Stocks in London made steady progress in early exchanges on Wednesday, although Rentokil slumped, ahead of key US inflation figures later.
The data is released at 1330 BST. Data is expected to show the rate of annual US consumer price inflation faded to 2.6% in August, from 2.9% in July.
The first US presidential debate between candidates Kamala Harris and Donald Trump took place late Tuesday. Dutch bank ING believes Harris was deemed the victor.
‘A weaker dollar (and bitcoin) across the board, Asia [emerging markets foreign exchange] outperformance, and softer US equity futures match opinion polls pointing to Harris having done better than Trump in the first presidential debate.
‘Unlike the first presidential debate between Trump and Biden, where the latter came out as clearly defeated, this one was not interpreted as ending in any ’knock out’ win. However, markets seem to have awarded Harris a victory on points, and a CNN poll showed 63% of voters thought Harris won the debate. In FX, a Trump win is associated with a stronger dollar, which is trading on the soft side across the board.’
The FTSE 100 index edged up 10.85 points, 0.1%, at 8,216.83. The FTSE 250 was down 16.66 points, 0.1%, at 20,639.48, and the AIM All-Share was down 1.63 points, 0.2%, at 742.23.
The Cboe UK 100 was marginally higher at 822.21, the Cboe UK 250 also rose slightly to 18,192.76, and the Cboe Small Companies was down 0.3% at 16,793.24.
In European equities on Wednesday, the CAC 40 in Paris was up 0.4%, while the DAX 40 in Frankfurt added 0.5%.
In Tokyo, the Nikkei 225 slid 1.5%. In China, the Shanghai Composite fell 0.8%, while the Hang Seng in Hong Kong was down 0.7% in late trade. In Sydney, the S&P/ASX 200 ended 0.3% lower.
The pound was quoted at $1.3093 early Wednesday, rising from $1.3060 at the London equities close on Tuesday. The euro stood at $1.1048, up from $1.1021. Against the yen, the dollar was trading at JP¥141.49, down from JP¥142.55.
Sterling gained on the greenback despite tepid UK data. The UK economy tread water in July, the second successive month of no growth, an outcome that underperformed expectations.
The Office for National Statistics said the UK economy registered no growth on-month in July. It had also made no progress in June.
It had been expected to advance 0.2% in July from June, according to FXStreet cited consensus.
‘Where to now? Big picture, today’s data marks a second consecutive flat GDP reading for the UK economy. Growth is normalising from the rapid pace set in H1-24 – this much should be expected. The pace of the slowdown, however, is a little faster than we anticipated – especially in light of the still stellar survey data we’ve seen over summer. Accordingly, our GDP nowcast for Q3-24 has slipped meaningfully. From seeing upside risks to Q3-24 GDP growth, relative to our baseline of 0.4% quarter-on-quarter, we now see downside risks building given the weaker than expected GDP print,’ Deutsche Bank analyst Sanjay Raja commented.
Brent oil was quoted at $70.32 a barrel early Wednesday, rising from $69.20 at the London equities close on Tuesday. Gold climbed to $2,526.81 an ounce from $2,515.08.
XS.com analyst Antonio Ernesto Di Giacomo commented: ‘The price of gold has shown remarkable performance, remaining above $2,500 per ounce. This rise reflects the caution of investors awaiting August’s release of the US consumer price index. This report will be published on September 11 and could significantly impact the Federal Reserve’s decisions.
‘It is possible that the Federal Reserve could cut interest rates at its meeting on September 18, which could potentially boost the price of gold even further. An adjustment in interest rates could push the metal’s price towards $2,600 per ounce before the end of the year. This projection and global uncertainty reinforce gold’s appeal as a safe haven for investors seeking protection against economic volatility.’
In London, Rentokil shares tumbled 18%. It warned slower growth in North America and the strong pound will dent full-year profit.
The pest control and hygiene firm said trading in North America in July and August was lower than anticipated while there had been been some modest disruption to organic growth from branch integration.
The firm now expects second half organic revenue growth in North America of around 1%. Rentokil had previously forecast full-year organic revenue in North America between 2% to 4%.
Rightmove rose 0.6%. The property portal rebuffed a ‘wholly opportunistic’ takeover approach from Australia’s REA Group. The firm said the tilt ‘fundamentally undervalued’ the company. Rightmove said the proposal consists of 305 pence in cash and 0.0381 of a new REA share.
Based on the closing price of REA on Tuesday, the proposal valued each Rightmove share at 698p, and the issued share capital at around £5.5 billion.
WH Smith jumped 11% as it reported healthy trade and announced a share buyback.
In the fourth-quarter ended August 31, group revenue rose 6% on-year. Like-for-like revenue rose 4%. For the full-year, revenue was 7% higher, rising 5% like-for-like. ‘We have ended the financial year in a strong position, delivering a performance in line with our expectations with good growth across our Travel businesses. Our UK division performed particularly well over the peak summer trading period,’ CEO Carl Cowling said.
‘We are also today announcing the launch of a £50 million share buyback, which reflects strong ongoing cash flow, the receipt of the pension fund buyout cash return, as well as the strength of our balance sheet, with leverage now within our target range.’
WH Smith said a buy-in of its defined benefit pension scheme has been sealed, resulting in a cash refund to the company of £75 million, and a transfer of an investment fund of £10 million ‘which will convert to cash over the next two years’. It announces annual results on November 14.
Gym Group climbed 10% as it reported a swing to half-year profit.
Revenue in the half-year to June 30 climbed 12% to £112.1 million from £99.8 million, the low-cost gym operator said. It swung to a pretax profit of around £200,000, from a loss of £6.1 million.
‘Trading momentum continued in July and August; we now expect to deliver 5-6% like-for-like revenue growth in 2024,’ the firm said.
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