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(Alliance News) - Stock prices in London are seen opening lower on Wednesday, following data showing a record jump in UK inflation in August.
"The Bank of England will have noted this morning's release ahead of their next meeting on 23rd September, when it's possible they will take a more hawkish tone. With the ECB and Federal Reserve beginning to make their moves in terms of tapering, it won't be long until the BoE feels it has to act as the recovery continues to take shape," Quilter Cheviot analyst Richard Carter commented.
"It will be hoping, however, that the inflation pressures being experienced around the world will ultimately prove to be transitory given the latest consumer price data out of the US yesterday saw a tempering of price rises. We will wait to see if the worst is now behind us."
IG futures indicate the FTSE 100 index will open 12.0 points lower, 0.2%, at 7,022.06. The blue-chip index closed down 34.37 points, 0.5%, at 7,034.06 on Tuesday.
The pound was quoted at USD1.3816 early Wednesday in London, down from USD1.3845 late Tuesday. It reached a high of USD1.3821 shortly after the UK inflation data.
In early corporate news on Wednesday, cybersecurity firm Darktrace and consumer review website Trustpilot, two of the London Stock Exchange's significant newer listings, posted revenue hikes but both saw losses widen. Longer standing investor favourite Fevertree lifted its payout as profit rose, despite logistics pressures hitting the tonic water maker's margins.
The UK annual inflation rate jumped to 3.2% in August from 2.0% in July. According to consensus cited by FXStreet, a smaller increase to 2.9% was expected.
"The increase of 1.2 percentage points is the largest ever recorded increase in the CPI National Statistic 12-month inflation rate series, which began in January 1997," the Office for National Statistics said.
On a monthly basis, consumer prices rose 0.7% in August, having been flat in July.
In August of last year, consumer prices had fallen by 0.4% monthly and had risen by 0.2% annually.
ONS analyst Jonathan Athow commented: "August [2021] saw the largest annual inflation month-on-month since the series was introduced almost a quarter of a century ago. However, much of this is likely to be temporary as last year restaurant and cafe prices fell substantially due to the 'Eat Out to Help Out' scheme, while this year, prices rose."
Equities were lower in Asia on Wednesday. The Nikkei 225 index in Tokyo closed down 0.5%. In China, the Shanghai Composite was 0.5% lower, while the Hang Seng index in Hong Kong was down 1.8%. The S&P/ASX 200 in Sydney was 0.3% lower.
Weaker retail sales in China growth hurt sentiment. Growth in China's retail sales slowed in August to a 12-month low, data showed, as parts of the country were hit by lockdowns and other containment measures to fight the worst Covid outbreak since its initial spread in 2020.
Retail sales grew by 2.5% in August, well short of the 7% forecast and sharply down from the 8.5% pace witnessed in July. The reading was the lowest since August 2020.
In London, Darktrace, which will soon join the FTSE 250 index, said revenue in the financial year that ended June 30 surged. However, its loss ballooned.
The cybersecurity firm's revenue jumped 41% to USD281.3 million from GBP199.1 million. Growth was "robust" across all its markets.
However, its pretax loss widened considerably to USD147.6 million from USD26.9 million. Finance costs soared to USD109.2 million from USD2.4 million.
These non-cash costs were related to convertible loan notes issued to some shareholders back in July 2020. "These notes and associated finance costs were eliminated upon conversion to equity with the IPO," Darktrace noted.
The company raised its revenue guidance for financial 2022 to between 35% and 37% growth from 29% to 32% growth previously forecast.
Trustpilot, which also floated earlier this year, said revenue in the six months to June 30 grew 31% year-on-year to USD62.4 million from USD47.7 million. However, its pretax loss widened to USD17.3 million from USD6.4 million.
General and administrative expenses almost trebled annually to USD30.1 million from USD11.5 million.
Trustpilot also lifted its outlook. It previously expected constant currency revenue growth in the "high-teens". It now expects growth at similar levels to the 28% constant currency revenue surge from the first half.
Drink mixers maker Fevertree saw revenue rise 36% over the same six-month period. Revenue came in at GBP141.8 million, improved from GBP104.2 million a year earlier. Pretax profit increased 17% year-on-year to GBP25.3 million from GBP21.7 million.
It lifted its interim payout by 2.0% to 5.52 pence from 5.41p.
Profit rose despite logistics disruption and cost pressures hitting margins. Its gross margin slipped to 44.1% from 46.8% a year earlier.
Chief Executive Tim Warrillow said: "I am pleased to report an excellent sales performance for the first half of the year. Our ambition and confidence in the global opportunity continues to grow and we have been encouraged by the initial re-opening of the On-Trade, the ongoing strength of the Off-Trade with sales exceeding pre-Covid levels across all our regions, as well as the response to our new product launches, all of which is a testament to our increasing brand strength, growing presence, marketing investments, and relationships across the industry."
The euro stood at USD1.1803 early Wednesday down from USD1.1821 at the European equities close on Tuesday. Against the yen, the greenback was trading at JPY109.47, down from JPY109.65.
Brent oil was quoted at USD74.04 a barrel early Wednesday, up from USD73.74 a barrel at the London equities close on Tuesday. Gold was quoted at USD1,801.03 an ounce, down from USD1,807.10.
By Eric Cunha; ericcunha@alliancenews.com
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