London’s FTSE 100 jumped on Wednesday, massively outperforming European peers, as a deceleration in UK inflation pushed equities higher, but sent the pound hurtling below the $1.30 mark.
The FTSE 100 index closed up 79.79 points, or 1.0%, at 8,329.07. The FTSE 250 ended up 185.06 points, or 0.9%, at 20,979.50, while the AIM All-Share closed up 5.57 points, 0.8%, at 739.43.
The Cboe UK 100 ended up 0.9% at 834.50, the Cboe UK 250 closed up 1.2% at 18,581.16, and the Cboe Small Companies climbed 0.1% at 17,082.23.
According to the Office for National Statistics annual consumer price index inflation in the UK rose by 1.7% in September, easing from 2.2% in August.
This was short of the 1.9% rise that had been expected by FXStreet-cited market consensus and the lowest figure in more than three years.
It also was below the 2.1% forecast by the Bank of England in its August monetary policy report.
Significantly, services inflation decelerated to 4.9% in September from 5.6% in August, undershooting consensus expectations of 5.2% and well below the BoE’s August MPR forecast of 5.5%.
Barclays noted the various measures of underlying services inflation that have been referenced by the BoE, all saw an easing in the year-on-year inflation rates.
This ‘will give comfort to the [Monetary Policy Committee] that the easing today is not purely an artefact of volatile components,’ the broker added.
The deceleration in services saw core inflation fall by more than expected to 3.2% in September from 3.6% in August, well below consensus expectations of 3.4%.
Deutsche Bank Chief Economist Sanjay Raja said today’s data should be ‘music to the MPC’s ears’.
‘Inflation momentum is slowing,’ he noted, while services prices, ‘once deemed too sticky in the UK are coming off faster than expected’.
Raja feels the case for sequential rate cuts is rising and believes the MPC can start to contemplate a faster dial of restrictive policy.
James Smith at ING agrees and expects a cut at every meeting until rates reach 3.25% next summer.
Rate sensitive housebuilders took heart on hopes the housing recovery would build up a head of steam.
On the FTSE 100, Barratt Redrow rose 4.7%, Taylor Wimpey gained 3.7% and Persimmon advanced 3.2%.
Kitchen goods supplier Howden Joinery perked up 2.3%, do-it-yourself retailer Kingfisher rose 1.3%.
The data put sterling under pressure. The pound was quoted at $1.3006 at the London equities close on Wednesday, lower compared to $1.3094 at the close on Tuesday. It had fallen as low as $1.2987 earlier on Wednesday.
In Europe the mood in equity markets was more downbeat than in London. The CAC 40 in Paris ended down 0.4%, while the DAX 40 in Frankfurt closed 0.3% lower.
Weighing on the CAC, LVMH fell 4.1% after posting weak third quarter sales as soft Chinese trading and a stronger yen took their toll.
Revenue in the third-quarter of 2024 declined 4.4% on-year to €19.08 billion from €19.96 billion, the firm said.
RBC Capital Markets said the update was ‘worse than feared,’ with a revenue miss of 5% and Fashion & Leather down 5% compared to expectations of 1% growth.
Deutsche Bank said it was a ‘weak print’ pretty much across the board.
The euro stood at $1.0874 at the European equities close on Wednesday, down against $1.0950 at the same time on Tuesday. Against the yen, the dollar was trading at JP¥149.65, up compared to JP¥149.29 late Tuesday.
Stocks in New York were higher at the London equities close, with the Dow Jones Industrial Average up 0.5%, the S&P 500 0.2% higher and the Nasdaq Composite 0.1% to the good.
Morgan Stanley leapt 7.0% after hailing growth across the business as it delivered revenue and earnings ahead of expectations.
The New York-based investment bank said net income jumped 36% to $3.23 billion from $2.44 billion a year prior.
Diluted earnings per share also climbed 36% to $1.88 from $1.38, beating a CNBC-cited consensus of $1.58. Revenue grew 16% to $15.38 billion from $13.27 billion, also topping a CNBC-cited consensus of $14.41 billion.
Institutional Securities net revenue of $6.82 billion increased 20% from $5.67 billion a year prior. This reflected a strong performance in Equity and Fixed Income on higher client activity and increased momentum in Investment Banking.
In Investment Banking, revenue leapt 56% to $1.46 billion from $938 million.
Back in London, Whitbread led the blue-chip risers, climbing 6.1%.
The Premier Inn owner said its interim profit has dropped more than 20% amid soft UK demand, but remained optimistic for the future as it begins to implement a five-year growth plan.
The Bedfordshire-based firm aims to grow financial 2030 adjusted pretax profit by at least £300 million compared with financial 2025, and generate more than £2.0 billion for dividends, share buybacks and high-return investments.
The company also announced a further £100 million share buyback.
Antofagasta was also in favour, up 1.3%, after reporting an increase in copper production in the third quarter.
The Chile-focused miner said copper production rose 15% to 179,000 tonnes in the third quarter of 2024 from 155,300 tonnes in the second quarter. It was 3.4% higher from 173,600 tonnes a year ago.
The company left production guidance for 2024 unchanged. Full year output is expected to be at the lower end of the guidance range of 670,000 to 710,000 tonnes.
On the FTSE 250, Oxford Instruments firmed 5.3% amid first-half revenue growth, helped by strong demand in the materials analysis and semiconductor markets.
Progress in those parts of the business offset ‘softer demand from our healthcare & life science market’, the Oxfordshire-based company said.
Oxford Instruments, which provides technology and services to industrial companies and scientific researchers, expects revenue growth of 10% for the half year ended September 30.
Moonpig jumped 12% after announcing a share buyback programme of up to £25 million, expected to start in early November.
The firm aims to pay a total financial 2025 dividend of £10 million, with the first dividend under its new policy to be paid around March.
The new policy commits to maintaining ‘robust dividend cover’ of 3x to 4x in the medium term.
Brent oil was quoted at $73.83 a barrel at the London equities close on Wednesday, down from $73.90 late Tuesday.
Gold was quoted at $2,673.31 an ounce at the London equities close on Wednesday, up against $2,663.59 at the close on Tuesday.
Thursday’s UK corporate calendar sees trading statements from pest controller Rentokil, miner BHP and wealth management firm St James’s Place. Asset manager Schroders reports third quarter results.
The economic calendar has an ECB interest rate decision at 1315 BST, US retail sales figures and weekly jobless claims data at 1330 BST and US industrial production numbers at 1415 BST.
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