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London open: Stocks edge down ahead of US inflation
London stocks edged lower in early trade on Wednesday as investors eyed the latest US inflation report.
At 0900 BST, the FTSE 100 was down 0.2% at 7,750.93.
US consumer price inflation data for April is due at 1330 BST.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “The extent to which price pressures are still weighing on the American economy is in sharp focus today, with investors watching and waiting for the latest inflation snapshot. This is a big piece of the puzzle for central bank policymakers and will help them decide on whether to press pause on rate hikes in June.
“If headline CPI comes in, as expected, around 5% and core prices, stripping out volatile food and energy, drop slightly back, it will indicate that monetary policy has been wound tight enough to keep prices cranking down. There will still be worries that due to the lag effect, aggressive rate hikes might still bring stronger than expected disinflationary shockwaves in the months to come, which could push the US into a deeper downturn. This is being reflected in oil prices with Brent Crude dropping back below $77 a barrel, as traders assess the potential knock-on effects of a US recession on global demand.”
In equity markets, Asos slumped as the fast fashion retailer reported a widening of its interim losses as shoppers continued to tighten their belts amid the cost-of-living crisis, but the company said it was confident of a return to profit in the second half.
Holiday giant Tui fell despite reporting narrower losses and an increase in revenue as travel rebounded from the Covid pandemic. Second-quarter underlying losses before interest and tax came in at €242.4m, compared with a €330m loss a year ago.
On the upside, Melrose Industries surged after saying it was trading “materially ahead” of expectations, with significant growth in revenue, profit and margin being achieved, as it issued new guidance for the full year.
Caterer Compass Group gained after it lifted its full-year guidance as it posted a jump in first-half revenue and operating profit.
Pub chain Wetherspoons was also up after saying it expects annual earnings to be at the top end of expectations and tipped 2023 to be a record year for sales.
Harbour Energy pushed higher as it held full-year guidance after a reporting a strong first quarter.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Melrose Industries Plc | +3.61% | +15.30 | 439.70 |
| 2 |  |
Compass Group Plc | +1.94% | +40.00 | 2,105.00 |
| 3 |  |
Rolls-royce Holdings Plc | +1.88% | +2.85 | 154.50 |
| 4 |  |
Dcc Plc | +0.89% | +42.00 | 4,756.00 |
| 5 |  |
Fresnillo Plc | +0.67% | +4.80 | 721.80 |
| 6 |  |
Segro Plc | +0.62% | +5.00 | 811.80 |
| 7 |  |
Easyjet Plc | +0.61% | +3.00 | 492.20 |
| 8 |  |
Prudential Plc | +0.55% | +6.50 | 1,181.00 |
| 9 |  |
Imperial Brands Plc | +0.55% | +10.50 | 1,933.50 |
| 10 |  |
Direct Line Insurance Group Plc | +0.41% | +0.65 | 157.45 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Tui Ag | -3.98% | -22.40 | 540.00 |
| 2 |  |
Pearson Plc | -2.69% | -22.20 | 804.40 |
| 3 |  |
Ocado Group Plc | -1.47% | -7.00 | 468.00 |
| 4 |  |
Admiral Group Plc | -1.35% | -30.00 | 2,192.00 |
| 5 |  |
Vodafone Group Plc | -1.16% | -1.09 | 93.19 |
| 6 |  |
Kingfisher Plc | -1.14% | -2.90 | 252.10 |
| 7 |  |
Unilever Plc | -1.04% | -45.50 | 4,323.00 |
| 8 |  |
Itv Plc | -1.04% | -0.82 | 77.92 |
| 9 |  |
Bhp Group Limited | -0.98% | -23.50 | 2,377.50 |
| 10 |  |
Bp Plc | -0.96% | -4.70 | 483.85 |
US close: Stocks fall ahead of key inflation reading
Wall Street’s main market gauges closed in negative territory on Tuesday, as investors took profits before important economic data releases on both sides of the Atlantic.
The Dow Jones Industrial Average fell 0.17% to close at 33,561.81, while the S&P 500 slipped 0.46% to 4,119.17.
At the same time, the tech-heavy Nasdaq Composite was down by 0.63% to close at 12,179.55.
The US consumer price index (CPI), a key gauge of inflation, was set to be released on Wednesday, giving investors insights into the Federal Reserve’s next monetary policy move.
Meanwhile, the Bank of England is also expected to announce its next interest rate decision.
In currency markets, the dollar weakened slightly against its major trading pairs, last falling 0.03% against sterling to trade at 79.22p, while it declined 0.01% on the euro to 91.21 euro cents.
