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London open: Stocks edge down as investors mull inflation data
London stocks edged lower in early trade on Wednesday as data showed that annual consumer price inflation eased to the Bank of England’s 2% target in May.
At 0825 BST, the FTSE 100 was down 0.2% at 8,174.97, while sterling was up 0.1% against the dollar at 1.2721.
Inflation fell from 2.3% in April, according to figures released earlier by the Office for National Statistics, in line with expectations. It marked the first time inflation has hit the Bank of England’s target since July 2021.
Inflation peaked at 11.1% in October 2022, hitting its highest level since 1981.
The largest downward contributions came from food and non-alcoholic beverages, recreation and culture, and furniture and household goods. The largest upward contribution was from transport.
The data showed that prices for food and non-alcoholic drinks rose 1.7%, down from 2.9% in April. This marked the lowest annual rate since October 2021. The ONS said the rate has eased for the 14th month in a row from a recent high of 19.2% in March 2023, which was the highest annual rate in more than 45 years.
Services inflation fell to 5.7% in May from 5.9% a month earlier, but missed expectations for a drop to 5.5%.
Meanwhile, core inflation – which strips out food, energy, alcohol and tobacco – eased to 3.5% from 3.9%, as expected.
The inflation data comes a day before the Bank of England is due to make its latest policy announcement.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “UK inflation finally hitting target may come as relief for companies and consumers, but given this descent was widely expected it’s not moved the dial much for London-listed stocks.
“The FTSE 100 has opened lower as investors digest the inflation reading which shows prices in the services sector remain hot, indicating a rate cut may not come until the Autumn. Fed policymakers are also staying cautious about the prospects for interest rate cuts.”
In equity markets, housebuilder Berkeley was in the red despite lifting its earnings outlook for the current financial year by 5%.
Precision instrumentation and controls group Spectris tanked as it warned full-year profits will be at the bottom end of market forecasts as a result of weaker-than-expected demand at its lab equipment division in the first half. The news came as the company announced the appointment of Royal Mail’s chief financial officer Angela Noon as its new CFO.
Helios Towers was under the cosh after Newlight and RIT sold a combined 37.6m shares in the company in placing at 115p each, raising about £43.2m. This marked their first sale since the company’s IPO in 2019.
On the upside, Warhammer maker Games Workshop rallied after saying it expects a jump in annual pre-tax profits to at least £200m compared to £171m a year earlier.
Vodafone edged up after saying it had raised €1.7bn through the sale of 484.7m shares, or 18%, of Indus Towers, through an accelerated bookbuild.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Smurfit Kappa Group Plc | +3.69% | +132.00 | 3,710.00 |
| 2 |  |
Vodafone Group Plc | +1.56% | +1.10 | 71.74 |
| 3 |  |
International Consolidated Airlines Group S.a. | +1.55% | +2.60 | 170.65 |
| 4 |  |
Hiscox Ltd | +1.41% | +16.00 | 1,148.00 |
| 5 |  |
Anglo American Plc | +1.36% | +32.50 | 2,421.50 |
| 6 |  |
Tui Ag | +1.14% | +6.50 | 578.50 |
| 7 |  |
Easyjet Plc | +1.04% | +4.70 | 456.80 |
| 8 |  |
Smith (ds) Plc | +0.97% | +3.40 | 353.80 |
| 9 |  |
Mondi Plc | +0.88% | +13.00 | 1,486.50 |
| 10 |  |
Glencore Plc | +0.83% | +3.75 | 457.20 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Berkeley Group Holdings (the) Plc | -4.91% | -246.00 | 4,764.00 |
| 2 |  |
Persimmon Plc | -2.39% | -33.50 | 1,371.00 |
| 3 |  |
Taylor Wimpey Plc | -2.27% | -3.35 | 144.05 |
| 4 |  |
Segro Plc | -2.24% | -20.60 | 898.20 |
| 5 |  |
Barratt Developments Plc | -1.99% | -9.60 | 472.30 |
| 6 |  |
Spirax Group Plc | -1.85% | -160.00 | 8,495.00 |
| 7 |  |
Astrazeneca Plc | -1.56% | -194.00 | 12,222.00 |
| 8 |  |
Halma Plc | -1.32% | -35.00 | 2,621.00 |
| 9 |  |
British Land Company Plc | -1.10% | -4.80 | 430.40 |
| 10 |  |
Carnival Plc | -1.07% | -12.00 | 1,109.00 |
US close: Nvidia lifts S&P 500 and Nasdaq to new heights
US stock inched higher on Tuesday with the S&P 500 and Nasdaq eking out new record highs on the back of yet more gains from Nvidia, which surpassed Microsoft as the world’s most valuable listed company.
