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London open: Stocks gain ahead of US inflation; Experian surges
London stocks rose in early trade on Wednesday, helped along by the likes of Experian and Imperial Brands, as investors eyed the latest US inflation reading.
At 0835 BST, the FTSE 100 was up 0.5% at 8,467.82, having hit a record high of 8,474.41 closer to the open.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: “All eyes are on the US CPI update today. Both headline and core inflation are expected to have moderated last month.
“If that’s the case, the risk rally will likely continue. And if it’s not the case, the risk rally could continue, as well. Until when? Until it doesn’t.”
US CPI for April is due out at 1330 BST, along with retail sales and the NY Empire State manufacturing index.
In equity markets, Experian surged after saying that FY24 growth was at the top end of expectations.
Tobacco giant Imperial Brands gained as it reiterated its full-year outlook despite a fall in interim profits and sales.
Engineering firm Spirax-Sarco was in the black as it maintained its guidance for organic sales growth this year despite ongoing weakness in the wider market, though foreign exchange headwinds will impact profits more than previously thought.
Keller Group rallied as the geotechnical engineer said its annual earnings would be “materially ahead” of expectations after a strong performance in the first four months of the year.
Britvic fizzed higher as the drinks company posted a jump in interim profit and revenue and announced a £75m share buyback, as it highlighted “strong” customer demand for its brands.
Hunting surged as it said full-year earnings would be at the upper end of expectations after winning a $145m order with the Kuwait Oil Company.
On the downside, Burberry slumped as it warned of a challenging first half after slowing demand hit annual sales and profits. The luxury fashion brand said revenues in the year to 30 March fell 4% to £2.97bn. On a constant currency basis, revenues were flat, while like-for-like store sales fell 1%.
Burberry said a “robust” first half, where comparable store sales had sparked 10%, had been offset by a more challenging second half, when they fell 8%.
Compass Group also fell even as the catering firm lifted its 2024 underlying operating profit growth guidance.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Experian Plc | +7.72% | +268.00 | 3,738.00 |
| 2 |  |
Vodafone Group Plc | +4.78% | +3.50 | 76.78 |
| 3 |  |
Imperial Brands Plc | +4.52% | +85.00 | 1,963.50 |
| 4 |  |
Spirax-sarco Engineering Plc | +3.51% | +325.00 | 9,585.00 |
| 5 |  |
Centrica Plc | +3.01% | +4.20 | 143.60 |
| 6 |  |
Persimmon Plc | +2.02% | +28.50 | 1,437.00 |
| 7 |  |
Flutter Entertainment Plc | +1.95% | +310.00 | 16,185.00 |
| 8 |  |
Segro Plc | +1.89% | +16.80 | 904.60 |
| 9 |  |
Bhp Group Limited | +1.63% | +38.00 | 2,366.00 |
| 10 |  |
Tui Ag | +1.33% | +8.00 | 608.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | -5.95% | -22.00 | 347.80 |
| 2 |  |
Burberry Group Plc | -4.04% | -48.00 | 1,140.50 |
| 3 |  |
Compass Group Plc | -3.45% | -80.00 | 2,241.00 |
| 4 |  |
St. James’s Place Plc | -2.82% | -14.00 | 482.80 |
| 5 |  |
Whitbread Plc | -1.45% | -45.00 | 3,069.00 |
| 6 |  |
Schroders Plc | -1.22% | -4.60 | 371.00 |
| 7 |  |
Crh Plc | -1.13% | -74.00 | 6,476.00 |
| 8 |  |
Associated British Foods Plc | -1.03% | -28.00 | 2,691.00 |
| 9 |  |
Intercontinental Hotels Group Plc | -0.92% | -72.00 | 7,782.00 |
| 10 |  |
Diageo Plc | -0.72% | -20.50 | 2,818.50 |
US close: Late rally sends Nasdaq to new all-time high
US stocks finished the day with moderate gains despite more hawkish comments from the head of Federal Reserve and rising concerns about sticky inflation, with the Nasdaq reaching another record high.
After trading more or less flat for most of the session, a late rally sent the Dow up 0.3%, the S&P 500 up 0.5% and the Nasdaq up 0.8% to a new closing high of 16,511.18 – its seventh record close of the year so far.
Wall Street opened in a subdued fashion following stronger-than-expected wholesale inflation data and comments from Federal Reserve chair Jerome Powell, who reinforced the central bank’s approach to wait and see regarding incoming economic indicators before making any changes to interest rates.
Regarding stronger-than-expected inflation readings in the first quarter, Powell said: “We did not expect this to be a smooth road, but these were higher than I think anybody expected.” He said the central bank would “need to be patient and let restrictive policy do its work”.
