Stocks in Europe endured another muted session on Wednesday, extending the FTSE 100’s recent poor run, amid some nerves ahead of Thursday’s US inflation reading.
Investors also have one eye on the start of the US banking season, with the likes of JPMorgan getting things going forward.
The FTSE 100 index ended down 32.20 points, 0.4%, at 7,651.76. The FTSE 250 closed down 13.94 points, 0.1%, at 19,280.08, and the AIM All-Share lost 2.95 points, 0.4%, at 749.71.
The Cboe UK 100 closed down 0.4% at 764.79, the Cboe UK 250 lost 0.1% to 16,749.54, though the Cboe Small Companies shot up 1.5% to 15,155.69, getting a boost from construction and engineering firm Costain.
In European equities, the CAC 40 in Paris closed marginally lower, while the DAX 40 in Frankfurt edged ever-so-slightly higher.
In New York, the Dow Jones Industrial Average was up 0.1%, the S&P 500 added 0.2% and the Nasdaq Composite was 0.4% higher.
Sterling was quoted at $1.2725 late Wednesday afternoon, rising from $1.2703 at the London equities close on Tuesday. The euro traded at $1.0958, higher than $1.0923. Against the yen, the dollar was quoted at JP¥145.74, up versus JP¥144.35.
The focus on Thursday will be on a US inflation report.
According to FXStreet, the consensus is for the US headline consumer price index to edge up to 3.2% annually in December, from 3.1% in November. However, core inflation - which excludes food and energy - is expected to cool to 3.8% from 4.0%.
The reading may help direct the path of Federal Reserve interest rates. The US central bank is expected to stand pat in its first meeting of the year, but cut rates in March.
The Fed’s first decision of the year will be on January 31. It is widely expected to maintain the federal funds rate range at between 5.25% and 5.50% in that meeting.
‘[The inflation reading] could affect expectations regarding the next steps in monetary policy, while anticipations of an interest rate cut in March continue to subside. Recent labour market data points to robust economic conditions, while Fed officials see little likelihood of a rate cut before mid-year,’ KAMA Capital analyst Abdelhadi Laabi commented.
‘Additionally, markets are gearing up for the earnings season starting Friday, with banking companies leading the way. Investors could react strongly to the figures, which could help the market return to its uptrend if they come up better-than-expected.’
JPMorgan, Citigroup and Wells Fargo are among those reporting full-year earnings on Friday.
In London, housebuilders were among the best large-cap performers. Berkeley rose 2.3%, while Taylor Wimpey added 1.6%.
FTSE 250-listed Persimmon surged 6.3%.
Persimmon said it completed 9,922 homes in the 12-months ended December 31, down a third from 14,868 in 2022. It beat guidance of 9,500 homes, however. The average selling price rose slightly to £255,750 from £248,616 over the period.
Persimmon said that it enters the new year with an improved forward sales position, up to £1.06 billion from £1.04 billion at the end of 2022.
Sainsbury’s fell 6.3%, as a tough Christmas period for its clothing and merchandise offering overshadowed decent grocery sales.
The London-based supermarket chain said grocery sales rose 9.3% year-on-year in the 16 weeks to January 6, with Christmas grocery sales in the final six weeks of that period climbing 8.6%.
Sainsbury’s said total retail sales excluding fuel grew 6.5% annually in the full 16-week period, and 4.9% in the six-week Christmas period.
However, general merchandise sales fell 0.6% annually in the 16 weeks and slumped 3.7% over Christmas. Clothing sales fell 1.7% in the 16 weeks and slumped 6.0% in the six-week shorter period.
‘Sainsbury’s partially blames tough comparative figures from the previous year, yet it does feel as if Argos, in particular, has been bumped down the list of priorities for the group since Simon Roberts took over as chief executive,’ AJ Bell analyst Russ Mould commented.
Grocery peers Ocado and Tesco fell 1.9% and 1.4%.
Also on the decline, Admiral ended among the worst FTSE 100 performers. The insurer closed down 5.6%. Direct Line fell 7.5%, among the worst in the FTSE 250.
Greggs rose 5.4%. The Newcastle, England-based bakery chain reported that its total sales increased 20% to £1.81 billion for the full year, from £1.51 billion the year prior.
The firm said company-managed shop like-for-like sales in 2023 increased 14% during the period, while they increased 9.4% in the fourth quarter, as transaction numbers continued to grow but price inflation had a negative effect.
Elsewhere, Costain shares climbed 9.0%. It said it has been appointed by Northumbria Water Group to help with its strategic infrastructure upgrade programme for the UK regulatory asset management period 8.
The Maidenhead, Berkshire-based construction and engineering firm said the contract with Durham-based Northumbria Water starts immediately and will run for a seven-year initial term with an option for a five-year extension.
Costain said through the framework, it will be awarded contracts with a potential value of up to £670 million during a 12-year period.
Marks Electrical slumped 24%. The electrical products retailer said revenue in the three months to December 31 rose 18% to £35.1 million from £29.8 million a year prior. However, the firm said that its gross margin did not see the rise that had been expected.
‘In a challenging trading environment where consumers remain highly price-conscious, our gross product margin did not increase to the levels we expected, and despite proactive action on other controllable costs, the impact of this in the peak trading period has had a material impact on our full year profit guidance,’ Marks Electrical explained.
Gold was quoted at $2,026.60 an ounce late Wednesday afternoon, lower than $2,029.09 on Tuesday. Brent oil was trading at $77.36 a barrel, falling from $77.81.
Thursday’s economic calendar has the key US inflation reading, and the latest initial jobless claims data, at 1330 GMT.
The local corporate calendar has a trading statement from retail Marks & Spencer, grocer Tesco and hotel company Whitbread.
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