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(Alliance News) - Inflation in the UK raced above 5% in November, numbers on Wednesday showed, ahead of a crunch Bank of England meeting on Thursday.
The UK's annual inflation rate accelerated to 5.1% in November, from 4.2% in October, according to the Office for National Statistics. The Bank of England's inflation target is 2%.
November's figure was above market estimates of 4.7%, according to FXStreet.
"This is the highest CPI 12-month inflation rate since September 2011, when it stood at 5.2%," the ONS said.
On a monthly basis, consumer prices increased 0.7%, topping expectations of a 0.4% hike, following October's 1.1% rise.
Producer price growth, meanwhile, similarly topped estimates in November, surging 9.1% yearly, versus expectations of an 8.3% hike. October's growth was upwardly revised to 8.6%.
Monthly, producer prices rose 0.9%, following October's 1.5% acceleration.
"The move [in the UK inflation rate] will reignite speculation that the Bank of England will raise its policy interest rate tomorrow," commented Lloyds Bank.
"However, BoE policymakers will also need to take into account the greater uncertainty generated by the new Covid variant, which is still expected to tip the balance in the direction of delaying a move for now."
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.2% at 7,207.51
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Hang Seng: down 0.9% at 23,420.76
Nikkei 225: closed up 0.1% at 28,459.72
S&P/ASX 200: closed down 0.7% at 7,327.10
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DJIA: closed down 106.77 points, or 0.3%, at 35,544.18
S&P 500: closed down 34.88 points, or 0.8%, at 4,634.09
Nasdaq Composite: closed down 175.64 points, or 1.1%, at 15,237.64
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EUR: soft at USD1.1270 (USD1.1275)
GBP: up at USD1.3250 (USD1.3231)
USD: flat at JPY113.73 (JPY113.70)
Gold: up at USD1,786.28 per ounce (USD1,775.45)
Oil (Brent): down at USD73.03 a barrel (USD73.23)
(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
1100 GMT Ireland goods exports and imports
0700 EST US MBA weekly mortgage applications survey
0830 EST US import & export price indices
0830 EST US retail sales
1000 EST US manufacturing & trade
1000 EST US NAHB housing market index
1030 EST US EIA weekly petroleum status report
1400 EST US Fed interest rate decision and economic projections
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All adults in England now are being offered a Covid-19 booster. The NHS national booking system has opened up to all over 18s as the health service ramps up its vaccination programme. People are eligible for a booster three months after their second vaccine but they can book after two months. It marks the NHS meeting its objective of offering every eligible adult a chance to book a booster before the new year. The UK health service is now racing to boost as many people as possible as it braces for the impact of a wave of Omicron cases.
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BROKER RATING CHANGES
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BARCLAYS CUTS DCC TO 'UNDERWEIGHT' ('EQUAL WEIGHT') - TARGET 5,550 (6,900) PENCE
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BERENBERG CUTS HARBOUR ENERGY TO 'HOLD' (BUY) - PRICE TARGET 350 (425) PENCE
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RBC CUTS HARBOUR ENERGY TO 'SECTOR PERFORM' (OUTPERFORM) - PRICE TARGET 480 (650) PENCE
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BARCLAYS CUTS DOMINO'S PIZZA TO 'UNDERWEIGHT' (EQUAL-WEIGHT) - PRICE TARGET 495 (500) PENCE
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COMPANIES - FTSE 100
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The GBP420 million takeover of Air Europa by British Airways-owner International Consolidated Airlines Group has been scrapped, both sides announced. They said "discussions are at an advanced stage to terminate the agreement" and it comes just weeks after the UK's competition watchdog said it would investigate whether it breached competition rules. IAG first announced plans for its Iberia arm to buy the Spanish airline in 2019 for EUR1 billion although the price was slashed after the Covid-19 pandemic knocked the entire sector by grounding planes. It has now been scrapped entirely.
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Miner and steel maker Evraz said that after a year-long study, first announced back in January, it has decided to de-merge its metallurgical coal assets. The demerger will be effected by means of a distribution of shares in Moscow-listed PJSC Raspadskaya, which holds the assets, directly to Evraz shareholders. They are expected to receive these by February 15. Evraz said that, even after the demerger, it still will pay a minimum of USD300 million in annual dividends.
