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| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London close: Tesco paces gains as sales accelerate Stocks in London finished higher as the pound slid back against the dollar after data showed consumer prices unexpectedly dropped in October.
The FTSE 100 was up 0.59% to 6,792.74, while the pound was down 0.8% against the greenback at 1.2402 after data from the Office for National Statistics showed the consumer prices index fell to 0.9% in October from 1% in September, below economists' expectations for a nudge up to 1.1%.
The ONS said a large jump in input prices was not yet being reflected on the high street.
Month-on-month, CPI rose 0.1% versus the previous month's 0.2% increase and the consensus forecast for an acceleration to 0.3%.
Core UK CPI, which strips out more volatile prices like food and fuel, rose 1.2%, which was again short of the 1.4% consensus estimate and down from the prior month's 1.5% rise.
The ONS said the main downward pressures on the CPI rate were prices for clothing and university tuition fees, which rose by less than they did a year ago, along with falling prices for certain games and toys, overnight hotel stays and non-alcoholic beverages.
Spreadex's Connor Campbell said: "Coming in at 0.9%, the markets were shocked that the CPI reading not only failed to hit the 1.1% forecast, but actually arrived under the 1.0% seen in September. And while analysts were quick to state that prices are still set to rise, and rise quite sharply, the news of this inflation respite was taken as a big blow by sterling, as it makes it even more unlikely that the Bank of England will consider lifting interest rates away from their record lows any time soon."
Cable finished the session down by 0.61% at 1.2419.
"Despite October's weak number, CPI inflation remains set to make big strides towards the 2% target over the next three months, as the anniversary of sharp falls in motor fuel and food prices is reached. [...] As a result, we still expect CPI inflation to peak at about 3.5% by the end of 2017, crippling consumers and preventing the MPC from announcing more stimulus," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
Tombs expected CPI to peak at roughly 3.5% by the end of 2017, while Barclays Research expected it to average 2.4% next year.
Crude oil futures stormed back following three back-to-back sessions of losses, amid hopes that OPEC will agree a production cut at its meeting later this month. West Texas Intermediate was up 4.31% to $45.27 a barrel and Brent crude was 3.9% firmer at $46.24.
Investors were also mulling over Bank of England governor Mark Carney's testimony before Parliament's Treasury Committee.
Carney, who confirmed on Tuesday that he will not extend his time at the BoE beyond 2019, explained that he had added to his term by a year in order to provide continuity through the Article 50 process. He highlighted a neutral stance on monetary policy, saying that were risks on both sides, and adding that there was no forward guidance on the future policy path.
He also argued in favour of a transition period after the end of the two-year period for Brexit renegotiations.
In corporate news, Tesco powered ahead a day before its next Capital Markets Day as the latest figures from Kantar Worldpanel for the 12 weeks to 6 November 2016 showed the group has grown at its fastest rate in three years, with sales increasing by 2.2%. Figures from a rival survey published by Nielsen showed growth at rival discounters Aldi and Lidl slowed to its lowest pace since the last quarter of 2011.
Budget airline EasyJet flew higher as it reported a 27.9% drop in full-year profit to £495m that was in line with the guidance it gave in October, as it took a hit from terrorist attacks and as the UK's decision to leave the European Union made the euro more expensive for British travellers over the summer.
Technology company Smiths Group ticked up as its said first-quarter revenues rose 16% on a reported basis, while Land Securities rallied after reporting a 4.5% jump in first-half revenue profit to £192.5m.
Assurance provider Intertek gained ground as it partnered with ABC Analitic, a water test provider, to form an environmental services joint venture in Mexico.
Stock in aerospace and defence group Meggitt was on the front foot after it said trading since the half year has been in line with expectations, while transport operator FirstGroup nudged up as it swung to an interim profit.
On the downside, Vodafone reversed earlier gains despite better-than-expected first-half results, while TalkTalk fell sharply as it posted a rise in first-half pre-tax profit but said it lost 29,000 broadband customers and 56,000 TV customers.
Miners fell victim to profit-taking on the heels of overnight losses in steel and iron ore futures. Adding to the selling pressure, analysts at HSBC weighed in with a rather gloomy prognosis for the copper market, telling clients that there was "limited visibility" on improved Chinese demand and a mooted increase in US infrastructure spending.
