Stocks in Europe were mostly lower on Wednesday morning, ahead of a eurozone consumer price inflation reading and the King’s Speech.
The FTSE 100 index opened down 10.32 points, or 0.1%, at 8,155.17. The FTSE 250 was down 55.59 points, or 0.3%, at 21,159.81, and the AIM All-Share was up 0.71 points, or 0.1%, at 787.79.
The Cboe UK 100 was down 0.2% at 813.97, the Cboe UK 250 was down 0.1% at 18,451.87, and the Cboe Small Companies was up slightly at 17,165.46.
In economic news, UK consumer price inflation remained at the Bank of England’s target after nearly three years of loftier readings.
According to the Office for National Statistics, the rate of yearly consumer price growth was unchanged at 2.0% in June. The same rate was registered in May, fading from 2.3% in April. The reading was in-line with the FXStreet-cited consensus.
On a monthly basis, consumer prices grew 0.1% in June, compared to 0.3% in May. This reading was also in line with FXStreet-cited consensus.
Separate data showed that UK producer input prices declined 0.4% annually in June, the decline easing from a revised fall of 0.7% in May. On a monthly basis, producer input prices declined 0.8% in June, following a revised fall of 0.6% in May.
Meanwhile, in the world of politics, Labour is set present a ‘packed’ legislative agenda, focused on improving living standards by driving economic growth, the first of the UK prime minister’s five ‘missions for national renewal’.
One of the expected measures is a commitment to major planning reform. The bill is likely to involve streamlining the planning process and reintroducing mandatory housing targets, as well as facilitating building on the ‘grey belt’ – green belt land that has previously been developed.
Other bills expected in the speech include new laws to renationalise the railways by 2029 under a new public body, Great British Railways. An English Devolution bill, transferring more power away from Westminster, the creation of a national wealth fund, and a boost for workers’ rights through Labour’s ‘new deal for working people’ are also likely to feature.
In European equities on Wednesday, the CAC 40 in Paris and the DAX 40 in Frankfurt were down 0.7% and 0.4% respectively.
Gridlock drove down sentiment in France, after President Emmanuel Macron accepted the resignation of Prime Minister Gabriel Attal’s government.
An inconclusive snap election earlier this month means that parties in the National Assembly have been scrambling to put together a governing coalition. Attal and his team will ‘handle day-to-day business until a new government is named’, the Elysee Palace said.
Meanwhile, in Germany, the German Cabinet is set to approve its long-contested 2025 budget on Wednesday, after weeks of wrangling over finances, reported DPA.
The draft, negotiated by the coalition leaders - Chancellor Olaf Scholz of the Social Democratic Party, Economy Minister Robert Habeck of the Greens, and Finance Minister Christian Lindner of the pro-business Free Democratic Party - calls for a total budget of €480.6 billion - slightly less than this year.
Lindner is planning new loans totalling €43.8 billion, the maximum allowed by Germany’s strict rules against ordinary budget deficits, known as the debt brake, which is enshrined in the country’s constitution.
The pound was quoted at $1.2983 early on Wednesday in London, up compared to $1.2957 at the equities close on Tuesday. The euro stood higher at $1.0902 against $1.0884. Against the yen, the dollar was trading down at JP¥157.91, compared to JP¥158.57.
In the FTSE 100, HSBC was down 0.1%.
The bank has announced that Chief Financial Officer Georges Elhedery will take over as chief executive in September, succeeding Noel Quinn in the role after Quinn announced his retirement from the bank in April.
Elhedery joined HSBC in 2005 and was appointed to the board and as chief financial officer in January 2023. His appointment follows Quinn’s unexpected retirement after an ‘intense’ five years in the role.
‘I am delighted to confirm Georges as the next HSBC group chief executive. He is an exceptional leader and banker who cares passionately about the bank, our customers, and our people. He has a track record of leading through change, driving growth, delivering simplification, containing costs and brings a strong focus on execution,’ said HSBC Chair Mark Tucker.
In the FTSE 250, Mitie Group gained 0.8%.
The Glasgow-based facilities management company has bought ESM Power, an electrical engineering business specialising in grid and power connections, for a maximum consideration of £8.5 million. This is comprised of an initial payment of £5.5 million, and performance-linked deferred payments of up to £3 million over two years. Completion is expected on July 31.
Managing Director Mark Caskey said: ‘We are delighted that the ESM Power team will be joining Mitie. This acquisition strengthens our position as a leading provider of power connections in the UK, offering our customers a comprehensive range of design, delivery and maintenance capabilities to support their decarbonisation and asset resilience objectives.’
Elsewhere, BHP Group gained 0.4%.
The Melbourne, Australia-based resource miner indicated that it ended the year with a ‘strong’ fourth quarter, setting ‘several’ production records.
Copper output rose 8.8% to 1.86 million tonnes for the financial year that ended June 30 from 1.71 million tonnes the year before. Increased production was primarily due to a higher concentrator feed grade, as mining progressed into areas of higher-grade ore.
For the fourth quarter, copper output was up 8.4% to 505,000 tonnes from 466,000 tonnes in the third quarter. In the recent year, the average price of copper improved 9.0% to $3.98 per pound from $3.65 per pound in 2023.
Annual iron ore production was 1.2% higher at 260 million tonnes, compared to 257 million tonnes, getting a boost from Western Australia Iron Ore, or WAIO, in Australia.
In Asia on Wednesday, the Nikkei 225 index in Tokyo was down 0.4%. In China, the Shanghai Composite was down 0.5%, while the Hang Seng index in Hong Kong was up 0.2%. The S&P/ASX 200 in Sydney closed up 0.7%.
In the US on Tuesday, Wall Street ended higher, with the Dow Jones Industrial Average up 1.9%, the S&P 500 up 0.6%, and the Nasdaq Composite up 0.2%.
The ’Trump trade’ continue to boost stocks in New York on Tuesday, following an assassination attempt on former president Donald Trump over the weekend. Trump was hit in the ear by a gunman at a campaign rally Saturday.
Following on from this incident, Republicans approved their policy platform at the party’s national convention, with a more radical shadow manifesto raising fears about the future of American democracy.
Project 2025 has been characterised by opponents as an authoritarian, right-wing wish list. Its 887-page ‘Mandate for Leadership’ sets out how to replace thousands of federal workers with ultra-conservative loyalists should Trump prevail against Democratic President Joe Biden in November.
It calls for a makeover of almost every function of the federal government, reshaping its numerous agencies to centralise power in the White House and push policy to the right on everything from abortion to immigration.
Brent oil was quoted at $83.71 a barrel early in London on Wednesday, down from $83.89 late Tuesday.
Gold was quoted at $2,464.40 an ounce, up against $2,463.64.
Still to come on Wednesday’s economic calendar, there is a handful of data from the US, including building permits, industrial production, and EIA crude oil stocks. Federal Reserve Governor Christopher Waller is also due to speak.
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