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Distribution firm Bunzl said it expects to post a "strong performance in 2021". Underlying revenue growth will be in the "high single digit" level compared to 2019, before the onset of the pandemic. Revenue in 2021 is tipped to rise 2% year-on-year at actual exchange rates, and 7% on a constant currency basis. "At constant exchange rates, underlying revenue growth is expected to reflect a strong recovery in the base business, supported by inflation, partially offset by the anticipated decline in Covid-19 related orders with deflation on certain Covid-19 related products. Group adjusted operating margin is expected to be only slightly ahead of historical levels," the company said. Bunzl noted uncertainty related to new Covid-19 variants, but added that it expects revenue to increase in 2022. However, it warned sales of Covid-19 related products could moderate.
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GlaxoSmithKline, developing a Covid-19 jab alongside French firm Sanofi, said a single booster dose of the vaccine delivered "consistently strong immune responses". Neutralising antibodies increased in the 9- to 43-fold range, GSK said, regardless of which initial jab the patient took, be it AstraZeneca's, J&J's, Moderna or Pfizer's. "The booster was well tolerated, with a safety profile similar to currently approved Covid-19 vaccines. This is the most comprehensive booster trial to date to explore boosting across different vaccine technologies used for primary vaccination," GSK added. The companies plan to file the booster data with regulators following full phase III results.
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COMPANIES - FTSE 250
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Movie house operator Cineworld said a Canadian court has ruled against it in the case brought by jilted takeover target Cineplex. The court has ordered Cineworld to pay to Cineplex CAD1.23 billion, about GBP720 million, in lost synergies and CAD5.5 million in transaction costs. Cineworld said it will appeal the judgement and no damages will be payable during appeal. Cineworld had agreed to the acquisition before the Covid-19 pandemic and cancelled it as lockdowns closed cinemas.
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Electronics retailer Currys said it has seen "strong UK market share gains", despite supply chain challenges. In the half year to October 30, revenue fell 1.5% annually to GBP4.79 billion from GBP4.86 billion. Pretax profit, however, inched up 6.7% to GBP48 million from GBP45 million, helped by net finance costs dropping 15% to GBP47 million. "We've had a strong first half of the year. We grew colleague engagement and customer satisfaction, gained market share and stabilised gross margins in the UK, grew profits and generated strong cash flow," Chief Executive Alex Baldock said. The company, which announced plans for a GBP75 million buyback in November, said the programme will begin in January. Currys declared an interim payout of 1.00 pence per share, having not paid one a year earlier. An increased dividend, along with a return of surplus cash and a pledge to invest in the business, are among its "refreshed capital allocation priorities". Looking ahead, CEO Baldock added: "Our market has been softer over recent weeks, and we may face into further headwinds from omicron and associated restrictions, but the stronger business we've built can ride out both the industry-wide disruption to supply chains and bumpy demand. After the strong first half, we remain on track to meet the expectations we set out a month ago for full year adjusted pretax profit of around GBP160 million."
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COMPANIES - MAIN MARKET AND AIM
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Perth, Australia-based miner South32 said it has secured USD1.4 billion of commitments from lenders for a five-year term to 2026, with options to extend for up to a further two years by mutual agreement. The multi-currency revolving syndicated credit facility refinances the group's existing undrawn revolving credit facility that is due to expire in 2023. The new facility has been established as a sustainability-linked loan, with measures linked to South32's commitment to emissions reduction and improving energy and water use efficiency.
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Wednesday's shareholder meetings
Beeks Financial Cloud Group PLC - AGM
Brighton Pier Group PLC - AGM
DX Group PLC - AGM
GCP Student Living PLC - AGM
GRC International Group PLC - AGM
Gresham House Strategic PLC - GM re shareholder returns
Kingswood Holdings Ltd - AGM
ProPhotonix Ltd - GM re acquisition by Exaktera
PRS REIT PLC - AGM
Schroder Oriental Income Fund Ltd - AGM
Softcat PLC - AGM
SolGold PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
