Stock prices in London opened slightly higher on Tuesday, despite weakness in New York, as data suggests easing UK shop price inflation.
The FTSE 100 index opened up 8.58 points, 0.1%, at 7,692.88. The FTSE 250 was up 20.49 points, 0.1%, at 19,147.41, and the AIM All-Share was down 0.32 of a point at 745.49.
The Cboe UK 100 was up 0.2% at 770.90, the Cboe UK 250 was up 0.1% at 14,499.03, and the Cboe Small Companies was up 0.6% at 14,499.03.
In European equities, the CAC 40 in Paris was up slightly, while the DAX 40 in Frankfurt was up 0.1%.
In the US on Monday, Wall Street ended in the red, with the Dow Jones Industrial Average down 0.2%, the S&P 500 down 0.4% and the Nasdaq Composite down 0.1%.
The US will release its latest economic growth figures on Wednesday, with personal consumption expenditures - which contains a key inflation metric - to follow on Thursday.
‘Favourable data – meaning resilient but not abnormally strong growth, coupled with softening inflation, would allow the market bulls to surf on the ’goldilocks’ wave. If that’s the case, we could see the stock market rally continue, and to broaden to sectors other than the technology stocks... If not, if growth is resilient, but inflation ticks higher in a way that’s concerning for the Federal Reserve expectations, we could see profit taking and a downside correction across major US indices, and selling could spill over to the other major stock markets,’ said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
According to FXStreet-cited consensus, the headline annual PCE inflation rate is to ease to 2.4% in January, from 2.6% in December. The core reading, the Fed’s preferred inflationary gauge, is to ebb to 2.8% from 2.9%.
The dollar was weaker in early exchanges in Europe.
Sterling was quoted at $1.2692 early Tuesday, higher than $1.2676 at the London equities close on Monday. The euro traded at $1.0858, rising from $1.0849. Against the yen, the dollar was quoted at JP¥150.29, down versus JP¥150.81.
Meanwhile, in a hopeful sign for UK consumers, shop price inflation ebbed to an almost two-year-low in February, according to the latest British Retail Consortium-NielsenIQ shop price index.
Annual shop price inflation ebbed to 2.5% in February, from 2.9% in January. The reading was also short of the three-month average inflation rate of 3.3%. The non-food inflation rate was unmoved at 1.3% in February, below the 3-month average rate of 2.0%. Food price inflation eased to 5.0% in February, from 6.1% in January, below the three-month average rate of 6.0%.
The trend was confirmed by new data on grocery inflation from Kantar, showing annual UK grocery price inflation in February eased to 5.3% in February, marking the lowest rate since March 2022 and down from 6.8% from January.
Kantar said grocery sales in the 12 weeks to February 18 were up 5.1% annually to £35.37 billion from £33.64 billion.
In the FTSE 100, Smith & Nephew was the top performer, rising 3.8%, after medical technology firm reported slightly stronger-than-expected annual results.
In 2023, revenue climbed 6.4% to $5.55 billion from $5.22 billion a year before. The topline figure beat company-compiled analyst consensus of $5.53 billion. Trading profit increased to $970 million from $901 million, beating consensus of $966 million. Pretax profit rose to $290 million from $235 million.
For 2024, S&N is guiding for underlying revenue growth of 5.0% to 6.0% or reported revenue growth of 4.6% to 5.6%, with trading profit margin of at least 18.0%, which would be a step up from 2023’s 17.5%.
In the FTSE 250, investment firm abrdn rose 6.1%.
abdrn reported a pretax loss of £6 million in 2023, narrowed substantially from £612 million the prior year. Net operating revenue fell 4.0% to £1.40 billion from £1.46 billion. Assets under management and administration fell 1% or so to £494.9 billion from £500.0 billion the year before, ‘with net outflows in Investments and Adviser partly offset by positive market movements and continued net inflows in ii,’ abrdn noted. Net outflows over the year worsened to £13.9 billion from £10.3 billion in 2022.
Among London’s small-caps, On the Beach jumped 11%.
The beach package holiday retailer announced it has signed a long-term distribution agreement with budget airline carrier Ryanair.
OTB customers will be able to access Ryanair’s low fare flights as part of their holiday packages with ‘full price transparency’, while continuing to have access from OTB’s flexible payment plans, customer perks and Air Travel Organisers’ Licensing protection.
‘We are excited to have entered into this transformational partnership with Ryanair. This will improve the booking and travel experience for our customers selecting Ryanair flights, while ensuring we can continue to provide customers with best value package holidays...Importantly, this agreement enables both parties to move on from outstanding litigation and we look forward to working closely with our new partner,’ OTB CEO Shaun Morton said.
OTB had previously sued Ryanair for some £2 million over refunds paid after flights were cancelled or changed.
‘The news reiterates, to us, the need Ryanair has to work with OTA to fill its seat supply, noting it has previously announced three other similar deals including one with Tui. By giving consumers direct access to their booking through Ryanair accounts, it implies that the customer data will be shared between the OTA’s and Ryanair, which could further benefit Ryanair’s future customer acquisition strategy,’ said Shore Capital research analysts.
In Asia on Tuesday, the Nikkei 225 index in Tokyo closed marginally higher, as new data showed Japanese inflation slowed by less than expected. Consumer price inflation hit the Bank of Japan’s 2.0% target in January, according to official data, helping to firm expectations of an end to its ultra-loose monetary policy.
Consumer prices rose 2.0% year-on-year in January, slowing from 2.3% in December - the third straight monthly easing. The January data ‘will support market speculation for an April rate hike’, ING economists said, although inflation could still be ‘choppy’ in coming months.
In China, the Shanghai Composite closed up 1.3%, while the Hang Seng index in Hong Kong added 1.0%. The S&P/ASX 200 in Sydney closed up 0.1%.
Gold was quoted at $2,035.34 an ounce early Tuesday, higher than $2,028.18 on Monday. Brent oil was trading at $82.87 a barrel, rising slightly from $82.18.
Tuesday’s economic calendar has the latest US durable goods orders data at 1330 GMT, as well as a consumer confidence reading from the world’s largest economy at 1500 GMT.
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