"Both of these issues are driving sentiment at present, but there is limited visibility on whether these are materialising to gauge the impact on fundamentals," they said. |
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| Market Movers
FTSE 100 (UKX) 6,792.74 0.59%
FTSE 250 (MCX) 17,573.10 0.58%
techMARK (TASX) 3,309.64 0.05%
FTSE 100 - Risers
Hikma Pharmaceuticals (HIK) 1,723.00p 6.10%
Tesco (TSCO) 217.00p 5.42%
easyJet (EZJ) 1,087.00p 5.33%
Morrison (Wm) Supermarkets (MRW) 221.90p 4.37%
Intertek Group (ITRK) 3,148.00p 3.62%
British Land Company (BLND) 606.50p 3.23%
Royal Dutch Shell 'A' (RDSA) 1,989.50p 3.19%
International Consolidated Airlines Group SA (CDI) (IAG) 453.80p 2.97%
Royal Mail (RMG) 499.20p 2.95%
Royal Dutch Shell 'B' (RDSB) 2,076.50p 2.92%
FTSE 100 - Fallers
Anglo American (AAL) 1,096.50p -6.68%
Glencore (GLEN) 267.40p -5.45%
Antofagasta (ANTO) 671.00p -4.96%
BHP Billiton (BLT) 1,271.50p -4.86%
Rio Tinto (RIO) 3,004.00p -4.50%
Standard Life (SL.) 355.00p -2.39%
DCC (DCC) 6,065.00p -2.26%
Paddy Power Betfair (PPB) 8,660.00p -1.93%
Shire Plc (SHP) 4,852.50p -1.81%
ITV (ITV) 165.00p -1.61%
FTSE 250 - Risers
Polypipe Group (PLP) 282.30p 9.69%
Tullow Oil (TLW) 262.20p 9.62%
Amec Foster Wheeler (AMFW) 450.30p 7.21%
Laird (LRD) 140.80p 6.39%
Intermediate Capital Group (ICP) 673.50p 6.31%
Assura (AGR) 60.00p 4.99%
Petrofac Ltd. (PFC) 796.00p 4.45%
Metro Bank (MTRO) 3,110.00p 4.36%
Allied Minds (ALM) 367.20p 4.11%
Meggitt (MGGT) 462.90p 3.98%
FTSE 250 - Fallers
Kaz Minerals (KAZ) 332.60p -8.70%
Vedanta Resources (VED) 761.00p -6.63%
TalkTalk Telecom Group (TALK) 189.50p -5.52%
BTG (BTG) 611.50p -5.34%
Debenhams (DEB) 55.95p -3.78%
Euromoney Institutional Investor (ERM) 1,097.00p -2.92%
Card Factory (CARD) 249.40p -2.54%
Dairy Crest Group (DCG) 582.00p -2.43%
Riverstone Energy Limited (RSE) 1,281.00p -2.19%
Clarkson (CKN) 2,180.00p -2.15% |
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| | US Market Report | | US open: Markets mixed as December Fed rate hike seems likely US equities were mixed on Tuesday as oil prices surged over 3%, while data pointed to firmer household spending, which could increase the likelihood of a rate hike from the Federal Reserve.
The Dow Jones Industrial Average dropped 0.29% to 18,814.59 points, but the S&P 500 increased 0.14% to 2,167.24 points and the Nasdaq was up 0.53% to 5,246.26 points at 1457 GMT.
Spreadex's Connor Campbell said the Dow Jones fell due to a combination of rate hike-fears, questions over whether the economy really needs president-elect Donald Trump's suggested fiscal stimulus and general exhaustion, as it had risen by between 900 to 1,000 points in around 11 days.
In commodity markets, gold retreated as rising rate hike expectations turned investors' attention away from the zero-yielding metal.
Gold on Comex declined 0.06% to $1,221.00 per troy ounce at 1435 GMT.
Oil prices advanced amid expectations that OPEC members will agree to a cut in production when they meet in late November.
Brent crude rose 3.24% to $45.91 per barrel and West Texas Intermediate jumped 3.41% to $44.85 at 1439 GMT.
