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London open: Stocks gain ahead of US CPI; Tesco in the black
London stocks rose in early trade on Wednesday as investors eyed the latest US inflation reading, with Tesco in the black after well-received results.
At 0820 BST, the FTSE 100 was up 0.6% at 7,981.42.
There are no major UK macro points due, but the US consumer price index for March is scheduled for release at 1330 BST, while the latest FOMC minutes are at 1900 BST.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said there will be growing hope that US consumer prices are heading south, “to help guide the Federal Reserve to cut interest rates this summer”.
“More broadly, earning season starts this week, and investors will be looking to economic barometers in the form of major US banks to gauge the health of important economies,” she said.
In equity markets, Tesco gained as it struck a confident tone for the current financial year after reporting a jump in both annual profits and volumes.
On a statutory basis, pre-tax profits surged 159.5% to £2.76bn, with group sales excluding VAT and fuel up 7.2% in the 52 weeks to 24 February to £61.48bn.
Looking ahead, the grocer said it expected retail adjusted operating profit of “at least” £2.8bn for the 2024/25 year. It also forecast retail free cash flow of between £1.4bn and £1.8bn.
Affordable homes developer Vistry rose after saying it had signed two new deals with Homes England to deliver 1,000 mixed-tenure homes in the Midlands.
Capita rallied as the outsourcer extended its customer experience contract with a “leading” European integrated telecoms company for two years from January 2024, with an option to extend for a further two years. The contract is worth more than £95m over the four years.
Elsewhere, Direct Line ticked up after saying it had poached the head of finance from Aviva‘s general insurance unit to be its new chief financial officer, replacing its CFO of three years just weeks after a failed takeover offer from Ageas.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Hargreaves Lansdown Plc | +3.22% | +23.60 | 757.40 |
| 2 |  |
Burberry Group Plc | +2.86% | +34.00 | 1,222.50 |
| 3 |  |
Wpp Plc | +2.85% | +21.40 | 772.60 |
| 4 |  |
Croda International Plc | +2.81% | +132.00 | 4,832.00 |
| 5 |  |
Ocado Group Plc | +2.39% | +9.10 | 389.70 |
| 6 |  |
Hsbc Holdings Plc | +2.19% | +14.10 | 658.80 |
| 7 |  |
Carnival Plc | +1.86% | +20.00 | 1,097.00 |
| 8 |  |
Whitbread Plc | +1.77% | +57.00 | 3,271.00 |
| 9 |  |
Bt Group Plc | +1.77% | +1.90 | 109.10 |
| 10 |  |
Ashtead Group Plc | +1.74% | +100.00 | 5,842.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rolls-royce Holdings Plc | -1.43% | -5.90 | 406.30 |
| 2 |  |
Bae Systems Plc | -0.94% | -12.00 | 1,265.00 |
| 3 |  |
Relx Plc | -0.60% | -20.00 | 3,300.00 |
| 4 |  |
Crh Plc | -0.48% | -32.00 | 6,568.00 |
| 5 |  |
Hiscox Ltd | -0.43% | -5.00 | 1,164.00 |
| 6 |  |
Imperial Brands Plc | -0.41% | -7.00 | 1,693.00 |
| 7 |  |
Auto Trader Group Plc | -0.38% | -2.60 | 687.00 |
| 8 |  |
Gsk Plc | -0.37% | -6.00 | 1,610.00 |
| 9 |  |
Intertek Group Plc | -0.29% | -14.00 | 4,842.00 |
| 10 |  |
Astrazeneca Plc | -0.28% | -30.00 | 10,678.00 |
US close: Stocks erase earlier losses, end mixed ahead of CPI
US stocks finished in mixed fashion on Tuesday with investors choosing to keep their powder dry ahead of Wednesday’s consumer-price index release and a key publication from the Federal Reserve.
“Equities continue to consolidate, having pulled back modestly from the record highs hit at the beginning of this month. It feels as if investors are exhibiting some caution now, following a long period of bullishness,” said David Morrison, senior market analyst at Trade Nation.
All three of Wall Street’s equity benchmarks pared earlier losses, with the Nasdaq and S&P 500 finishing up 0.32% and 0.14%, respectively, while the Dow closed down just 0.02%.
