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London open: FTSE nudges lower after inflation data, ahead of Fed
London stocks nudged lower in early trade on Wednesday as investors mulled a bigger-than-expected fall in UK inflation, with caution in the air ahead of rate decisions from the US Federal Reserve and the Bank of England.
At 0820 GMT, the FTSE 100 was down 0.1% at 7,733.16.
Figures released earlier by the Office for National Statistics showed that inflation fell a touch more than expected in February, to its lowest level since September 2021.
The consumer price index declined to 3.4% from 4% in January, versus expectations for a fall to 3.5% and getting a touch closer to the Bank of England’s 2% target.
The largest downward contributions came from food, and restaurants and cafes, while the largest upward contributions came from housing and household services, and motor fuels, the ONS said.
ONS chief economist Grant Fitzner said: “Food prices were the main driver of the fall, with prices almost unchanged this year compared to a large rise last year, while restaurant and cafe prices also slowed.
“These falls were only partially offset by price rises at the pump and a further increase in rental costs.”
Core CPI – which excludes energy, food, alcohol and tobacco – rose 4.5% in the 12 months to February, down from 5.1% the month before.
The inflation data came just a day before the Bank of England’s latest policy announcement.
Paul Dales, chief UK economist at Capital Economics, said the easing in inflation “probably won’t make the Bank of England sound any more dovish when it leaves interest rates at 5.25% tomorrow”.
“But our view that inflation will fall below 2% in April and then ease towards 1% suggests the BoE may have to start cutting rates in the summer and reduce them to 3.00% next year.”
The Fed is due to make its latest policy announcement at 1800 GMT.
In equity markets, luxury fashion brand Burberry was under the cosh after Kering warned that sales at Gucci were set to slide 20% in the first quarter due to a slowdown in Asia.
Review platform Trustpilot slumped after Vitruvian Partners sold 15.5m shares in the company in a placing at 200p each, versus a closing price of 208p on Tuesday.
Prudential gained as it said it was “increasingly confident” of meeting its long-term targets after a strong set of results for 2023, with new business profits rising by almost a half on the back of its ongoing strategic shift to Asian and African markets.
Johnson Matthey surged as it announced the sale of its medical device components business to Montagu Private Equity for $700m (£550m).
The business makes parts for medical device manufacturers globally with a focus on precious metal alloys and nitinol. It operates manufacturing sites in the US, Mexico, and Australia.
Johnson Matthey also said it had now finished the divestment programme announced in May 2022, bringing aggregate net proceeds from sales to “significantly more” than its target of £300m.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Johnson Matthey Plc | +8.35% | +142.50 | 1,850.00 |
| 2 |  |
Halma Plc | +3.17% | +70.00 | 2,278.00 |
| 3 |  |
Persimmon Plc | +2.57% | +32.50 | 1,295.50 |
| 4 |  |
Ashtead Group Plc | +1.32% | +70.00 | 5,382.00 |
| 5 |  |
Taylor Wimpey Plc | +1.24% | +1.70 | 138.75 |
| 6 |  |
Melrose Industries Plc | +1.22% | +7.60 | 628.40 |
| 7 |  |
Hikma Pharmaceuticals Plc | +1.18% | +22.50 | 1,935.50 |
| 8 |  |
Kingfisher Plc | +1.12% | +2.50 | 226.70 |
| 9 |  |
Admiral Group Plc | +0.90% | +25.00 | 2,796.00 |
| 10 |  |
Ferguson Plc | +0.87% | +145.00 | 16,850.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Burberry Group Plc | -5.00% | -61.50 | 1,168.50 |
| 2 |  |
Prudential Plc | -2.28% | -17.80 | 762.80 |
| 3 |  |
Standard Chartered Plc | -1.70% | -11.20 | 647.60 |
| 4 |  |
Spirax-sarco Engineering Plc | -1.59% | -165.00 | 10,190.00 |
| 5 |  |
Ocado Group Plc | -1.17% | -5.40 | 455.70 |
| 6 |  |
British American Tobacco Plc | -1.04% | -25.00 | 2,387.00 |
| 7 |  |
Fresnillo Plc | -0.91% | -4.00 | 437.40 |
| 8 |  |
Sainsbury (j) Plc | -0.88% | -2.20 | 248.00 |
| 9 |  |
Unilever Plc | -0.87% | -34.00 | 3,895.00 |
| 10 |  |
Whitbread Plc | -0.85% | -27.00 | 3,168.00 |
US close: Stocks higher as attention turns to FOMC meeting
Major indices delivered a positive performance on Tuesday as market participants patiently awaited the outcome of the Federal Reserve Open Markets Committee‘s March policy meeting.
