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London open: FTSE edges lower as UK inflation eases
London stocks edged lower in early trade on Wednesday as investors mulled a bigger-than-expected dip in UK inflation and looked ahead to the release of US retail sales.
At 0820 GMT, the FTSE 100 was down 0.2% at 7,940.47, having closed at a record high on Tuesday, just short of the 8,000 level. At the same time, sterling was 0.8% lower against the dollar at 1.2082.
Data released earlier by the Office for National Statistics showed that consumer price inflation eased more than expected in January.
The annual rate of CPI fell to 10.1.% from 10.5% in December, coming in below analysts’ expectations of 10.3%.
This was the third drop in three months, after CPI hit a 41-year high of 11.1% in October 2022.
The ONS said the largest downward contribution came from transport – particularly passenger transport and motor fuels – and restaurants and hotels, helping to offset rising prices in alcoholic beverages and tobacco.
The figures showed that fuel price inflation fell to 7.7% in January from 11.5% the month before, while food inflation remained high, at 16.7% compared to 16.8% in December.
Meanwhile, core CPI came in at 5.8%, down from 6.3% in December and versus expectations of 6.2%.
ONS chief economist Grant Fitzner said: “Although still at a high level, inflation eased again in January. This was driven by the price of air and coach travel dropping back after last month’s steep rise.
“Petrol prices continue to fall and there was a dip in restaurant, café and takeaway prices. The cost of furniture decreased by more than this time last year, in line with traditional New Year discounting.
“These were offset by rising prices for alcohol and tobacco, following on from seasonal price cuts in December and a more subdued rise at the same time last year.”
Craig Erlam, senior market analyst at Oanda, said: “UK inflation may still be far too high but the January CPI report has offered some cause for optimism, slipping faster than expected on both a headline and core basis.
“The headline number remains above 10% so there’s still a very long way to go but favourable base effects and lower energy prices should go a long way in driving this much lower over the course of the year.
“The BoE may be particularly encouraged by the core decline as this is where we’re likely to see stubbornness but we must remember that this is just one release and there will likely be many setbacks over the course of the year.”
Still to come on the macro front, US retail sales for January are due at 1330 GMT.
In equity markets, Barclays tumbled after it said annual profits fell 14%, with provisions for debt impairments increasing as the economy worsened.
The bank posted a pre-tax profit of £7bn in 2022, down from £8.2bn a year earlier and missing estimates of £7.2bn. Credit impairment charges were £1.22bn against a net release of £653m, reflecting “macroeconomic deterioration and a gradual increase in delinquencies”.
Glencore also lost ground despite announcing a $7.1bn payout to shareholders and reporting record full-year profits.
On the upside, Hargreaves Lansdown rallied after it posted strong growth on both its top and bottom lines at the first half-year stage, despite the impact from “challenging” external conditions and low investor confidence on asset values and stockbroking volumes.
Homeware retailer Dunelm also gained as it backed its FY23 profit guidance and reported a drop in interim profits, as expected, pointing in part to inflationary pressures.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Burberry Group Plc | +2.08% | +50.00 | 2,455.00 |
| 2 |  |
Persimmon Plc | +2.06% | +29.00 | 1,438.50 |
| 3 |  |
Coca-cola Hbc Ag | +1.96% | +40.00 | 2,078.00 |
| 4 |  |
Hargreaves Lansdown Plc | +1.84% | +17.40 | 965.20 |
| 5 |  |
Whitbread Plc | +1.77% | +54.00 | 3,112.00 |
| 6 |  |
Carnival Plc | +1.56% | +13.20 | 859.80 |
| 7 |  |
Scottish Mortgage Investment Trust Plc | +1.43% | +10.60 | 749.60 |
| 8 |  |
Next Plc | +1.28% | +86.00 | 6,798.00 |
| 9 |  |
Barratt Developments Plc | +1.26% | +5.80 | 465.70 |
| 10 |  |
Ferguson Plc | +1.21% | +145.00 | 12,115.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Barclays Plc | -7.43% | -13.92 | 173.40 |
| 2 |  |
Lloyds Banking Group Plc | -1.62% | -0.87 | 52.92 |
| 3 |  |
Fresnillo Plc | -1.39% | -11.00 | 782.60 |
| 4 |  |
Gsk Plc | -0.91% | -13.40 | 1,456.60 |
| 5 |  |
Hiscox Ltd | -0.76% | -8.50 | 1,111.50 |
| 6 |  |
Anglo American Plc | -0.54% | -17.50 | 3,195.50 |
| 7 |  |
National Grid Plc | -0.52% | -5.50 | 1,049.00 |
| 8 |  |
Hsbc Holdings Plc | -0.49% | -3.00 | 606.20 |
| 9 |  |
Astrazeneca Plc | -0.43% | -50.00 | 11,468.00 |
| 10 |  |
Glencore Plc | -0.41% | -2.10 | 513.80 |
US close: Stocks mixed as inflation beats forecasts
Wall Street stocks were mixed by the end of trading on Tuesday, after the all-important consumer price index registered a larger than expected increase in January.
