Stocks in Europe were mostly higher at midday Wednesday, with UK inflation reaching an eight-month high but not forcing ‘shares in interest rate-sensitive sectors’ to retreat.
In UK and European news, the UK consumer prices index rose by 2.6% in the year to November, picking up pace from a 2.3% rise in year to October and in line with FXStreet-cited market consensus. The closely watched CPI services annual rate was unchanged at 5.0%, below the 5.1% forecast.
‘UK inflation at an eight-month high sounds dramatic yet the annual 2.6% rate is bang in line with expectations and core inflation, which excludes food and energy, at 3.5% came in lower than the 3.6% consensus figure,’ AJ Bell’s Russ Mould commented. ‘As such, we haven’t had what the market would describe as an ’inflation shock’. That explains why shares in interest rate-sensitive sectors like housebuilding haven’t retreated on the latest figures.’
The average UK house price increased by 3.4% in the 12 months to October, ticking upwards from 2.8% in September, according to Office for National Statistics data. The average house price in October was £292,000.
Annual growth in private rental prices accelerated to 9.1% in November, from 8.7% in the 12 months to October. This was just below a record rise of 9.2%, recorded in March 2024.
The eurozone’s harmonised annual consumer price inflation rate accelerated to 2.2% in November from 2.0% in October, the highest inflation rate since August and above the European Central Bank’s target of 2.0%. On a monthly basis, eurozone consumer prices fell by 0.3% in November, unchanged from October.
The FTSE 100 index was up 12.40 points, 0.2%, at 8,207.60. The FTSE 250 was up 67.52 points, 0.3%, at 20,610.38, and the AIM All-Share was down 0.12 points at 721.92.
The Cboe UK 100 was up 0.1% at 823.87, the Cboe UK 250 was up 0.2% at 18,097.73, and the Cboe Small Companies was down 0.2% at 16,014.19.
On the FTSE 100, Kingfisher was 0.9% higher.
The home improvement products retailer has sold its loss-making Brico Depot Romania business to local retailer Altex Romania for an enterprise value of €70 million, exiting the country just over a decade after entering in 2013.
‘Kingfisher has been running hard to stand still in recent years..It has adjusted how the business is run, such as rolling out smaller stores and driving more sales through digital channels. They’ve helped to keep its head above water but it remains in the slow lane,’ Mould said.
‘Selling its loss-making Romanian operations is not going to make much difference to this situation as it only accounts for 2.1% of group sales. However, it’s one less thing for management to worry about, and it makes sense to focus on the stronger parts of the group.’
Among smaller caps, Shoe Zone lost 40%.
The retailer no longer intends to pay a final dividend for the year ended September 28, and cut its adjusted pretax profit forecast to at least £5.0 million from £10.0 million. In large part it blamed ‘significant additional costs’ and lower consumer sentiment thanks to the government Budget.
‘Shoe Zone putting the blame for a major profit warning on the Budget seems a poor fit,’ Mould said. ‘The impact of increased costs from National Insurance contributions and the National Living Wage is undeniable...However, attributing weak trading to a decline in consumer confidence since the Budget is at odds with UK-wide figures suggesting confidence has ticked higher since the event.’
He noted that Shoe Zone ‘sells affordable footwear, for which demand should be relatively resilient’, adding: ‘Perhaps Shoe Zone’s offering isn’t resonating with shoppers as much as it used to. At the very least, you would hope management is looking at what’s gone wrong rather than attributing everything to external factors.’
Helios Underwriting gained 4.4%.
The investment company offering exposure to Lloyd’s of London insurance markets has arranged a syndicate portfolio with an overall capacity of £484 million for 2025, down 5.6% from £512 million in 2024. It expects the overall cost base to be ‘materially’ lower for 2025.
Interim Executive Chair Michael Wade said: ‘By collaborating with top-performing syndicates and maintaining a proactive approach, Helios is well positioned to deliver strong results and sustained value in 2025. We head into 2025 confident of our high quality, diversified portfolio and its attractive profit pipeline.’
In European equities on Wednesday, the CAC 40 in Paris was up 0.3%, while the DAX 40 in Frankfurt was 0.4%.
The pound was quoted higher at $1.2717 at midday on Wednesday in London, compared to $1.2707 at the equities close on Tuesday. The euro stood at $1.0502, slightly up against $1.0498. Against the yen, the dollar was trading flat at JP¥153.59 compared to JP¥153.57.
Stocks in New York were called higher. The Dow Jones Industrial Average, the S&P 500 index, and the Nasdaq Composite were called up 0.3%.
Brent oil was quoted at $73.53 a barrel at midday in London on Wednesday from $72.70 late Tuesday.
Gold was quoted at $2,647.35 an ounce against $2,637.16.
Still to come on Wednesday’s economic calendar the US has, besides the interest rate call, data on building permits, current accounts and EIA crude oil stocks.
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