Nvidia was up 3.5% at yet another record closing high of $135.58, having risen 24% so far in June alone. The rise pushed its market cap to $3.34trn, topping Microsoft’s $3.32trn and Apple’s $3.29trn.
Nvidia’s gains helped push the S&P 500 up 0.25% to a new high of 5,487.03, while the Nasdaq edged just 0.03% higher to a fresh record of 17,862.23. The Dow, meanwhile, rose 0.15% to 38,834.86.
However, gains were limited ahead of the Juneteenth US public holiday on Wednesday, with comments from a number of Federal Reserve policymakers likely also weighing on sentiment.
The head of the Richmond Federal Reserve, Tom Barkin, said it wasn’t useful for the central bank to give forward guidance to the markets over interest rates. Barkin acknowledged that May’s inflation report was “very encouraging”, but said more data is needed before the Fed makes any decisions.
In a separate speech, St Louis Fed president Alberto Musalem said rates should only be cut after “months, and more likely quarters” of falling inflation.
Investors were having to contend with scheduled speeches from six members of the Fed on Tuesday, along with a mixed batch of economic data from May.
US retail sales rose by just 0.1% last month, missing the 0.2% growth expected, while April’s change was revised to -0.2% from 0%. Michael Pearce, deputy chief US economist at Oxford Economics, said the figures “leave real consumer spending on track for a gradual slowdown in Q2”.
Meanwhile, US industrial production increased by 0.9% last month, following no change in April and beating the 0.3% reading expected.
Market movers
Chip stocks were continuing to outperform, with Nvidia, Micron Technology and Qualcomm all putting in gains.
Micron was being lifted by comments from Bank of America, which added the stock to its US 1 List – the collection of the bank’s best investment ideas.
“While everyone is still talking about Nvidia being the superstar stock to own, Micron has been putting up a great fight,” said Dan Coatsworth, investment analyst at AJ Bell. “A 133% advance in its share price over the past 12 months might be slightly less than Nvidia’s 204% return over the same period, but it has put Micron on the map of big stock market success stories.”
Banks were also in demand, with Bank of America, Wells Fargo, Citigroup and JPMorgan Chase all on the rise.
Meanwhile, electric car stocks like Tesla and Nikola were in reverse after the bankruptcy of Fisker prompted a sell-off across the sector.
Apple was inching lower after the news that the tech giant is ending its buy now, pay later service which it launched in March 2023.
Adobe rebounded slightly following falls on Monday after the software group was accused by Justice Department on Monday of making it too difficult for customers to cancel their subscriptions.
McDonald’s was lower after the fast food giant ended a two-year experiment to use automated order taking at its drive-through stations.
Wednesday newspaper round-up: Unsecured household debts, Space Forge, Nvidia
UK households are expected to rack up extra unsecured debts of more than £1,600 this year, including on loans and credit cards, as the cost of living crisis continues to bite, according to a TUC analysis. The TUC said its analysis showed that unsecured household debt – including loans and credit cards but excluding mortgages and, for this exercise, student loans – was on course to increase by 9.4%, or £1,660, in real terms on average per household this year. – Guardian
A marine conservation group has initiated legal action against the UK government, claiming the Conservatives’ decision to issue North Sea oil and gas licences without taking into account their impact on the environment was unlawful. Oceana UK, part of an international conservation organisation, said that in issuing 82 licences, Claire Coutinho, the secretary of state for energy security, and the North Sea Transition Authority, ignored advice from independent government experts about the potential effects on marine protected areas (MPAs). – Guardian
A British start-up that is preparing to launch robot factories into space has secured funding from the Nato alliance’s $1.1bn (£870m) investment fund. Cardiff-based Space Forge wants to put satellites into orbit and use the low-gravity conditions to make crystals for cutting-edge microchips, as well as new medicines and super-alloys. The satellites would be the first in the world to be reusable, returning to Earth by unfurling a “Mary Poppins-style” umbrella upon completing their task. – Telegraph
Nvidia Corporation, the maker of chips used to power artificial intelligence, has overtaken Microsoft and Apple to become the world’s most valuable public company. Shares in the chip-maker closed up 3.5 per cent, or $4.60, at $135.58, lifting its market valuation to about $3.35 trillion. The rally dethroned Microsoft from the top spot as investors bet on Nvidia continuing to play a central role in the AI market. – The Times
Smaller listed companies are increasingly going back to operating with all-male boards, according to newly published evidence described as “profoundly shocking” by campaigners for gender diversity in the boardroom. The number of companies listed on the Alternative Investment Market, or Aim, with no women on the board has jumped this year by 73 per cent from 108 to 187. That means all-male boards are running 35 per cent of all companies on the junior market, up from 18 per cent in 2023, according to the analysis from WB Directors, a consultancy and networking group. – The Times
