London’s stock indices closed higher on Wednesday, contrasting with broader European declines, with confidence from easing bond yields lifting housebuilders over the session.
The FTSE 100 index rose 16.14 points, 0.2%, at 8,274.75. The FTSE 250 climbed 32.98 points, 0.2%, at 20,601.63, and the AIM All-Share firmed 0.81 of a point, 0.1%, at 731.40.
The Cboe UK 100 advanced 0.1% at 831.73, the Cboe UK 250 added 0.2% at 18,092.83, and the Cboe Small Companies gained 0.2% to 15,691.03.
In Europe, the CAC 40 in Paris ended down 0.7%, while the DAX 40 in Frankfurt lost 0.2%.
Stocks fell in Paris as concerns intensified that a row over a draft budget could bring down Michel Barnier’s government.
Far-right leader Marine Le Pen threatened last week to bring down the government if demands to amend the budget were not met.
Barnier warned on Tuesday that if the budget did not go through there would be a ‘big storm and very serious turbulence on the financial markets’, in comments reported by Reuters.
On Wednesday, the yield on the French 10-year bond stood at 3.02%, just shy of the 3.05% 12-year high reached on Tuesday. The spread to the German 10-year bond hit 0.86 percentage points, up from 0.72 on November 18.
Banks were on the back foot. Societe Generale fell 3.5%, BNP Paribas fell 1.2% and Credit Agricole fell 1.3%.
In New York, markets were mixed. The Dow Jones Industrial Average was up 0.1% at the time of the closing bell in London. The S&P 500 was 0.3% lower, and the Nasdaq Composite lost 0.9%.
Investors were digesting another slew of US economic data which showed a pick up in an inflation measures and continued robust growth.
According to the Bureau of Economic Analysis the core personal consumption expenditures index rose 2.8% on-year in October, picking up speed from 2.7% in September.
The reading was in line with the FXStreet-cited market consensus. The core PCE is the Federal Reserve’s preferred inflation gauge.
The headline PCE index, which unlike the core data factors in food and energy, showed the pace of annual inflation rose to 2.3% last month, from 2.1% in August, also in line with consensus.
On month, headline PCE rose 0.2% while the core measure increased 0.3%, both as expected.
In a separate report, the BEA said the US economy expanded 2.8% quarter-on-quarter on an annualised basis in the three months to September 30, in line with a prior estimate.
Growth slowed from 3.0% in the second-quarter but was in line with expectations.
Kathleen Brooks at XTB said US traders can pack up for the Thanksgiving holiday with ‘little to fear’ at this stage.
‘Overall, the Fed‘s preferred measure of inflation suggests that the Fed is right to tread a careful path when it comes to rate cuts, but it continues to support a gradual easing in Fed policy.’
On Tuesday, minutes from November’s Federal Open Market Committee showed officials continue to expect a gradual easing of monetary policy given that inflation is easing and the labour market is solid.
The Federal Reserve is confident that inflation is heading toward 2%, even if month-on-month readings remain volatile. Some officials said it may take longer to hit the target than planned, the minutes stated.
The dollar gave up ground after the data dump and on further consideration of President-elect Donald Trump’s tariff threats.
The pound was quoted at $1.2687 late on Wednesday afternoon in London, up from $1.2548 at the time of the European equities close on Tuesday. The euro stood at $1.0579, up from $1.0475.
Against the yen, the dollar was trading at JP¥150.71, fading from JP¥153.52.
On London’s FTSE 100, rate sensitive housebuilders and property stocks benefited from a drop in bond yields. The yield on the UK 10-year bond eased 18 basis points to 4.29%, back to levels seen before the autumn budget.
Hopes this would feed through to lower borrowing costs for homeowners boosting the property market supported Vistry, British Land, and Barratt Redrow, up 4.2%, 1.3% and 0.6% respectively.
Elsewhere, easyJet gave up early gains to close 1.0% lower.
For the financial year ended September 30, the Luton-based budget airline said its pretax profit grew 39% to £602 million from £432 million a year prior.
Revenue rose over the period by 14% to £9.31 billion from £8.17 billion, reflecting an 8.4% increase in capacity to 100.4 million seats from 92.6 million the prior year and the continued growth of easyJet holidays coupled with total per seat pricing strength.
RBC Brewin Dolphin analyst John Moore noted the rocky few years easyJet has endured recently, but dark clouds over the stock appear to be easing,
Moore said: ‘Demand for holidays continues to prove resilient, despite fears over the pent-up demand from the pandemic dissipating and the cost-of-living crisis taking its toll on household spending. easyJet is putting the turbulence of recent years firmly behind it and looks to have a positive outlook ahead.’
Aston Martin fell 5.9% after completing a fund raise to support future growth.
The Gaydon, Warwickshire-based luxury carmaker confirmed it had raised £111 million via a placing at 100.00 pence per share, a 7.3% discount to Tuesday’s closing price of 107.90p.
Leading shareholder Yew Tree Overseas Ltd subscribed for £50.5 million worth of stock through the placing. The Yew Tree consortium is led by Aston Martin Executive Chair Lawrence Stroll.
In addition, Aston Martin raised £100 million through the private placement of additional senior secured notes, which attracted strong support from bond holders.
In a statement, the firm trimmed earnings guidance to reflect the delayed delivery of some Valiant models.
The luxury carmaker expects full-year adjusted earnings before interest, tax, depreciation and amortisation between £270 to £280 million.
It had previously forecast adjusted Ebitda to be ‘slightly below’ the £305.9 million it achieved last year. This guidance was cut in September.
Citi put the consensus before Tuesday’s announcement at £290 million.
Pets At Home fell 16%, as it has grappled with a ‘subdued market’.
In the half-year to October 10, revenue rose 1.9% on-year to £789.1 million from £774.2 million. Pretax profit improved 47% to £51.1 million from £34.7 million.
‘However, we are operating in an unusually subdued pet retail market which we now expect to continue through H2. We are confident this will be temporary, and growth will return to historical norms with the longer-term attractive outlook for the UK pet care market unchanged,’ the pet care retailer said.
It now expects underlying pretax profit to grow ‘modestly’ in the full-year. In August, it predicted an outcome in line with consensus at the time of £144 million, which would have represented growth of 5.6%.
Brent oil was quoted at $72.79 a barrel late Wednesday afternoon, down from $73.42 at the time of the London equities close on Tuesday. Gold climbed to $2,643.13 an ounce from $2,629.43.
Thursday’s global economic diary sees eurozone consumer confidence figures, and CPI data in France, Germany and Italy.
The local corporate calendar has third quarter results from automotive engineering company Dowlais and full-year results from food processing firm Greencore.
US financial markets are closed for Thanksgiving.
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