European markets moved lower at the open on Tuesday with focus lying on the afternoon's US inflation print, which is expected to accelerate sharply.
‘We expect March headline inflation to be extraordinarily elevated,’ White House Press Secretary Jen Psaki told reporters ahead of the Tuesday release of the closely watched consumer price index data.
The data is due out at 1330 BST.
The world's largest economy has seen prices rise at record rates as it recovers from the Covid-19 pandemic, with CPI increasing 7.9% over the 12 months to February, its fastest rate in four decades.
Consensus, according to FXStreet, sees the inflation rate accelerating further to 8.5% in March. But this sharp jump may not be able to push the dollar further higher, said Commerzbank.
‘For inflation to have a positive effect on USD it would have to surprise notably on the upside. On the market two 50bp rate hikes are almost completely priced in for the coming two meetings. For the rest of the year rate hikes of at least 25bp are expected per meeting. It is getting increasingly difficult to imagine that rate expectations could increase further,’ said Commerzbank's You-Na Park-Heger.
The FTSE 100 index was down 62.96 points, or 0.8%, at 7,556.39 early Tuesday. The mid-cap FTSE 250 index was down 173.07 points, or 0.8%, at 20,942.25, while the AIM All-Share index was down 1.97 points, 0.2%, at 1,053.56.
The Cboe UK 100 index was down 0.8% at 752.28. The Cboe 250 was down 0.7% at 18,435.87, and the Cboe Small Companies down 0.3% at 15,389.06.
The UK unemployment rate for the three months to February was 3.8%, falling below the 3.9% registered for the three months to January. Market forecasts - according to FXStreet - had predicted unemployment to remain steady at 3.9%.
The number of job vacancies in January to March 2022 rose to a new record of 1.3 million.
The Office for National Statistics added: ‘However, the rate of growth in vacancies continued to slow down. Over the quarter the number of vacancies increased by 50,200 with the largest increase in human health and social work.’
The pound was quoted at $1.3008 early Tuesday, down from $1.3040 at the London equities close on Monday.
In mainland Europe, the CAC 40 in Paris was down 1.8%, while the DAX 40 in Frankfurt was down 1.9%.
The DAX was weighed down by Deutsche Bank and Commerzbank following reports of hefty stake sales.
Reuters reported that an undisclosed investor has sold stakes of more than 5% in the German lenders. Deutsche was down 10%, while Commerzbank was 9.6% lower.
Consumer prices in Germany rose at their fastest level since reunification, the federal statistics office said Tuesday, piling pressure on the European Central Bank to counteract a run of red hot inflation readings.
Destatis figures showed annual consumer inflation had run to 7.3% in March, ahead of the 5.1% figure seen in February - but was in line with market forecasts, according to FXStreet.
Destatis noted March's reading saw inflation reach its highest level since German reunification as energy prices continue to soar.
The new inflation reading comes days before the latest rate decision from the European Central Bank on Thursday afternoon, which is under pressure to combat rising prices around the continent.
The euro was priced at $1.0864, down from $1.0889.
In London, Rolls-Royce was anchored to the bottom of the FTSE 100, down 6.9%, after suffering a broker downgrade. JPMorgan cut the aircraft engine maker to 'underweight' from 'neutral'.
In the FTSE 250, Diploma rose 8.1%, the best midcap performer in early trading, after it said trading has been ahead of expectations so far this year.
The London-based seal and cables maker said it has seen double-digit underlying growth in the second quarter - in line with its first quarter performance - driven by ‘robust’ demand and market share gains.
The firm also noted it has made two acquisitions for a combined total of about £121 million.
‘Acquisitions are an integral part of the strategy, with a disciplined focus on acquiring value-added businesses, with great management teams, to accelerate our organic growth,’ the company explained.
It has acquired aftermarket distribution business R&G Fluid Power for about £100 million and LJR Electronics, a distributor of connectors in the US, for about £14 million.
Looking ahead, Diploma added: ‘Underlying revenue growth is expected to be low double digit, well ahead of our model. This reflects our expectation that growth will moderate in the second half, particularly as comparators become more demanding.’
Online trading platform Plus500 advanced 4.1% as its revenue in the first quarter jumped a third, despite the firm seeing a 62% drop in new customers.
