Stock prices in Europe were higher on Wednesday morning, as the post-election ‘Trump trade’ was wearing off, as investors await a consumer price inflation reading from the US.
FXStreet-cited market consensus expects the US consumer price index to post a 2.6% annual rise for October.
That said, Lloyds analysts declined to put much figurative stock in the release, saying: ‘Just as yesterday the message from the UK data was that it counted for less this time because the Budget had changed the outlook, so a similar story goes for the normally key US data release this week as October inflation data will tell us little of the path forward post a Trump election victory.
‘This very near-term data may though have some influence on the December Fed decision, even if thereafter changes in political choices need to be given more weight in the subsequent outlook.’
Swissquote’s Ipek Ozkardeskaya added: ‘The CPI data has regained importance since Donald Trump was re-elected President of the US. Jobs data remains crucial for the Fed’s policy path, as the last thing the Fed wants is to panic and lose control of the situation, but the Fed’s victory over inflation looks more vulnerable today than it did a month ago.’
The FTSE 100 index opened up 19.84 points, 0.3%, at 8,045.61. The FTSE 250 was up 89.78 points, 0.4%, at 20,517.58, and the AIM All-Share was up 1.56 points, 0.2%, at 732.42.
The Cboe UK 100 was up 0.4% at 809.02, the Cboe UK 250 was up 0.5% at 17,946.03, and the Cboe Small Companies was up 0.9% at 10,624.59.
‘FTSE100 earnings have surprised on the upside, while earnings growth has disappointed so far for the European index,’ said XTB’s Kathleen Brooks. ‘A stronger showing for Q3 earnings season, hopes that Trump will take pity on the UK and give us some sort of trade deal and immunity from tariffs, and political discord in Germany and the EU, is providing a shield for UK stocks, which may limit the downside if the global sell off continues.’
Smiths Group led the FTSE 100, rising 14%.
The engineering company has raised full-year guidance, now expecting organic revenue growth of 5% to 7%. First-quarter organic revenue growth has picked up to 16% from 3.5% the prior year.
Smiths also said it is initiating the second tranche of its previously announced buyback, and increasing the programme’s upper limit to £150 million from £100 million.
Intermediate Capital led the laggers, down 4.4%.
The private equity investor’s half year pretax profit has decreased to £198.4 million from last year’s £241.9 million, although net asset value per share rose on-year to 788p from 704p at September 30.
It did however increase the interim dividend to 26.3p from 25.8p.
Dowlais topped the FTSE 250 with a 16% gain.
Another engineering group, Dowlais said adjusted revenue for the ten months to October has decreased 6.1% on-year to £4.2 billion, driven by continued weakness in its ePowertrain line.
However Dowlais said full-year guidance is unchanged as it ‘continues to execute well and remains confident’ it will deliver the previously forecast mid-to-high single-digit adjusted revenue decline and an adjusted operating margin of between 6.0% and 7.0% at constant exchange rates.
On the FTSE Fledgling index, Creightons was the biggest winner having jumped 18%.
The consumer goods manufacturer said it expects half-year pretax profit to be ‘notably higher’ on an annual basis, and that operating profit before exceptionals will surpass the prior year’s £1.5 million.
‘Despite a small reduction in revenue, the groups’ strategy of maintaining a tight control on costs, whilst aligning the overhead cost base with activity levels, has delivered a healthy operating profit,’ Creightons said.
In European equities on Wednesday, the CAC 40 in Paris was up 0.1%, while the DAX 40 in Frankfurt was up 0.2%.
France’s unemployment rate ticked up a notch to 7.4% in the third quarter of the year, with the jobless rate decreasing for women aged 25 to 49, but rising for men and young people.
Meanwhile German Chancellor Olaf Scholz plans to address lawmakers in the lower house of parliament today following the collapse of his three-party coalition a week ago. The political upheaval means Europe’s biggest economy is now to hold an early election on February 23 instead of September as originally planned.
The pound was quoted at $1.2742 early on Wednesday in London, edging up compared to $1.2739 at the equities close on Tuesday. The euro stood higher at $1.0610, against $1.0600. Against the yen, the dollar was trading higher at JP¥155.02 compared to JP¥154.69.
In Asia on Wednesday, the Nikkei 225 index in Tokyo was down 1.7%. In China, the Shanghai Composite was up 0.5%, while the Hang Seng index in Hong Kong was down 0.1%. The S&P/ASX 200 in Sydney closed down 0.8%.
In the US on Tuesday, Wall Street ended lower as the post-election ’Trump trade’ eases off, with the Dow Jones Industrial Average down 0.9%, the S&P 500 down 0.3% and the Nasdaq Composite down 0.1%.
Brent oil was quoted lower at $71.89 a barrel early in London on Wednesday from $72.02 late Tuesday.
Gold was quoted higher at $2,608.68 an ounce against $2,600.40.
XS analyst Antonio Di Giacomo nonetheless warned that ‘gold prices remain vulnerable due to global economic factors and Federal Reserve policies. Rising bond yields and the strong dollar have created an unfavourable environment for gold, reducing its appeal as a safe-haven asset. However, the upcoming CPI data could shift this situation if inflation proves higher than expected, potentially forcing the Fed to reconsider its interest rate decisions.’
Still to come on Wednesday’s economic calendar, as well as CPI data the US has a monthly budget statement. Also, later this morning expect comments from UK Bank of England Monetary Policy Committee member Catherine Mann.
Copyright 2024 Alliance News Ltd. All Rights Reserved.