The yen, meanwhile, also fell 0.04% against the greenback to change hands at JPY 135.17.
“Whilst the rest of the week might feel like a stuck record and one that’s kept markets pretty subdued today, airline stocks have soared amid upbeat investor sentiment,” said AJ Bell head of financial analysis Danni Hewson.
“Boeing’s share price felt the wind beneath its wings as a lengthy spat over price with Ryanair was finally put to bed.”
Hewson noted that the low-cost carrier – Europe’s largest airline – signed up for at least 150 new aircraft in a symbol of the optimistic outlook the company was expecting.
“The big question of the week is where will the US inflation number fall and how will markets react.”
Small business confidence reaches 10-year low in April
On the economic front, the National Federation of Independent Business (NFIB) reported that small business confidence dipped to a 10-year low in April as entrepreneurs lost faith in their economic outlook, sales, and earnings.
The NFIB‘s confidence index fell from 90.1 in March to 89.0 in April, which is below the consensus estimate of 89.7.
In China, exports exceeded expectations in April, although growth slowed, while imports decreased again.
Exports rose by 8.5% year-on-year to $295.42bn, up from a 14.8% increase in March, surpassing expectations of a 6.4% rise.
Imports, meanwhile, dropped 7.9% to $205.21 billion, a further decline from the 1.4% decrease recorded in March, and below expectations of a 0.1% decline.
China’s total trade surplus was $90.2bn for April, up from $88.19 billion in March.
On British shorts, the BRC-KPMG retail sales monitor showed that retail sales in April increased as shoppers continued to feel the impact of inflation.
Total sales rose 5.1% last month, remaining unchanged from March, while like-for-like sales rose 5.2% compared to a 4.9% increase in March and a 1.7% decline in April 2022.
Finally on data, Halifax released figures showing that UK house prices fell in April, after three consecutive months of growth.
On a monthly basis, prices declined by 0.3% to £286,896, down from a 0.8% increase in March.
Year-on-year, house prices grew by just 0.1% in April, down from a 1.6% increase in March.
PayPal slides, Boeing ascends on big Ryanair order
In equities, Skyworks Solutions fell 5.15% after its third-quarter guidance fell short of expectations.
Skyworks projected revenue between $1.05bn and $1.090bn, which missed analysts’ estimates of $1.16bn.
PayPal Holdings saw a steep decline of 12.73%, despite raising its full-year earnings per share guidance.
On the upside, Palantir Technologies surged 23.39% after its first-quarter earnings report, which beat expectations.
The company also announced that it expects to report a profit in every quarter of this year.
Boeing also saw gains, with its stock increasing 2.34% after Ryanair placed an order for 300 new 737 MAX-10 jets, valued at more than $40bn.
Wednesday newspaper round-up: John Lewis, Vodafone, Asos
The boss of John Lewis will face a confidence vote by staff members on Wednesday as the business considers the option of bringing in outside investment in a change that could threaten the decades-old employee-owned model. Chairman Sharon White is considering radical ways to bring in up to £2bn to help secure the future of the John Lewis Partnership, including diversifying into building flats for rent above shops, after reporting hefty losses from its chain of department stores and Waitrose supermarkets. – Guardian
Banking start-ups and building societies risk being forced to set aside hundreds of millions of pounds of customers’ money under plans to shield taxpayers if there is a new financial crisis. The Bank of England is considering new rules that would saddle so-called challenger banks with a wave of extra costs in an attempt to ensure depositors can be paid quickly should a lender go bust. – Telegraph
Vodafone’s talks to merge its UK business with that of Chinese-owned rival Three face an “extremely difficult” conclusion amid calls for any deal to be investigated on national security grounds. Three’s owner CK Hutchison, controlled by 94-year-old Hong Kong billionaire Li Ka-Shing, and FTSE-listed Vodafone hope to push through a merger of their UK mobile units in a deal valuing the combined business at about £15bn. – Telegraph
Several Asos employees allegedly quit the fashion firm after an investigation into workplace misconduct uncovered incidents that led to disciplinary action being taken against certain staff but “failed to properly reprimand bullying male managers”. In 2021, Asos launched an internal investigation, supported by the law firm Lewis Silkin, after a series of anonymous posts were published on Instagram in spring 2020 levelling allegations of sexual misconduct at senior staff within the retailer. It was accused of being a “boys’ club” and allowing inappropriate sexual behaviour in the workplace. – The Times
European gas prices could rise in the second half of this year and nearly treble from present levels in the winter, according to Goldman Sachs. Analysts at the US investment bank said that lower-than-expected prices in recent months following a mild winter could make European households more likely to increase their gas usage. – The Times