“At the beginning of this year markets were pricing in six 25 basis point cuts. Now it’s nearer to two or three. In fact, there have been some FOMC members who feel that the recent stalling of the decline in inflation, together with robust economic data releases, means that it’s far too early to consider cutting rates,” Morrison said.
Looking ahead to Wednesday’s session, the US consumer price index for March is due out at 0830 ET and is expected to have risen to 3.4% from 3.2% the month before, though core inflation should have dipped to 3.7% from 3.8%.
Dan Coatsworth, investment analyst at AJ Bell, said a rise in headline inflation “will certainly give the Fed food for thought”. He said: “The central bank wants to see sustained evidence of inflation coming down and that doesn’t appear to be on the menu […] The Fed putting it into black and white could be a difficult pill for investors to swallow, so brace yourself for turbulence on the market this week.”
Wednesday will also see the release of the minutes of the Federal Reserve’s latest monetary policy meeting in March, due out at 1400 ET, along with scheduled speeches from Chicago Fed president Austan Goolsbee and Fed board governor Michelle Bowman.
Back to Tuesday’s session, the only major economic data release of the day was the National Federation of Independent Business’ small business optimism index, which fell for a third consecutive month in March. The index dropped to 88.5, the lowest reading since December 2012 and well below forecasts for a print of 90.2.
Inflation was given as the single most important problem in operating businesses for 25% of those surveyed, higher input and labor costs and up two points from February. Additionally, the net percentage of owners who expect real sales to be higher decreased eight points from February to a net -18%.
Market movers
Google parent company Alphabet hit a fresh 52-week high on the day of its next Google Cloud Next event as it unveiled its new custom Arm-based chip, which will be available later this year.
Boeing‘s struggles continued on the back of a whistleblower report surrounding alleged problems with its 787 Dreamliner, causing the stock to fall. According to the New York Times, the FAA is looking into claims made by a Boeing engineer who said that parts of the Dreamliner’s body have been fastened together in a way that could damage the aircraft over time.
Chip maker Nvidia slipped for the fifth time in six sessions, dropping to below the $855.02 level which puts it in correction territory, according to Marketwatch. Meanwhile, e-commerce giant Amazon was on track to beat its previous record close from back in 2021.
Gold miner Barrick Gold closed with gains after gold prices hit another record high, hitting an intraday peak of $2,384.50 an ounce.
Wednesday newspaper round-up: Shoplifting, EnQuest, Klarna
The government is investing more than £55m in expanding facial recognition systems – including vans that will scan crowded high streets – as part of a renewed crackdown on shoplifting. The scheme was announced alongside plans for tougher punishments for serial or abusive shoplifters in England and Wales, including being forced to wear a tag to ensure they do not revisit the scene of their crime, under a new standalone criminal offence of assaulting a retail worker. – Guardian
More than 7.4 million people in the UK struggled to pay a bill or a credit repayment in January, according to a financial regulator. The figure is less than last year but is still significantly higher than before the cost of living crisis began. According to the Financial Conduct Authority (FCA), which tracks the number of households in financial difficulties, 5.8 million people reported that they were struggling to pay a large bill in February 2020. – Guardian
A UK energy company is to start drilling at the biggest oil field discovered in the North Sea in at least 20 years in spite of a net zero crackdown on the industry. EnQuest plans to bring two fields onstream which have the potential to produce 500 million barrels of crude oil over coming decades. The sites, which neighbour Kraken oil and gas field, 80 miles east of Shetland, will reignite the political battle over the North Sea’s future in which Labour has threatened to block new production citing environmental concerns. – Telegraph
Klarna intends to grow its business by deploying generative artificial intelligence instead of hiring new staff. The “buy now, pay later” credit business believes that it will continue to expand its operations and revenue despite a hiring freeze that was announced in December, because AI is making work more efficient. – The Times
Elon Musk is wrong to say that artificial intelligence will overtake human intelligence next year, according to one of the world’s leading AI scientists. Yann LeCun, Meta’s chief AI scientist and one of the so-called godfathers of the technology, said that while artificial general intelligence was achievable, it could take decades to arrive. – The Times
