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(Alliance News) - UK inflation eased annually in February with the country in lockdown, according to the latest figures from the Office for National Statistics on Wednesday.
On an annual basis, UK consumer prices rose 0.4% in February, slowing from a rise of 0.7% in January. The reading missed market consensus, cited by FXStreet, for an 0.8% increase.
On a monthly basis, consumer prices rose 0.1% in February, rebounding from deflation of 0.2% in January. However, the figure missed the consensus estimate for an 0.5% rise.
The ONS said falling prices for clothing, for second-hand cars, and for games, toys & hobbies resulted in the largest downward contributions to the change in consumer prices. The largest upward contribution to the 12-month inflation rate came from transport.
At its policy meeting last week, the Bank of England's Monetary Policy Committee said it "does not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2.0% inflation target sustainably".
In a separate release, the ONS said producer output inflation for goods leaving the factory gate grew 0.9% year-on-year in February, accelerating from an 0.1% rise in January.
Input prices rose 2.6% annually in February having risen 1.6% in January.
"While we continue to see incremental increases in inflation...we still predict inflation rates are on course to rise rapidly this year with most of the increase coming in the next few months," commented Paul Craig, portfolio manager at Quilter Investors.
"This is likely to be driven by the raising of the price cap for many domestic energy bills and a surge in oil prices, while ultimately a return in consumer demand will result in higher prices. There are other domestic base effects to take into account too, for example higher restaurant prices when compared to last year's Eat Out to Help Out scheme, while those businesses that have survived on the high street may find they have improved pricing power and may wish to try and take advantage of people's thirst to get out an about."
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.6% at 6,660.45
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Hang Seng: down 2.1% at 27,900.05
Nikkei 225: closed down 2.0% at 28,405.52
DJIA: closed down 308.05 points, or 0.9%, at 32,423.15
S&P 500: closed down 0.8% at 3,910.52
Nasdaq Composite: closed down 1.1% at 13,227.70
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EUR: down at USD1.1826 (USD1.1861)
GBP: down at USD1.3690 (USD1.3778)
USD: soft at JPY108.63 (JPY108.67)
Gold: up at USD1,728.30 per ounce (USD1,727.16)
Oil (Brent): down at USD61.30 a barrel (USD62.09)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
0930 GMT UK ONS house price index
0930 GMT UK CIPS-Markit flash purchasing managers' index
0930 CET Germany flash PMI
1000 CET Germany Ifo economic forecast spring report
1000 CET EU flash PMI
1600 CET EU flash consumer confidence indicator
0830 EDT US advance report on durable goods
0945 EDT US flash manufacturing PMI
0945 EDT US flash services PMI
1000 EDT US Treasury sec and Fed chair testify to Senate committee
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UK Prime Minister Boris Johnson is set to be grilled by senior members of Parliament over his handling of the pandemic as he admitted the events of the past year would live with him for the rest of his life. Johnson will spend Wednesday afternoon in front of the Liaison Committee, made up of Commons select committee chairs, in which he will be asked about his response to coronavirus after the UK marked the anniversary of the first national lockdown. The session will take place after Johnson's weekly sparring with Labour leader Keir Starmer at Prime Minister's Questions in the House of Commons. Johnson, conceding that there were "many things that we wish we'd done differently" at the outset of the pandemic, said the past 12 months had been a "distressing period". He told a Downing Street press conference: "I certainly think that this is something that we will all remember and be dealing with in different ways, certainly in my case, for as long as I live." Labour's shadow health secretary, Jonathan Ashworth, said there had been a "litany of errors" from Johnson during the crisis and that "lessons must be learnt".
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BROKER RATING CHANGES
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DEUTSCHE BANK RAISES NATWEST TO 'HOLD' ('SELL') - TARGET 170 PENCE
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ODDO BHF RAISES COMPASS GROUP TO 'NEUTRAL' ('UNDERPERFORM') -TARGET 1450(1320) PENCE
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MORGAN STANLEY CUTS BHP GROUP TO 'EQUAL-WEIGHT' (OVERWEIGHT)
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COMPANIES - FTSE 100
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Hazard detection and life protection firm Halma raised its annual profit guidance. Halma said it has made good progress in the second half of the financial year and now expects adjusted pretax profit for financial 2021 to be similar to that in financial 2020, compared to prior guidance of around 5% below the prior year. It posted adjusted pretax profit of GBP267.0 million in financial 2020. Halma said this includes a small hit from movements in exchange rates, compared to the broadly neutral effect forecast at the time of the half year results. Halma said order intake is currently ahead of revenue and ahead of the same period last year, saying this reflected the agility of its business model and the benefits of focus on niche markets with long-term growth drivers.
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Water works Severn Trent said it intends to seek shareholder approval for climate change action plan at its annual general meeting in July. Severn Trent submitted emissions targets to reduce greenhouse gas emissions by 2030. In January, it had submitted several project proposals to regulator Ofwat to invest "hundreds of millions of pounds" as part of the Green Recovery initiative which would enable it to deliver new low-carbon water sources, to create new jobs, and to enhance river quality and flood resilience in the region. Chief Executive Officer Liv Garfield said: "As a water company we take care of one of life's essentials, so a healthy environment is vital to the long term sustainability of our business. Taking positive action to mitigate climate change and ensure we are resilient to its impact is at the core of that goal. We have set ourselves bold ambitions which we believe will benefit all our stakeholders over the long term, which is why we're pleased to offer this engagement opportunity to our shareholders at our upcoming AGM."
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COMPANIES - FTSE 250
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Housebuilder Bellway said it delivered a good first-half trading performance, achieving record interim revenue due to its strong brought forward sales position, alongside strong customer demand. For the six months to January 31, Bellway posted revenue of GBP1.72 billion, up 12% from GBP1.54 billion the year before, but pretax profit was GBP280.2 million, down 4.0% from GBP291.8 million. Bellway said its forward order book on March 14 was GBP1.64 billion, up 8.4% from GBP1.52 billion at the same time the year before. It also expects the full-year average selling price to rise to GBP295,000 from GBP293,054. In addition, Bellway reinstated its interim dividend at 35.0 pence per share, having made no interim payout last year. Bellway said the fundamentals of the housing market remain robust, with an underlying requirement for new homes in the UK, supported by an ongoing environment of low interest rates, and the mortgage market is broadly supportive. It also welcomed the UK government's extension of the stamp duty holiday to the end of June.
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COMPANIES - GLOBAL
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Trading app Robinhood filed confidential paperwork to pursue an initial public offering and take the company public. Robinhood Markets announced that it confidentially submitted a draft registration statement with the Securities & Exchange Commission relating to the proposed initial public offering of its common stock. "The number of shares to be offered and the price range for the proposed offering have not yet been determined," the statement on a company blog read. The initial public offering is expected to take place after the SEC completes its review process, subject to market and other conditions. Details of the IPO were not immediately known but Bloomberg News said the listing would be on the Nasdaq exchange. Some media reports said Robinhood's market valuation could be as high as USD40 billion. The financial services provider was founded in Menlo Park, California in 2013.
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Wednesday's Shareholder Meetings
Arden Partners PLC - AGM
BlackRock Throgmorton Trust PLC - AGM
Mitchells & Butlers PLC - AGM
N4 Pharma PLC - AGM
Oxford Biodynamics PLC - AGM
Pantheon Resources PLC - AGM
Rights & Issues Investment Trust PLC - AGM
Tertiary Minerals PLC - GM re disapplying pre-emptive rights
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By Tom Waite; thomaslwaite@alliancenews.com
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