European markets were slightly higher during midday trade on Wednesday, as investors braced for a key US inflation reading.
The FTSE 100 index edged up 5.21 points, 0.1%, at 8,211.19. The FTSE 250 was up just 10.14 points at 20,666.28, and the AIM All-Share was down 3.93 points, 0.5%, at 739.93.
The Cboe UK 100 was flat at 821.80, the Cboe UK 250 up 0.2% to 18,227.15, but the Cboe Small Companies was down 0.6% at 16,752.65.
In European equities on Wednesday, the CAC 40 in Paris was up 0.3%, while the DAX 40 in Frankfurt added 0.4%.
‘Mainland European equities are leading the way in early trade, with the FTSE 100 lagging behind amid declines for heavyweights AstraZeneca, Unilever, and GlaxoSmithKline. Nonetheless, there is a relatively positive tone in play despite a downbeat Asian session that saw the Nikkei 225 lead the way lower with a 1.5% decline,’ Scope Markets analyst Joshua Mahony commented.
Consumer goods firm Unilever was down 0.4%.
AstraZeneca lost another 1.5% after poor trial results sent shares 2.4% lower on Tuesday. GSK fell 0.6% after it said a vaccine candidate for the herpes simplex virus did not meet a primary efficacy objective in testing.
The pound was quoted at $1.3084 early Wednesday afternoon, rising from $1.3060 at the London equities close on Tuesday. The euro stood at $1.1049, up from $1.1021. Against the yen, the dollar was trading at JP¥141.57, down from JP¥142.55.
The UK economy tread water in July, the second successive month of no growth, an outcome that underperformed expectations.
The Office for National Statistics said the UK economy registered no growth on-month in July. It had also made no progress in June.
It had been expected to advance 0.2% in July from June, according to FXStreet cited consensus.
‘That said, it should be noted some moderation in activity was always likely, following the rapid 0.7% and 0.6% rates of expansion seen in Q1 and Q2 as the economy rebounded from the dip in activity seen in the second half of 2023. However, the elevated level of sentiment displayed by business and consumer confidence surveys suggests that the extent of the economic slowdown is being overstated by the July GDP report,’ analysts at Lloyds Bank commented.
The latest US consumer price inflation reading is released at 1330 BST.
Data is expected to show the rate of annual US consumer price inflation faded to 2.6% in August, from 2.9% in July.
SPI Asset Management analyst Stephen Innes commented: ‘With the Fed laser-focused on the worsening labour market, today’s CPI release is unlikely to shake up the rates market—unless there’s a significant surprise. The real question isn’t if the Fed will cut next week but by how much. A 25bp cut feels almost baked in at this point, but the possibility of a 50bp cut is still very much on the table, depending on how the Fed reads the tea leaves. One thing’s sure: the labour market will have a heavier hand in steering the Fed’s decision than inflation data alone.’
US stocks are called to open lower. The Dow Jones Industrial Average is called down 0.4%, while the S&P 500 and the Nasdaq Composite are called down 0.3%.
In London, Rentokil tumbled 19%. It warned slower growth in North America and the strong pound will dent full-year profit.
The pest control and hygiene company said trading in North America in July and August was lower than anticipated while there had been been some modest disruption to organic growth from branch integration.
The firm now expects second half organic revenue growth in North America of around 1%. Rentokil previously had forecast full-year organic revenue in North America between 2% to 4%.
Trustpilot jumped 16%. It reported half-year profit, predicted full-year earnings at the top end of market expectations, and announced a £20 million share buyback.
The Copenhagen-based consumer reviews platform said it swung to a pretax profit for the six months ended June 30 of $2.6 million, from a loss of $4.0 million a year prior. Revenue was $99.8 million, up 18% from $84.6 million.
Gym Group climbed 8.4% as it reported a swing to half-year profit.
Revenue in the half-year to June 30 climbed 12% to £112.1 million from £99.8 million, the low-cost gym operator said. It swung to a pretax profit of around £200,000, from a loss of £6.1 million.
‘Trading momentum continued in July and August; we now expect to deliver 5-6% like-for-like revenue growth in 2024,’ the firm said.
Edison analyst Neil Shah commented: ‘Operationally, The Gym Group is on track with its ’next chapter’ growth strategy, which includes expanding its estate and improving the returns from its existing gyms. With its seven new sites have opened this year, and the signing of a new £90 million banking facility with improved terms, it seems the group is on track to further strengthen its financial position.’
Brent oil was quoted at $70.50 a barrel early Wednesday afternoon, rising from $69.20 at the London equities close on Tuesday. Gold climbed to $2,522.03 an ounce from $2,515.08.
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