Investors reacted positively UK annual inflation holding steady last month, defying expectations of an acceleration and prompting local stocks to rise.
The FTSE 100 index closed up 56.12 points, 0.8%, at 7,568.40. The FTSE 250 ended up 80.06 points, 0.4%, at 19,003.89, and the AIM All-Share closed up 3.21 points, 0.4%, at 750.45.
The Cboe UK 100 ended up 0.7% at 755.91, the Cboe UK 250 closed up 0.7% at 16,459.15, and the Cboe Small Companies ended up 0.3% at 14,403.20.
In European equities on Wednesday, the CAC 40 in Paris ended up 0.7%, while the DAX 40 in Frankfurt ended up 0.4%.
According to the Office for National Statistics, the rate of annual consumer price inflation was unmoved at 4.0% in January, where it had stood in December. It had been expected to pick up to 4.2%, according to FXStreet-cited consensus.
The UK annual inflation rare hit a recent peak of 11.1% in October 2022, and faded to as low as 3.9% in November of last year. The Bank of England has a 2% inflation target, with the current rate still double that.
The next Bank of England decision is on March 21. There will be another consumer price index reading a day prior to that decision for Threadneedle Street to digest.
The pound was weaker, after the UK inflation data came in below expectations. The pound was quoted at $1.2542 at the London equities close Wednesday, down compared to $1.2596 at the close on Tuesday.
Meanwhile, interest rate sensitive stocks rose. Housebuilders Persimmon, Taylor Wimpey and Barratt Developments added 3.8%, 1.7% and 1.6%, respectively.
Berenberg said that after the small upside surprise in US inflation data on Tuesday, the UK release was awaited with ‘bated breath’.
According to the Bureau of Labor Statistics, US consumer price inflation eased to 3.1% in January, from 3.4% in December. It had been expected to ebb to 2.9%, according to FXStreet-cited consensus, so the latest reading topped expectations.
AJ Bell’s Russ Mould said the data has raised the prospect ‘of the Bank of England cutting its own rates before the US.’ This felt unlikely just a few weeks ago.
Stocks in New York were higher at the London equities close, with the DJIA up 0.2%, the S&P 500 index up 0.5%, and the Nasdaq Composite up 0.7%.
The euro stood at $1.0720 at the European equities close Wednesday, higher against $1.0716 at the same time on Tuesday. Against the yen, the dollar was trading at JP¥150.62, lower compared to JP¥150.66 late Tuesday.
In the FTSE 100, drink bottling company Coca-Cola HBC closed up 8.0%. It was the best performer on the index on Wednesday.
The firm, which operates in nations including Cyprus, Greece and Italy, said net sales revenue surged 11% in 2023 to €10.18 billion, from €9.20 billion in 2022. Net sales fell shy of the Vuma cited consensus of €10.25 billion.
Pretax profit shot up 46% to €910.3 million from €623.6 million, but was shy of consensus of €976.3 million.
‘I am deeply proud of our team as we delivered a third year of double-digit growth and record profits,’ Chief Executive Officer Zoran Bogdanovic said.
The CEO added: ‘2023 was another year of consistent execution of our growth strategy. We delivered volume growth, share gains, improved margins and record levels of free cash flow. As a result, we were able to increase shareholder returns, including the launch of a share buyback programme
In the FTSE 250, Tui fell 6.0% amid plans to be delisted in London.
Tui held its annual general meeting on Tuesday, at which shareholders were asked to approve its plan to delist from the London Stock Exchange, while upgrading to a ’prime standard’ listing in Frankfurt with inclusion on the MDAX index of German mid-cap stocks. The plan, announced early last month, is to achieve ’centralisation of liquidity‘ for Tui shares.
Late on Tuesday, Tui said shareholders voted clearly in favour of the proposed change to the company’s dual listing and voted by a large majority, 98.35%, to delist from the LSE.
Dunelm lost 2.6%.
The Leicester, England-based homeware retailer said revenue rose 4.5% to £872.5 million in the six months to December 30, from £835.0 million a year prior. Pretax profit was up 4.8% to £123.0 million from £117.4 million over the same period.
Dunelm has declared an interim dividend of 16p per share, ahead of last year’s 15p dividend. Further, the company declared a special dividend of 35p, down 13% from 40p a year prior.
Amongst London’s small-caps, Bloomsbury Publishing shares rose 6.6%. It expects annual results to be ’significantly ahead of upgraded market expectations‘.
The publisher noted that consensus for the year ending February 29 stands at £291.4 million for revenue, and £37.2 million for pretax profit before ’highlighted items‘. It would represent growth of 10% for revenue and 20% for profit.
‘Bloomsbury’s latest trading update shows a business enjoying strong momentum. Covid lockdowns rekindled people’s love of reading and unlike many other past times, this one seems to have stayed popular as the pandemic is confined to the rear-view mirror,’ AJ Bell’s Mould said.
Brent oil was quoted at $82.63 a barrel at the London equities close Wednesday, down from $82.93 late Tuesday. Gold was quoted at $1,988.99 an ounce at the London equities close Wednesday, lower against $1,995.88 at the close on Tuesday.
In Thursday’s UK corporate calendar, there are full year results from Centrica and Relx. There are also half year results from MJ Gleeson and South32.
The economic calendar for Thursday has a gross domestic product reading from the UK at 0700 GMT, as well as industrial production and trade balance readings.
Across the Atlantic, there is the weekly initial jobless claims report.
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