Inflation in focus
April’s producer price index (PPI) increased by 0.5% month-on-month, ahead of the 0.3% consensus forecast, while annual PPI inflation picked up to 2.2% – the strongest rate since April 2023. However, while the data reignited concerns that inflation may prove sticker than anticipated – given how wholesale inflation is often passed on to customers at the till – it wasn’t all bad news.
According to Matthew Martin at Oxford Economics, the components of the PCE price deflator – the price gauge targeted by the Fed – that were extracted from the PPI data likely indicated a “softer” rise in that index in April. Martin also noted the role played by crude prices in the jump in wholesale inflation, due to fears over the Middle East conflict in April, which had since unwound. And given the output increases from OPEC+ pencilled in for the back half of 2024, April’s increase would not hold, he said.
US consumer price inflation stats will now be in focus, with forecasts for a 10 basis-point decline in April’s headline annual rate to 3.4% when figures are released on Wednesday. However, any upside surprise will likely reinforce expectations that the Fed will hold off from cutting interest rates for longer.
According to David Morrison, senior market analyst at Trade Nation, US inflation data has the potential to trigger some “violent moves” across all financial markets, which could set the stage for stock market behaviour over the whole summer.
“That may sound a bit dramatic considering that the markets don’t expect any changes in Fed Funds until the third or fourth quarter, but sentiment is everything. If there’s no improvement in this week’s inflation numbers, then investors may feel it’s a good time to cut their exposure and come back in early September after Jackson Hole,” Morrison said.
Elsewhere on the macro front, the National Federation of Independent Business revealed that optimism among small businesses in the US has increased for the first time this year, but still remains well below the long-term average as inflation continues to weigh on confidence. The NFIB’s small business optimism index rose by 1.2 points in April to 89.7, as the sales outlook and job-creation expectations both improved.
Meme stocks continue to surge
Shares in GameStop and AMC soared after “Roaring Kitty”, the Reddit user at the centre of the meme stock craze, posted online for the first time in three years. GameStop gained 60%, having now risen more than 180% over the past two days, while AMC jumped 32%, taking its two-day gain to 136%.
Other names regarded as meme stocks, such as BlackBerry and Koss, also raced higher.
However, Kathleen Brooks, research director at XTB, said GameStop may not see the same interest as it did in 2021, when the share price increased by more than 1,600% over a one-month period.
She said: “There are a couple of differences between 2021 and 2024, not least that the stock price is far higher now than it was before the meme stock craze in 2021. Back then it was trading around $5, today it is trading at $30 [Monday’s closing price], so it may not be as much of a bargain as it once was.”
A number of overseas companies with secondary listings on Wall Street were making moves on Tuesday: UK telecoms group Vodafone rose strongly after beating forecasts with its full-year results; Japanese conglomerate Sony jumped after surpassing quarterly revenue estimates; while Chinese tech giant Alibaba dropped sharply after a significant decline in quarterly profits.
Wednesday newspaper round-up: Brexit border outages, Boeing, Stellantis
Lorries carrying perishable food and plants from the EU are being held for up to 20 hours at the UK’s busiest Brexit border post as failures with the government’s IT systems delay imports entering Britain. Businesses have described the government’s new border control checks as a “disaster” after IT outages led to lorries carrying meat, cheese and cut flowers being held for long periods, reducing the shelf life of their goods and prompting retailers to reject some orders. – Guardian
Boeing has violated a settlement that allowed the company to avoid criminal prosecution after two deadly crashes involving its 737 Max aircraft, the US justice department told a federal judge on Tuesday. It is now up to the justice department to decide whether to file charges against the aircraft maker amid increasing scrutiny over the safety of its planes. Prosecutors will tell the court no later than 7 July how they plan to proceed, the justice department said. – Guardian
The owner of Vauxhall is to sell cheap Chinese electric cars in Britain as it hit out at a decision by Joe Biden to impose tariffs on cars imported from China to the US. As part of a joint venture with Chinese carmaker Leapmotor, Stellantis will launch the Leapmotor T03 supermini and the C10 SUV in mainland Europe from September and in the UK from March next year. – Telegraph
About 1,650 British jobs are hanging in the balance after Anglo American’s decision to drastically curtail and delay the completion of its ambitious Woodsmith fertiliser mine under the North York Moors. While Duncan Wanblad, Anglo’s chief executive, insisted that it was still going to be a “stonking business” one day, he has slashed capital spending on the project from a planned $3 billion over the next three years to only $1 billion. – The Times
Taxpayers spent a total of almost 800 years last year waiting on the phone to speak to HM Revenue & Customs amid a “declining spiral” of customer service, according to the government’s spending watchdog. In a damning report, it said that HMRC failed to answer up to 45 per cent of calls to its tax helpline. People who did manage to speak to an adviser waited 23 minutes on average, up from five minutes in 2019. – The Times
