ADVFN Morning London Market Report: Thursday 18 Feb 2016

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London open: Stocks decline after China inflation misses forecasts

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The FTSE 100 was in the red on Thursday as mining stocks declined and China inflation rose less than expected.

China’s consumer inflation increased 1.8% year-on-year in January, compared to 1.6% in December. While it marked an improvement on the previous month, it missed analysts’ estimates of 1.9%.

“The pick-up in inflation last month was mostly seasonal,” Capital Economics said, referring to the benefits of the Lunar New Year holiday. “That said, underlying price pressures also appear to be edging up which ought to ease deflation concerns.”

Meanwhile, oil prices were mixed with Brent crude down 0.26% and West Texas Intermediate up 1.3% to $31.08 per barrel amid confusion over whether global producers will agree to a production freeze following a meeting in Tehran.

In the US, the Federal Reserve’s minutes of its 26-27 January policy meeting suggested policymakers were unlikely to raise interest rates before June. The minutes showed rate setters spent plenty of time debating the implications of global economic and financial developments on the US economic outlook, agreeing that uncertainty had increased, with many arguing this increased the downside risks to the outlook.

“The uncertainty about the economic outlook, with increased downside risks, and the need for more evidence to gauge the balance of risks suggest that a March rate hike is only a theoretical possibility, but in practice we do not expect to see a hike before June,” said Rabobank strategist Philip Marey.

In company news, Centrica’s shares gained after reporting full year results that beat expectations.

BAE Systems also rallied after posting full year results that were in line with analysts’ forecasts and issued guidance that underlying earnings per share will rise between 5-10% in 2016 as it enters a what it says is an improved business environment.

Go-Ahead was ahead after reporting a solid performance across most of its operations in six months to 26 December with a 6.8% rise in overall revenue to £1.67bn

Going the other way, miners were the biggest fallers after worse-than-expected Chinese inflation added to worries about the world’s largest consumer of commodities. Shares in Anglo American, Glencore and Rio Tinto plunged.

Vodafone declined on news it was looking at a £2.9bn fundraiser through the issue of convertible bonds.

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