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London open: Stocks rise as investors eye US inflation data
London stocks edged up in early trade on Thursday as investors digested a slew of UK earnings releases and looked to the release of key US inflation data.
At 0900 GMT, the FTSE 100 was up 0.3% at 7,644.34.
Neil Wilson, chief market analyst at Finalto, said: “US PCE inflation is the key data point today and has the potential to move market expectations.
“Core PCE (obligatory reference to being the Fed’s preferred gauge of inflation) is set to rise 0.4% month-on-month and 2.8% year-on-year in January. Slowing disinflation should help push out bets for rate cuts beyond May more firmly…quite frankly I find it hard to buy into a May cut anymore.”
The PCE figures are due at 1330 GMT.
In equity markets, Haleon shot to the top of the FTSE 100 as the consumer health firm posted flat annual earnings but said it expected to grow revenue this year on higher demand.
Building materials group CRH advanced as it reported a jump in full-year earnings and revenue, supported by good underlying demand across its end-use markets.
Ocado also rose after saying it swung back to an underlying profit in 2023 as its joint venture with Marks & Spencer returned to profit.
British Airways and Iberia owner IAG flew higher after saying it more than doubled annual profit as demand continued to rebound from the effects of the Covid pandemic.
Howden Joinery was up even as it said profits fell more than expected last year as a weaker DIY and housing market hit the bottom line.
Power generation firm Drax rallied as it posted a surge in full-year profits and lifted its dividend as Britons struggled to pay their energy bills.
Serco pushed up as the government contractor said it expected slightly lower revenues this year and a 5% rise in profit as 2023 earnings rose 25%.
Man Group gained as it reported record assets under management even as annual profits fell on lower performance fees.
On the downside, Weir Group lost ground even as it delivered an 18% increase in adjusted profits in 2023 after beefing up margins more than expected as it pointed to further growth across the board this year.
Barclays, Diageo, Hargreaves Lansdown, Hays, Diversified Energy and Plus500 were all weaker as they traded without entitlement to the dividend.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Crh Plc | +6.71% | +416.00 | 6,616.00 |
| 2 |  |
Rentokil Initial Plc | +3.38% | +14.40 | 440.10 |
| 3 |  |
St. James’s Place Plc | +2.89% | +14.60 | 520.40 |
| 4 |  |
Admiral Group Plc | +2.15% | +56.00 | 2,655.00 |
| 5 |  |
Ocado Group Plc | +2.10% | +10.30 | 501.00 |
| 6 |  |
Sage Group Plc | +1.89% | +23.00 | 1,239.50 |
| 7 |  |
Halma Plc | +1.76% | +40.00 | 2,318.00 |
| 8 |  |
Easyjet Plc | +1.59% | +8.60 | 550.60 |
| 9 |  |
Standard Chartered Plc | +1.54% | +10.00 | 659.20 |
| 10 |  |
Melrose Industries Plc | +1.48% | +9.20 | 632.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Whitbread Plc | -3.99% | -138.00 | 3,323.00 |
| 2 |  |
Barclays Plc | -3.64% | -6.14 | 162.76 |
| 3 |  |
Carnival Plc | -3.00% | -34.00 | 1,099.50 |
| 4 |  |
Hargreaves Lansdown Plc | -2.38% | -18.00 | 737.80 |
| 5 |  |
Intercontinental Hotels Group Plc | -1.24% | -106.00 | 8,448.00 |
| 6 |  |
Diageo Plc | -1.23% | -37.00 | 2,967.00 |
| 7 |  |
Rolls-royce Holdings Plc | -1.11% | -4.10 | 366.40 |
| 8 |  |
Vodafone Group Plc | -0.89% | -0.61 | 67.68 |
| 9 |  |
Smith & Nephew Plc | -0.86% | -9.00 | 1,039.50 |
| 10 |  |
Centrica Plc | -0.71% | -0.90 | 125.30 |
US close: Stocks slip ahead of key inflation reading
Wall Street stocks closed Wednesday in negative territory, as investors braced for upcoming inflation reports.
The Dow Jones Industrial Average dipped 0.06%, settling at 38,949.02 points by the closing bell, while the S&P 500 declined 0.17% to 5,069.76 points, and the Nasdaq Composite saw a downturn of 0.55% to 15,947.74 points.
In currency markets, the dollar was last unchanged against sterling at 78.98p, while it experienced a marginal decline of 0.01% on the euro, trading at 92.26 euro cents, and weakened 0.05% against the yen to change hands at JPY 150.62.
“Risk on sentiment has taken another, albeit slight, beating as China’s embattled major property developer Country Garden faces a winding up petition in Hong Kong,” said IG senior market analyst Axel Rudolph earlier.
“US fourth quarter GDP growth being revised slightly lower also didn’t help the bulls ahead of the Fed’s preferred PCE inflation gauge on Thursday.
