Shares in London opened mixed on Wednesday, with focus moving to a US inflation report and the fate of the nation’s monetary policy.
Investors will be hoping reports on Wednesday provide an insight into the latter. If US inflation was to cool, it could strengthen the case for the Federal Reserve to pause rate hikes. Minutes from the central bank’s most recent meeting are also reported on Wednesday.
Among London listings, student accommodation provider Unite hailed strong demand. Banknote printer De La Rue is suffering from the opposite.
The FTSE 100 index opened up 20.87 points, 0.3%, at 7,806.59. The FTSE 250 was down 33.76 points, 0.2%, at 18,922.29, and the AIM All-Share was down 0.62 of a point at 816.23.
The Cboe UK 100 was 0.3% higher at 780.92, the Cboe UK 250 down 0.3% at 16,482.70, and the Cboe Small Companies was down 0.6% at 13,189.85.
In European equities, the CAC 40 in Paris and the DAX 40 in Frankfurt both were up 0.2%.
US inflation data for March will be released at 1330 BST. Markets are expecting the annual inflation rate to cool to 5.2% from 6.0%, according to FXStreet. From the previous month, consumer prices are expected to rise 0.4%, compared to 0.5% in February.
Core inflation - excluding food and energy - is expected to edge up to 5.6% annually from 5.5% in February.
‘This out-turn, or any positive surprise in the core inflation numbers, will bolster expectations that the Fed will continue with a final 25 basis point hike in its target rate to a 5-5.25% range at its May 3rd policy meeting,’ Davy analysts commented.
There also will be the release of the Federal Open Market Committee meeting minutes at 1900 BST.
At its March meeting, the Fed lifted interest rates by 25 basis points to a 475-500 basis point target range, resisting the urge to pause hikes in the face of banking sector turmoil.
‘Today’s minutes may help shed light on how the FOMC viewed the fallout from the collapse of SVB - specifically, the extent that tighter credit conditions alleviate the need for further rate hikes,’ said Davy Research.
In the US on Tuesday, Wall Street had a muted session, with the Dow Jones Industrial Average ending up 0.3%, the S&P 500 flat, and the Nasdaq Composite down 0.4%.
The dollar was mixed against major currencies in early exchanges.
Sterling was quoted at $1.2432 early Wednesday, higher than $1.2427 at the London equities close on Tuesday. The euro traded at $1.0931, up from $1.0914. Against the yen, the dollar was quoted at JP¥133.64, up slightly versus JP¥133.61.
In Asia on Wednesday, the Nikkei 225 index closed up 0.6%. In China, the Shanghai Composite added 0.4%, though the Hang Seng index in Hong Kong was down 1.0%. The S&P/ASX 200 in Sydney closed up 0.5%.
In London’s FTSE 100 index, student accommodation provider Unite added 0.7%, updating on its UK Student Accommodation Fund and London Student Accommodation joint venture’s quarterly trading.
In the 2023/24 academic year, it noted ‘strong progress’ in booking, with 90% of rooms already sold.
‘Reservations are significantly ahead of recent sales cycles, reflecting strong demand from both new and existing students as well as new nomination agreements with universities,’ said Chief Executive Richard Smith.
The progress reinforces its confidence in rental growth of 6% to 7% for the academic year, Unite said.
Anglo American fell 1.6%.
The miner announced the value of rough diamond sales for De Beers in the third sales cycle of the year. Sales values rose to $540 million from $497 million in the second cycle. However, sales were down from $566 million in the third cycle of 2022. The third cycle ran from March 27 to April 11.
‘Sales were in line with expectations and we continue to see some encouraging positive trends in consumer demand for diamond jewellery, not least in China where we’re beginning to see some signs of recovery in consumer confidence following the relaxation of travel restrictions,’ said De Beers CEO Al Cook.
Gold was quoted at $2,016.14 an ounce early Wednesday, higher than $2,002.83 on Tuesday.
In the FTSE 250, Tullow Oil dropped 4.0%, as Jefferies cut the stock to ’underperform’ from ’hold’.
Brent oil fetched $85.80 a barrel, higher than $85.22.
Elsewhere, Hikma Pharmaceuticals fell 0.5% as it named Riad Mishlawi as its new chief executive officer.
Mishlawi will become CEO from September 1, and is currently the president of Hikma’s Injectables business. Acting CEO Said Darwazah will step down, and resume his role as executive chair.
Among London’s small-caps, De La Rue plunged 29%.
The banknote printer said it has been hurt by demand for banknotes sinking to a more than 20-year low. It expects full year adjusted operating profit for the year ended March 25 to be ‘a mid-single digit percentage below market expectations’.
De La Rue said it is seeing signs of recovery, with a ‘significant number of new tenders actively underway’, though the pace of a bounce back is uncertain.
De La Rue added: ‘The company is in discussions with its lending banks in relation to seeking an amendment to its banking covenants, reflecting the revised outlook and also reflecting the increase in the company’s funding costs resulting from higher Bank of England base rates.’
More positively, it expects revenue in its Authentication to top £100 million for the first time in the new financial year.
On AIM, ImmuPharma jumped 10%.
The specialist drug discovery and development company said it had received confirmation of a meeting with the US Food & Drug Administration. The pre-investigational new drug meeting will take place on May 16. It concerns the phase 2/3 adaptive trial study protocol for P140 in chronic idiopathic demyelinating polyneuropathy.
‘We are delighted to be moving P140 into its second indication for CIDP patients who suffer from a rare disease with high unmet medical need. This is a great example of P140’s broad potential,’ said CEO Tim McCarthy.
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