At the close, the Dow Jones Industrial Average was up 0.83% at 39,110.76, while the S&P 500 advanced 0.56% to 5,178.51 and the Nasdaq Composite saw out the session 0.39% firmer at 16,166.79.
The Dow closed 320.33 points higher on Tuesday, extending gains recorded in the previous session.
Investors now turn their attention to Washington as the Federal Reserve kicked off its two-day policy meeting, with a recent batch of concerning inflation figures leaving traders fearful that the central bank may look to hold benchmark interest rates at a higher level for longer than previously expected.
Also in focus, Wall Street darling Nvidia shares traded higher on Tuesday following its first-ever GTC Conference, during which chief executive Jensen Huang unveiled its latest artificial intelligence chip, Blackwell, which he claimed was significantly more powerful than its current chips.
On the macro front, both building permits and housing starts surged across the US in February, according to the Census Bureau, beating forecasts. Building permits rose 1.9% to a seasonally adjusted annualised rate of 1.51m in February, exceeding market forecasts for a reading of 1.49m to hit the highest level seen since August 2023. Housing starts soared 10.7% month-on-month to an annualised rate of 1.52m, after falling by 12.3% in January, smashing expectations for a reading of 1.42m, amid a persistent shortage of previously owned houses.
No major corporate earnings were released on Tuesday.
Wednesday newspaper round-up: Self-checkout, Indivior, Amanda Staveley
Cross-Channel ferry operators will be required to pay their crew at least £9.95 an hour after France implemented a new minimum wage law aimed at preventing the exploitation of seafarers. The move comes two years after P&O Ferries caused outrage on both sides of the Channel by sacking almost 800 workers and replacing them with low-cost crew. – Guardian
The chancellor, Jeremy Hunt, has suggested a general election could be held in October. Speaking in the House of Lords, Hunt said the Treasury would need time to push through a review of Whitehall budgets before next spring, making an October date the last time when an election would be possible. “This particular spending review has to be completed before next April, when the next financial year starts. And if the general election is in October, that will mean it’s very, very tight,” he said. – Guardian
On the shop floor of supermarkets there is one shoplifting tactic which has become so commonplace, staff have given it its own name. The “banana trick” consists of putting an item through a self-checkout as a cheap fruit or vegetable product and walking out with a much more expensive item. “Best life hack ever,” one TikTok user claims in a viral video, joking that they managed to get a TV and Playstation through a self-service checkout by logging them as grapes or bananas. – Telegraph
A top-ten shareholder in Indivior — and one of the City’s biggest institutional investors — is unlikely to oppose the drug company’s plans to move its primary listing to the United States. Indivior, which specialises in treatments for substance abuse disorders and serious mental illnesses, said last month that it is to consult shareholders about making the switch from the London Stock Exchange to Nasdaq. – The Times
Amanda Staveley, the co-owner of Newcastle United football club, has claimed she was threatened with violence by a shipping tycoon she believes has “illegal” links to Iran. Staveley, 50, appeared at court on Tuesday in an attempt to throw out a bankruptcy claim bought by Victor Restis, who says he is owed £37 million. She appeared to become emotional when the judge was told Restis took advantage of her Huntington’s disease, an inherited brain disorder, which affected her judgment in her dealings with him. – The Times