Revenue for the three-month period to March 31 rose 33% year-on-year to $270.9 million from $161.1 million, with earnings before interest, tax, depreciation and amortization also rising 33% to $161.6 million from $70.9 million.
Plus500 recorded a 62% year-on-year drop in new customers in the first quarter to 33,740 from 89,406, but noted a 2% rise from the fourth quarter of financial 2021.
Active customers were down 35% to 176,642 from 269,743, but, again, were up on the fourth quarter - rising 3%. Average revenue per user more than doubled year-on-year to $1,534 from $753.
‘At the current time, the board anticipates that revenue for financial 2022 will be ahead of current market expectations and continues to expect that Plus500 will deliver sustainable growth from all of the group's product offerings over the medium to long term,’ Plus500 added.
Peers CMC Markets and IG Group gave back 2.2% and 0.4%, respectively.
Price comparison website Moneysupermarket.com Group gained 2.0%. The firm said it was ‘pleased’ with the performance of its Money and Travel businesses in the first quarter - as the firm's total revenue increased on the year before.
In the three months to March 31, total revenue rose 8% to £92.3 million from £85.5 million, with its Money business seeing 37% growth and Travel jumping sharply. The firm's largest business - Insurance - saw a flat revenue performance.
Chief Executive Peter Duffy said: ‘With cost-of-living increases adding pressure to consumer budgets, our distinctive brands remain well positioned to help households save money in a broad range of areas.’
Mid-cap budget airline easyJet was down 1.9% but said its first half loss is expected to narrow despite headwinds gathering in the period.
‘First half losses have reduced year on year, outperforming expectations, as self-help measures including network optimisation, ancillary products, and a continued cost focus deliver. This result is despite ongoing challenges from Covid-19, rising fuel prices, the removal of furlough support and incremental costs associated with ramping up operations,’ Luton-headquartered easyJet explained.
For the first half to March 31, the airline expects to report revenue of £1.50 billion, with headline costs around £2.05 billion. It has guided for a headline pretax loss in the range of £535 million to £565 million, which would be narrowed from £701 million year-on-year.
Flights in the second quarter jumped sharply year-on-year to 82,247 from 11,672. As a result, passengers rose to 11.5 million from 1.2 million. Load factor improved to 78% from 60%.
easyJet expects its third quarter capacity to be about 90% of the same period in 2019, while capacity in the fourth quarter should ‘remain near’ the level seen in the final quarter of 2019.
The firm added: ‘easyJet has flown 94% of the planned schedule in the last seven days with daily flight volumes around 1,500 per day being 4x higher than the same point last year. This is despite the recent increase in the number of crew testing positive for Covid-19, together with normal operational disruption such as weather and ATC delays.’
Peer Wizz Air lost 1.8%. British Airways parent International Consolidated Airlines lost 2.2%.
Food delivery platform Deliveroo slipped 3.2% in early trading but saw boosted sales in the first three months of the year, despite facing tough comparisons from a year earlier when restaurants were shut due to the pandemic.
More customers placed orders during the first three months of the year, although the amount spent per order fell. Fewer, larger orders are more profitable for Deliveroo because its largest cost is its workforce of gig-economy riders.
Across all markets Deliveroo operates in, gross transaction value hit £1.8 billion in the period - up 11% on the same three months a year ago.
This included an 18% rise in orders to 82.4 million, although the amount spent per order fell 7% to £21.70 on average.
In the UK and Ireland GTV was up 12% to £956 million, with orders up 20% to 40.7 million but, again, the average spend per order was down 7% to £23.50.
In Asia on Tuesday, the Japanese Nikkei 225 index closed down 1.8%. In China, the Shanghai Composite ended 1.5% higher, while the Hang Seng index in Hong Kong was up 0.2% in late trading in a see-saw session. The S&P/ASX 200 in Sydney ended down 0.4%.
Against the yen, the dollar was trading at JP¥125.53 in London, a hair higher from JP¥125.52.
Brent was quoted at $100.80 a barrel early Tuesday, up from $98.80 a barrel Monday evening. Gold stood at $1,954.60 an ounce, higher against $1,952.48 late Monday.
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