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London open: Stocks gain after UK inflation data; Flutter surges
London stocks rose in early trade on Wednesday as the latest UK inflation data boosted rate cut expectations.
At 0850 BST, the FTSE 100 was up 0.5% at 8,279.44, while sterling was down 0.1% against the dollar at 1.2844.
Data released earlier by the Office for National Statistics showed that consumer price inflation rose in July for the first time since December, but less than expected.
CPI rose by 2.2%, up from 2% in June and May but coming in below expectations of 2.3%. It is now back above the Bank of England’s 2% target.
The ONS said the largest upward contribution came from housing and household services where prices of gas and electricity fell by less than they did last year. The largest downward contribution came from restaurants and hotels, where prices of hotels fell this year having risen last year.
The figures also showed that core CPI – which strips out food, energy, alcohol and tobacco – fell to 3.3% in July from 3.5% in June.
Meanwhile, the CPI services annual rate fell to 5.2% in July from 5.7% a month earlier.
Grant Fitzner, chief economist at the ONS, said: “Inflation ticked up a little in July as although domestic energy costs fell, they fell by less than a year ago.
“This was partially offset by hotel costs, which fell in July after strong growth in June.”
Ruth Gregory, deputy chief UK economist at Capital Economics, said the smaller-than-expected rise in CPI inflation and the sharp fall in services inflation to a two-year low “will reassure the Bank of England that the disinflation process is on track and opens the door to more interest rate cuts later this year”.
In equity markets, Flutter Entertainment surged to the top of the FTSE 100, having said late on Tuesday that it was lifting full-year guidance after a better-than-expected second-quarter performance.
The company now expects US revenue of between $6.05bn and $6.35bn and adjusted EBITDA of $680m to $800m. This is up from previous guidance of $5.8bn to $6.2bn revenue and adjusted EBITDA of $635m to $785m.
Revenue outside the US is expected to be between $7.85bn and $8.15bn, while adjusted EBITDA is set to be $1.69bn to $1.85bn. This is up from previous guidance of $7.65bn to $8.05bn and $1.63bn to $1.83bn, respectively.
Ladbrokes owner Entain also gained.
Infrastructure company Balfour Beatty edged down even as it lifted its dividend by 9% and said it expected annual earnings to grow after an increase in half-year profit.
Aviva was also a little weaker despite reporting a 14% rise in interim operating profits.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Flutter Entertainment Plc | +7.95% | +1,165.00 | 15,820.00 |
| 2 |  |
Bae Systems Plc | +2.34% | +31.00 | 1,354.50 |
| 3 |  |
Berkeley Group Holdings (the) Plc | +2.14% | +110.00 | 5,240.00 |
| 4 |  |
Smurfit Westrock Plc | +2.01% | +62.00 | 3,147.00 |
| 5 |  |
Taylor Wimpey Plc | +1.99% | +3.15 | 161.65 |
| 6 |  |
Aib Group Plc | +1.94% | +8.25 | 434.50 |
| 7 |  |
Banco Santander S.a. | +1.58% | +5.50 | 353.00 |
| 8 |  |
Bt Group Plc | +1.41% | +2.00 | 143.60 |
| 9 |  |
Shell Plc | +1.33% | +37.00 | 2,818.00 |
| 10 |  |
Severn Trent Plc | +1.29% | +33.00 | 2,589.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
South32 Limited | -2.02% | -3.10 | 150.20 |
| 2 |  |
Bhp Group Limited | -1.78% | -37.00 | 2,043.00 |
| 3 |  |
Anglo American Plc | -1.39% | -31.00 | 2,200.50 |
| 4 |  |
Rio Tinto Plc | -1.33% | -65.50 | 4,863.50 |
| 5 |  |
Standard Chartered Plc | -0.49% | -3.60 | 728.20 |
| 6 |  |
Aviva Plc | -0.49% | -2.40 | 486.20 |
| 7 |  |
Antofagasta Plc | -0.35% | -6.50 | 1,832.00 |
| 8 |  |
3i Group Plc | -0.20% | -6.00 | 3,047.00 |
| 9 |  |
Gen.acc.8se.pf | -0.17% | -0.25 | 143.00 |
| 10 |  |
Pearson Plc | -0.14% | -1.50 | 1,034.50 |
US close: Stocks register solid gains following PPI reading
Wall Street stocks closed sharply higher on Tuesday as market participants got their first taste of this week’s key inflation numbers.
At the close, the Dow Jones Industrial Average was up 1.04% at 39,765.64, while the S&P 500 advanced 1.68% to 5,434.43 and the Nasdaq Composite saw out the session 2.43% firmer at 17,187.61.
The Dow closed 408.63 points higher on Tuesday, easily reclaiming the previous session’s losses.
US producer prices rose by less than expected in July, according to the Bureau of Labor Statistics. Producer prices increased 0.1% to 144.67 points in July, up from 144.53 in June but short of preliminary estimates for a 0.2% month-on-month uptick. On an annualised basis, PPI was up 2.2%.
On Wednesday, the Bureau of Labor Statistics will publish last month’s consumer price index, giving an all-important look at how price changes have impacted consumers in their day-to-day lives.
Elsewhere on the macro front, the National Federation of Independent Business‘ small business optimism index rose to 93.7 in July, up from 91.5 in June for the highest reading since Russia’s invasion of Ukraine in February 2022 but was still below the 50-year average of 98.25%.
In the corporate space, Home Depot traded higher despite the retailer’s H2 sales warning, with the group now expecting to report a 3-4% year-on-year decline in full-year comparable sales.
Wednesday newspaper round-up: Avon, AstraZeneca, Google
Anti-sewage campaigners have warned of “extreme anger” if the Labour government does not radically reform the water regulator. Sources at the Environment Agency (EA) and in the Labour party have told the Guardian that while Labour had spent time considering reforms of the EA and Ofwat in order to fix the sewage crisis, some stricter options that had been proposed were now off the table. -Guardian
The owner of the beauty brand Avon in the UK, Europe and Latin America has filed for bankruptcy as it tries to off-load more than $1bn of debt, including millions of dollars in liabilities linked to lawsuits alleging that talc in its products caused cancer. Avon Products Inc (API), a subsidiary of Brazil’s Natura which bought Avon’s non-North American trading businesses in 2020, has filed for Chapter 11, the American version of administration. – Guardian
AstraZeneca has become Britain’s first £200bn company following a 20pc rally in its share price since the start of the year. Shares in the pharmaceutical business rose 1.1pc yesterday to value the company at £200.3bn. AstraZeneca’s stock has surged so far this year amid strong sales of its roster of cancer and rare disease medicines. The drug company jumped ahead of Shell in April to become the most valuable business on the FTSE 100. – Telegraph
A growing number of people have cut corners on their travel insurance since the start of the cost of living crisis, research suggests. Some withhold information to obtain cheaper cover, while others are selective about the medical information that they declare, according to AllClear Travel Insurance. – The Times
Google could be ordered to break up its operations after a judge ruled that the company has an illegal monopoly over online search, according to a report. The US Department of Justice is considering ordering Alphabet, Google’s owner, to divest parts of the search business, which could include the Android operating system and Google’s web browser Chrome, Bloomberg reported. – The Times