“Weaker-than-expected eurozone economic sentiment furthermore dragged stocks down, except for the German DAX 40 index which hit yet another record high as investors pile into it.”
Rudolph said the latest earnings season highlighted that European stocks remained undervalued compared to US stocks in terms of PE ratios, which was why investors were favouring investing in Europe’s largest economy.
“New Zealand’s central bank signalling a slightly less aggressive stance on, still possible, rate hikes and sticking to its 5.5% base rate for the fifth month in a row led to strong Kiwi dollar depreciation, dragging the Aussie down with it.
“While oil, gold and silver prices were little changed on the day Bitcoin decided to break through its psychological 60,000 barrier.”
US economic growth comes in slower than estimated
In economic news, the Department of Commerce reported that the American economy expanded at a slightly slower pace than initially estimated in the final quarter of 2023.
Gross domestic product (GDP) grew at a quarterly annualised rate of 3.2% over the three months ending in December, slightly below the preliminary estimate of 3.3%.
Upward revisions to household consumption, non-residential and residential investment, and government spending helped offset a downward revision to inventory growth.
Stockpiling, previously thought to contribute positively, was now estimated to have subtracted 0.27 percentage points from GDP growth.
On the price front, the headline price deflator for personal consumption expenditures (PCE) rose at an annual rate of 1.8% in the last quarter of 2023, with the core level increasing by 2.1%.
Both PCE readings were slightly higher than previously reported.
“Based on this data, the US consumer looks strong, and inflation is hovering around the Fed’s target rate,” said Kathleen Brooks at XTB.
“This is the second reading of GDP and there is one more release to go, but so far it looks like a soft landing has already happened for the US economy.
“But, far from making life easy for the Fed, it actually makes it harder, as this data doesn’t give a clear signal about when the Fed should cut rates.”
Elsewhere, mortgage applications saw a notable decline, sinking by 5.6% in the week ended 23 February, following a 10.6% drop in the prior week, according to the Mortgage Bankers Association.
Preliminary figures from the Census Bureau meanwhile indicated a 0.1% month-on-month decrease in wholesale inventories for January, contrasting with the prior month’s 0.4% increase and falling short of consensus estimates for a 0.1% rise.
Investors were now awaiting Thursday’s core PCE reading, which serves as the Federal Reserve’s preferred inflation measure.
Taser maker jumps on earnings, Urban Outfitters tumbles
In equities, online marketplace eBay jumped 7.88% after it announced an increase in its quarterly dividend payout.
The company also revealed plans to allocate an additional $2bn towards share buybacks.
Taser manufacturer Axon Enterprise surged 13.76% after the company unveiled better-than-expected earnings and optimistic forecasts for full-year sales and profits, surpassing Wall Street estimates.
On the downside, retailer Urban Outfitters tumbled 12.78% following the release of its fourth-quarter earnings report, which failed to meet expectations.
Alphabet, the parent company of Google, slid 1.8% amid news of a $2.3bn lawsuit filed by a group of 32 European publishers, targeted at the search giant’s advertising technology and practices.
Thursday newspaper round-up: Non-dom rules, Dyson, Skipton
Jeremy Hunt is considering scrapping Britain’s non-domiciled tax rules in next week’s budget, it has been reported, in a move that would see him poach one of Labour’s key fiscal policies. The decision is understood to be on a list of revenue-generating options drawn up for the chancellor and Rishi Sunak after economic estimates left them with less money than expected for tax cuts or spending pledges. – Guardian
Immigration restrictions imposed on international students threaten to damage the UK economy, according to university leaders, with the number enrolling from overseas falling by a third. Universities UK (UUK), which represents mainstream universities and colleges, said the government’s new curbs, coupled with steep visa fee increases and threats to cut back on graduate work entitlements, are having a negative impact on the UK as a study destination. – Guardian
Dyson spent a record £468m on researching advanced household robots and artificial intelligence last year, as its annual revenues surged to more than £7bn. Profits at the company rose by 9pc to £1.4bn in 2023 following a drop in the previous year. The engineering company, best known for its vacuum cleaners, increased its spending on developing new products to £9m per week, up 40pc on the previous year. – Telegraph
A pioneering mortgage product that does not require any deposit from borrowers attracted applications adding up to £62 million in its first nine months, Skipton Building Society has said. Stuart Haire, 49, the former HSBC banker who joined Skipton Group as its chief executive in December 2022, launched the Track Record product in May as a way of helping renters with good rental payment records but little cash savings. So far 484 borrowers have signed up. – The Times
FirstGroup is in talks to extend its open-access rail services from Edinburgh to Glasgow. Its Lumo brand runs services between Edinburgh, above, and London on the east coast main line. It wants to expand this route so that some services would begin or end in Glasgow. Discussions are taking place between FirstGroup, Transport Scotland, the government body, and Network Rail, which manages the railway infrastructure. – The Times