In currency markets, the dollar was up 0.38% against the yen to 108.83, rose 0.01% versus the euro to 0.9315, and edged higher by 0.62% against sterling to 0.8056.
On the macroeconomic front, the Empire State manufacturing index rose to 1.5 in November from -6.8 in the previous month, and above the -2.5 consensus forecast.
According to the Department of Commerce, retail sales volumes grew by 0.8% month-on-month in October to $465.9bn, 4.3% higher than last year, and above the 0.6% forecast.
Naeem Aslam, chief market analyst at ThinkMarkets, said: "The US economic data released today has painted a better picture for the economy. Most of the strength was in the retail sales data which came on the heels of higher wage growth. The dollar has ticked higher and further away from its lows.
"The December interest rate hike is very much a done deal now and what matters most is to listen to the Fed statement carefully, as this will provide enough clues for future interest rate hike trajectory."
In corporate news, Home Depot's shares fell 2.36% despite the DIY store posting higher than expected third quarter sales and earnings.
Sales rose 6.3% to $23.2bn, compared to last year, and earned $1.60 a diluted share, up from £1.36. Analysts had expected earnings of $1.58 a share on $23.05bn in revenue.
Shares in Dick's Sporting Goods also declined 1.74% as the fortune 500 company reported better than expected results and boosted its forecast for the year.
Third quarter revenue rose 10% to $1.81bn, above expectations of $1.77bn. |
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| | Broker Tips | | FX roundup: Sterling softens on surprise UK inflation drop; US rates in focus Sterling was lower across most of the board on Tuesday afternoon, its spiral south sparked by an unexpected fall in UK consumer prices earlier in the session.
At 16:48 GMT, sterling was down 0.6% to $1.2415 and down 0.53% to €1.1571. The dollar-spot index was flat at 100.110, with the greenback mixed on major crosses.
Sterling also fell against emerging-market currencies the Australian, Canadian and New Zealand dollars, as well as South Africa's rand and Japan's yen.
Office for National Statistics said month-on-month, consumer price index (CPI), a gauge of inflation, rose 0.1% in October. This on September's 0.2% rise and consensus for a 0.3% surge.
ONS said a large jump in input prices was not yet being reflected on the UK high street. The market expects shop prices to rise after UK's Brexit vote in June to quit the EU.
Core UK CPI, which strips out more volatile prices like food and fuel, rose 1.2%, which was again short of the 1.4% consensus estimate and down from the prior month's 1.5% rise.
"Despite October's inflation rate showing a fall there is no doubt that inflation will be on a rising trend over the next few quarters," said Mark Dampier, head of investment research at Hargreaves Lansdown.
Rising input prices indicated goods would be more expensive in 6-12 months' time, Dampier said.
"The reality is that the forecasts for inflation to peak at around 4% are just educated guesses. A more important question to ask is will rising inflation cause the Bank of England to raise rates? I think it is unlikely."
Jasper Lawler, market analyst at CMC Markets, said sterling's broader 15% drop the currency humbled by the Brexit vote would take time to make its way through the supply chain.
"Should data later this week show wages are stable, the outlook in the medium term for the UK economy should be robust," Lawler added.
IG market analyst Joshua Mahony added that CPI's pullback from Bank of England's 2% target gave the central bank's Monetary Policy Committee room for manoeuvre in the coming months.
"Today's appearance from (BoE governor Mark) Carney saw the governor speculate on the notion that we should see the mandate revised regularly, providing a hint that he would be willing to ease further if it wasn't for the 2% inflation target," Mahony added.
Turning to the US dollar, it rose 0.05% to €0.9319, also stacking on gains versus the aussie, kiwi and yen, but falls against the loonie and rand.
The US dollar enjoyed a boost this afternoon after Boston Federal Reserve president Eric Rosengren encouraged recent speculation that the US Fed would raise rates in December.
Rosengren said that in the absence of "significant negative economic news over the next month (market pricing for the odds of a December rate move) seems plausible."
He continued: "I would much prefer that tightening be gradual, and that policymakers try to avoid circumstances in which we need to tighten more quickly," he added.
Finally, Dampier commented that the US tended to be the lead economy in the world so sudden changes there and rate rises could be followed by other countries in due course. |
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