Stocks closed in the green in Europe on Wednesday, following encouraging inflation data, and with housbuilders and gaming stocks leading the winners.
The FTSE 100 index closed up 45.82 points, 0.6%, at 8,281.05. The FTSE 250 ended up 208.21 points, 1.0%, at 20,952.29, and the AIM All-Share closed up 3.53 points, 0.5%, at 771.51.
The Cboe UK 100 ended up 0.6% at 827.47, the Cboe UK 250 closed up 0.7% at 18,331.01, and the Cboe Small Companies ended marginally higher at 16,808.85.
In European equities on Wednesday, the CAC 40 in Paris ended up 0.8%, while the DAX 40 in Frankfurt ended up 0.4%.
US consumer prices rose less quickly than expected in July from the previous year, official data on Wednesday showed.
The Bureau of Labor Statistics reported that consumer prices rose 2.9% year-on-year in July. Market consensus, as cited by FXStreet, had expected the reading to be unchanged from 3.0% in June.
July’s annual increase was the smallest since March 2021, the BLS said.
The yearly core inflation rate, which strips out food and energy, slowed to 3.2% in July from 3.3% in June, in line with market consensus.
‘July’s CPI report is probably best described as mildly encouraging – it adds support for a 25 [basis point] rate cut in September [from the Federal Reserve] but, at the same time, doesn’t suggest price pressures are collapsing in a way that could warrant a bigger 50bp reduction,’ said Capital Economics’ Paul Ashworth.
Still, the dollar weakened against major currencies on Wednesday afternoon.
The pound was quoted at $1.2847 at the London equities close Wednesday, edging up from $1.2826 at the close on Tuesday. The euro stood at $1.1029, up against $1.0956. Against the yen, the dollar was trading at JP¥146.74, down compared to JP¥147.03.
Traders were also digesting the latest UK inflation print, which had come earlier on Wednesday morning.
The Office for National Statistics reported that annual consumer price index inflation in the UK increased to 2.2% in July from 2.0% in June.
However, this was short of the increase to 2.3% that had been expected by FXStreet-cited market consensus.
‘A lower-than-expected jump in UK inflation has boosted market expectation that the Bank of England could deliver another rate cut next month,’ said AJ Bell analyst Danni Hewson.
Stocks in the interest rate-sensitive area of housebuilding were among the top performers in the FTSE 100, on hopes of lower mortgage rates stimulating more house buying.
Berkeley added 3.8%, Taylor Wimpey rose 3.7% while Persimmon was up 3.2%.
Gambling stocks also were in focus.
Playtech surged 14%, after it said it was holding talks with Flutter Entertainment regarding the possible sale of its Snaitech business.
The Isle of Man-based gambling software development company said that Snaitech, its Italian gambling unit, could be valued at around £2 billion.
Playtech said it had granted Flutter, which owns betting firm Paddy Power, a period of exclusivity to complete due diligence and finalise the necessary transaction documentation.
Shares in Flutter, which recently moved its main listing to the US, closed 11% higher in London.
Meanwhile its former peer in the FTSE 100, Entain, rose 4.5%.
Aviva closed up 0.7%, after raising its interim dividend following a strong opening half, with the company improving financially and growing its customer base.
The London-based insurance company said pretax profit attributable to shareholders jumped 50% to £784 million in the first half that ended June 30 from £521 million the previous year.
Insurance revenue rose 9.7% to £9.82 billion from £8.95 billion, as insurance service expense grew 11% to £8.53 billion from £7.69 billion.
‘While no fresh news of extra share buybacks may disappoint some, an ongoing focus on operational efficiency and forecast dividend yield above 7% continue to support City consensus opinion of Aviva shares as a strong hold,’ said Keith Bowman, investment analyst at interactive investor.
Stocks in New York were mixed at the London equities close, with the DJIA up 0.3%, the S&P 500 index up 0.1%, and the Nasdaq Composite down 0.1%.
M&M’s and Snickers maker Mars said that it would acquire snack food business Kellanova, marking a multibillion dollar agreement set to result in a new industry giant.
The all-cash transaction would value Kellanova – which is behind snacks such as Pringles and Pop-Tarts – at $35.9 billion, including debt.
Mars is privately held, while Kellanova shares rose 7.7% in New York.
Elsewhere, Alphabet shares fell 3.1%.
Bloomberg reported that a bid to break up Google is one option being considered by the US Justice Department.
Bloomberg said this follows a landmark court ruling which found that the company monopolised the online search market.
Meanwhile, in commodities, Brent oil was quoted at $80.27 a barrel at the London equities close Wednesday, down from $80.98 late Tuesday. Gold was quoted at $2,451.20 an ounce, lower against $2,470.54 at the close.
In Thursday’s UK corporate calendar, there are half-year results from the likes of Admiral Group, Empiric Student Property and Rank Group.
The economic calendar for Thursday has a slew of Chinese data overnight - including unemployment, retail sales, and industrial production - followed by UK trade balance, GDP and industrial production in the morning, with US retail sales, industrial production and initial jobless claims in the afternoon.
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