on the back of price cuts. Pre (Shanghai: 600048.SS - news) -tax profit for the half year to 2 August fell 35% to £117m in the same period last year, missing market expectations, while total sales were down 5.1% to £8.1bn. Same-store sales fell by 2.4% in the second quarter.

Significant market share gains in mobile phones have lifted first quarter like-for-like revenues at Dixons Carphone (Stuttgart: CWB.SG - news) by 8%, the company said in a trading statement. In the UK and Ireland (Other OTC: IRLD - news) revenues rose 10% and rose in the Nordic region by 4%, but were flat in southern Europe, although Dixons saw improving trading in Spain and growth in Greece "despite challenging markets".

CLS Holdings plc (LSE: CLI.L - news) said it is selling six properties in the UK for £7.4m in aggregate, being £1.6m above their external valuation at 31 December 2014, but in line with their values at 30 June 2015.