At the close, the Dow Jones Industrial Average was down 0.46% at 34,089.27 and the S&P 500 lost 0.03% to 4,136.13, while the Nasdaq Composite managed gains of 0.57% to 11,960.15
The Dow closed 156.66 points lower on Tuesday, reversing the gains it recorded in the previous session as stocks recovered some of last week’s losses.
Tuesday’s primary focus was January’s CPI reading, which revealed the cost of living in the US increased by more than expected at the start of 2023.
According to the Department of Labor, the country’s consumer price index, the Federal Reserve’s preferred inflation gauge, rose by 0.5% month-on-month – a tenth of a percentage point more than anticipated by economists.
At the core level meanwhile, CPI increased 0.4% on the month, ahead of consensus estimates for a jump of 0.3%.
Elsewhere on the macro front, the National Federation of Independent Business‘ small business optimism index rose to 90.3 in January, up from a six-month low of 89.9 in December, as the percentage of owners expecting to see business conditions improve over the next six months improved six points to -45%.
However, 26% of business owners still singled out inflation as their single most pressing concern.
In the corporate space, Coca-Cola was down 1.67% despite beating guidance with its fourth-quarter results as strong demand and price hikes helped it through the Christmas trading period.
Hotel operator Marriott International was up 3.96%, meanwhile, after it posted an increased quarterly profit performance as strong demand buoyed the firm over the holidays.
Wednesday newspaper round-up: Subway, Waitrose, Royal Mail
Fast-food chain Subway has put itself on the menu – announcing on Tuesday it is exploring a possible sale of its business after 58 years of family control. After years of rapid growth, rising costs and mounting competition from rivals have taken their toll on the company in recent years, but it still has more than 37,000 restaurants in over 100 countries – making it one of the largest chains in the world. – Guardian
It has long had the reputation as Britain’s most luxurious supermarket. But even Waitrose customers are being squeezed by the cost of living crisis, leading to the store slashing the prices of some of its own-brand basics. Almost a third of items in the high-end grocer’s Essential range will have their costs cut – including coffee, carrots and butter. – Guardian
Royal Mail spurned an “absurd” £66m ransom demand from a gang of Russia-linked hackers, a cache of online chats has revealed. Directors rejected an ultimatum from the Lockbit ransomware group after it blocked international mail shipments by breaking into Royal Mail’s software, according to information that the gang has released on the dark web. – Telegraph
Two former record label executives with private equity backing have launched a rival to Hipgnosis Songs Fund and have snapped up the rights to tracks by artists including Robbie Williams and LeAnn Rimes. Bella Figura Music was set up last year by Alexi Cory-Smith and Neelesh Prabhu, who previously worked at BMG UK, the music publisher and record label. – The Times
Workers outside London who have shorter commutes on public transport are returning to their offices more frequently. Regional Reit, which owns 156 office buildings from Eastleigh to Glasgow, said that virtually all its tenants were back in their offices for at least part of the week. Of the company’s 1,042 tenants, only 12 had not bothered to start working from their offices again. Two of those were Scottish government departments, it said. – The Times
