Stock prices in London closed up on Tuesday after a hopeful US producer price inflation print left investors reassured ahead of further key readings on Wednesday.
The FTSE 100 index closed up 24.98 points, 0.3%, at 8,235.23. The FTSE 250 ended up 66.89 points, 0.3%, at 20,744.08, and the AIM All-Share closed up 0.99 of a point, 0.1%, at 767.98.
The Cboe UK 100 ended up 0.3% at 822.29, the Cboe UK 250 closed up 0.5% at 18,198.42, and the Cboe Small Companies ended up 0.2% at 16,806.76.
In European equities on Tuesday, the CAC 40 in Paris ended up 0.4%, while the DAX 40 in Frankfurt ended up 0.5%.
The dollar weakened, while the pound strengthened.
The pound was quoted at $1.2826 at the London equities close Tuesday, firmer compared to $1.2789 at the close on Monday. The euro stood at $1.0956, down against $1.0937. Against the yen, the dollar was trading at JP¥147.03, lower compared to JP¥147.61.
US producer prices grew by less than expected in July, data showed.
The Bureau of Labor Statistics said producer prices rose 2.2% on-year in July, cooling from 2.6% inflation in June and 2.4% in May. Producer prices had been expected to rise 2.3% annually, according to FXStreet-cited market consensus.
The print helped to drive up market expectations of a 50-basis point interest rate cut from the Federal Reserve next month. However, the US consumer price index data coming on Wednesday will be key in determining how market expectations develop.
Meanwhile, the UK will also release CPI data on Wednesday.
In the meantime, traders were digesting the latest unemployment print.
For the April-to-June period, the jobless rate unexpectedly eased to 4.2% from 4.4% for March to May, according to the Office for National Statistics. Further, ONS data showed wage inflation was hotter than anticipated.
However, AJ Bell’s head of financial analysis Danni Hewson noted there are still indicators that the UK labour market is cooling.
‘Looking at updates from London listed recruiters, businesses are still cautious and the jobs market is subdued. Even if unemployment is down, the employment rate is lower than it was a year ago and there’s still the thorny issue of economic inactivity which has remained stubbornly stuck at 22.2%,’ she considered.
Stocks in New York were higher at the London equities close, with the DJIA up 0.5%, the S&P 500 index up 1.1%, and the Nasdaq Composite up 1.7%.
Starbucks jumped 22% as the Seattle, Washington-based coffee shop chain said it has hired Brian Niccol as its next chair & chief executive officer.
Niccol is currently the chair & CEO of California-based restaurant chain Chipotle Mexican Grill, and Starbucks said he has ‘transformed’ the firm since assuming the role in 2018. He also serves on the board of Walmart.
Meanwhile, Home Depot managed to shake off earlier losses, rising 0.2%. This comes despite the home improvement retailer cutting annual guidance and warning of weakening consumer demand.
In commodities, Brent oil was quoted at $80.98 a barrel at the London equities close Tuesday, little changed from $80.86 late Monday.
Gold was quoted at $2,470.54 an ounce, up against $2,458.10.
It was a quiet news day in the FTSE 100.
Sainsbury’s rose 1.7% and Persimmon added 2.1%, while Antofagasta fell 2.2% and Marks & Spencer dropped 1.7%.
In the FTSE 250, Bellway was up 4.1% while Crest Nicholson plunged 16%, after the former said it would not make an offer for its fellow mid-cap housebuilder.
Newcastle-based Bellway made its first all-share takeover approach in late April, offering 0.089 shares per Crest Nicholson share. Surrey-based Crest Nicholson rejected this proposal in May, and later rejected a revised offer of 0.093 Bellway shares.
In July, Bellway submitted a revised proposal offering Crest Nicholson’s shareholders 0.099 shares in Bellway for each share they own, as well as a 4 pence per share dividend. The proposal at the time valued each Crest share at 273p.
Crest Nicholson subsequently said it was minded to accept the revised bid proposal, which would see its shareholders owning 18% of the enlarged group’s share capital.
On Tuesday, however, Bellway confirmed that it did not intend to make a firm offer for Crest.
Bellway commented that it ‘remains confident that its robust balance sheet and operational strength, combined with the depth and quality of its land bank, will enable Bellway to deliver volume growth in the years ahead and support ongoing value creation for shareholders’.
Meanwhile, Just Group jumped 14%.
Despite seeing pretax profit fall to £74 million in the first half, down from £117 million a year prior, the firm posted retirement income sales of £2.47 billion, up from £1.90 billion. New business profit rose to £222 million from £161 million, while underlying operating profit was £249 million, up from £173 million the previous year.
Looking ahead, Just Group said its outlook is positive, noting a ‘strong and resilient capital base and low-strain business model’. It now expects to ‘substantially beat previous 2024 guidance’, which was doubling 2021’s £211 million operating profit in three years.
‘Higher interest rates might not be to everyone’s taste but a relative normalisation in the headline cost of borrowing, bond yields and returns on cash continues to benefit Just Group, as its bulk annuities business continues to gather momentum and retail annuity sales grow strongly after years in the doldrums,’ said AJ Bell investment director Russ Mould.
‘All of this is giving the shares a boost to a six-year high, but the damage done by more than a decade of zero interest rates, not to mention the pension freedoms introduced by then Chancellor of the Exchequer George Osborne in 2014, mean the stock still trades well below its 2013 flotation price.’
In Wednesday’s UK corporate calendar, there will be half-year results from insurer Aviva and infrastructure group Balfour Beatty.
The economic calendar for Wednesday has consumer price inflation from the UK and France in the morning, followed by unemployment, GDP and industrial production data from the eurozone, with US CPI to follow in the afternoon.
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