Stock prices in London rose on Thursday morning, in anticipation of crucial US inflation data, as festive updates from UK grocery companies received a mixed reception.
The FTSE 100 index opened up 38.25 points, 0.5%, at 7,690.01. The FTSE 250 was up 81.38 points, 0.4%, at 19,361.46, and the AIM All-Share was up 1.44 points, 0.2%, at 751.15.
The Cboe UK 100 was up 0.5% at 768.44, the Cboe UK 250 was up 0.4% at 16,814.53, and the Cboe Small Companies was up 0.1% at 15,163.06
In European equities, the CAC 40 in Paris was 0.6%, while the DAX 40 in Frankfurt was up 0.7%.
‘Investors are gearing up for the release of new inflation data on Thursday, eager to glean insights into the timing of potential interest rate cuts by the Federal Reserve. Despite some concerns among Fed members about inflation re-accelerating, they remain entirely emphatic about incoming economic data driving their policy decisions,’ said SPI Asset Management’s managing partner, Stephen Innes.
‘Consequently, any substantial decrease in CPI inflation could become a critical focal point for market participants in shaping early 2024 rate-cut expectations.’
According to FXStreet, the consensus is for the US headline consumer price index to edge up to 3.2% annually in December, from 3.1% in November. However, core inflation - which excludes food and energy - is expected to cool to 3.8% from 4.0%.
The dollar was weaker against major currencies in early exchanges in Europe, suggesting traders are pinning their hopes on a benign inflation print.
Sterling was quoted at $1.2768 early Thursday, rising from $1.2725 at the London equities close on Wednesday. The euro traded at $1.0981, higher than $1.0958. Against the yen, the dollar was quoted at JP¥145.45, down versus JP¥145.74.
The governor of the Bank of England has said further ‘global shocks’ are a major threat to the UK economy as he told MPs he is monitoring the situation in the Red Sea closely amid concerns over oil supplies.
Andrew Bailey also said he was hoping to see mortgage costs continue to fall after the bank paused hiking interest rates. Bailey said: ‘We’ve certainly seen – as best we can tell from the monitoring – shipping traffic is being affected and is being rerouted. That will increase shipping prices and shipping costs.
‘I think initially that will be an issue in the monetary policy world.’
However, he noted that fortunately been no ‘prolonged spike’ in oil prices as a result.
Brent oil was trading at $77.31 a barrel early Thursday, little changed from $77.36 on Wednesday afternoon.
In the FTSE 100, it was a mixed day for UK grocers.
Tesco added 0.9%, as it raised its annual guidance as it reported on its trading over the Christmas period and its third quarter.
The grocer’s third quarter is the 13 weeks to November 25, while Christmas covers the six weeks to January 6. In the UK & Republic of Ireland, it saw like-for-like sales growth of 7.3% in the third quarter, slowing to 6.4% over the six-week Christmas period. The figures exclude value-added tax and fuel.
It cited a strong market share performance in the UK, adding 15 basis points to 27.9% in the four weeks to Christmas, and net switching gains for 10 periods in a row.
However, Marks & Spencer dropped 3.6%.
This was despite reporting sustained ‘strong sales momentum’ over the festive trading period in its financial third quarter, the 13 weeks to December 30. Group sales rose 7.2% to £3.86 billion year-on-year in constant currency, with Food leading at 10%, Clothing & Home seeing 4.8% growth, resulting in total UK growth of 8.5%.
Looking ahead, M&S said it was confident of annual results in line with market expectations.
What may have unnerved investors is its forward guidance. It pointed to uncertainty in terms of economic growth, and consumer and geopolitical risks. It also faces higher costs from the higher-than-expected wage and business rate cost inflation.
Elsewhere in the FTSE 100, Antofagasta jumped 4.0%, as RBC raised the stock to ’outperform’ from ’sector perform’. Premier Inn-owner Whitbread rose 2.3%, following a well-received trading update for its third quarter.
In the FTSE 250, Trustpilot jumped 17%.
The review platform around 18% year-on-year to £176 million in 2023 from £149 million in 2022, with profit and positive free cash flow ahead of expectations. It also announced a £20 million buyback programme.
On AIM, CyanConnode surged 18%.
The narrowband radio frequency mesh network company announced its subsidiary received an order for one million Omnimesh Modules, alongside other offerings, and a support and maintenance contract, from Montecarlo Ltd.
Executive Chair John Cronin said the order ‘underscores the growing market acceptance and momentum for [the company’s] products’.
In the US on Wednesday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.5%, the S&P 500 up 0.6% and the Nasdaq Composite up 0.8%.
In Asia on Thursday, the Nikkei 225 index in Tokyo jumped 1.9%, closing above 35,000 for the first time in nearly 34 years. It gained further ground amid the recent weakness in the yen, and a positive performance in the technology sector.
In China, the Shanghai Composite closed up 0.3%, while the Hang Seng index in Hong Kong was up 1.3%. The S&P/ASX 200 in Sydney closed up 0.5%.
Gold was quoted at $2,034.58 an ounce early Thursday, higher than $2,026.60 on Wednesday.
Thursday’s economic calendar has the key US inflation reading, and the latest initial jobless claims data, at 1330 GMT.
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