More cooler US data, this time on factory prices, lifted stock market sentiment further on Thursday, and added strength to the argument that a 25 basis point hike by the Federal Reserve should be its last for now.
The pound also rose on Thursday, shaking off a less-than-stellar reading of the UK economy, to top the $1.31 threshold for the first time since April 2022.
The FTSE 100 index closed up 24.10 points, 0.3%, at 7,440.21. It is up 2.5% so far this week, supported by the pair of tamer US inflationary readings.
The FTSE 250 ended up 52.17 points, 0.3%, at 18,631.71, and the AIM All-Share closed up 0.5%, or 3.90 points, at 750.29.
The Cboe UK 100 ended up 0.3% at 742.41, the Cboe UK 250 closed up 0.3% at 16,355.22, and the Cboe Small Companies ended down 0.5% at 13,518.00.
On Thursday, the US Bureau of Labor Statistics reported that producer price inflation cooled more than expected in June.
The producer price index rose 0.1% on an annual basis in June, easing from a 0.9% increase in May. Markets were predicting June’s print to cool to just 0.4%, according to FXStreet-cited consensus.
On Wednesday, data had showed the US consumer price index rose by 3.0% on an annual basis in June, cooling from a 4.0% rise in May. According to FXStreet-cited marked consensus, the headline inflation figure was expected to cool to 3.1%.
The more moderate inflation readings will lift hope that the Fed’s rate hiking cycle is close to an end and hopes of a soft landing for the US economy.
ActivTrades analyst Ricardo Evangelista said: ‘With inflation slowing down faster than expected, the Fed’s tightening is producing the desired effect, and investors have started to price-in the end of the current hiking cycle, which is now expected to come after this month’s final increase of 25 basis points.
There is also hope that the US can avoid a ’hard landing‘, which would see inflation fall but at the expense of economic growth.
SPI Asset Management’s Stephen Innes believes ’the good news is the disinflation process looks increasingly benign, especially when set against a US economy characterized by low unemployment and solid growth‘.
The pound was boosted by the tamer US data, topping the $1.31 mark.
The pound was quoted at $1.3102 at the London equities close Thursday, compared to $1.2994 at the close on Wednesday.
Data on Thursday showed that the UK economy saw a milder-than-expected contraction in May.
According to the Office for National Statistics, real gross domestic product is estimated to have fallen by 0.1% in May from the previous month, after growing 0.2% in April. May’s came in ahead of FXStreet cited consensus, which had pencilled in a 0.3% decline.
GDP in May 2023 was 0.4% lower than May 2022, falling well short of the 0.5% annual growth registered in April 2023.
The euro stood at $1.1192 at the European equities close Thursday, higher against $1.1119 at the same time on Wednesday. Against the yen, the dollar was trading at JP¥138.12, down compared to JP¥138.38 late Wednesday.
In European equities on Thursday, the CAC 40 in Paris ended up 0.5%, while the DAX 40 in Frankfurt ended up 0.7%.
Stocks in New York were higher at the London equities close, with the Dow Jones Industrial Average up 0.1%, the S&P 500 index up 0.5%, and the Nasdaq Composite up 1.0%.
On the FTSE 100, housebuilders closed lower after Barratt Developments forecast a sharp decline in its home completions next year.
Barratt fell 1.5%, with Taylor Wimpey falling 2.1% and Berkeley Group down 1.0% in a negative read across.
The Leicestershire, England-based Barratt expects adjusted pretax profit in the financial year ended June 30 to be in line with market expectations, citing consensus of £800.6 million. This will be down 16% from £1.05 billion a year prior, however.
Over the financial year, it said total home completions fell by 14% to 17,206 from 17,908 year-on-year.
In the FTSE 250, Domino’s Pizza was up 4.7%.
It named former head of multiple Domino’s franchises Andrew Rennie as its new chief executive officer, effective August 7.
Rennie will replace Elias Diaz Sese, who took over as interim CEO in October last year. Diaz Sese will revert to non-executive director, a role he had held since joining the board in 2019. Rennie will join the Domino’s board on August 1, ahead of taking over as CEO.
The Milton Keynes, England-based master franchiser for the Domino’s Pizza delivery brand in the UK and Ireland said Rennie spent over two decades at the Sydney-listed Domino’s Pizza Enterprises. There, he was CEO of France & Belgium from 2006 to 2010, chief operating officer and then CEO of its Australia & New Zealand arm from 2010 to 2013, and CEO of its European business from 2014 to 2020.
‘The new boss of London-listed Domino‘s Pizza is the textbook definition of a safe pair of hands. This is perhaps what the company needs given all the drama the UK franchise owner has been through in recent years,’ said AJ Bell analyst Danni Hewson.
Trustpilot closed up 12%.
The online consumer reviews platform said it expects to report that revenue in the six months that ended June 30 was up 15% to $85 million from $73 million a year before, or 18% at constant currency.
For all of 2023, it repeated its guidance for mid-teens percentage revenue growth at constant currency.
Brent oil was quoted at $80.65 a barrel at the London equities close Thursday, up from $79.93 late Wednesday. Gold was quoted at $1,956.63 an ounce at the London equities close Thursday, higher against $1,954.01 at the stock market close on Wednesday.
In Friday’s UK corporate calendar, luxury fashion brand Burberry will issue a trading statement.
The economic calendar for Friday has EU foreign trade data at 1000 BST.
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