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(Alliance News) - Stock prices in London closed higher on Wednesday, with the FTSE 100 outperforming continental peers, as European equities brushed aside a hot US consumer price index report.
Despite its gains being modest compared to the FTSE's, Frankfurt's large-cap benchmark notched a record closing high, after coming tantalisingly close to doing so on Tuesday. The CAC 40 in Paris narrowly missed out again, however.
New York equities, however, again showed signs of weakness, with traders there wary as US inflation accelerated to a 30-year-high.
"It's been a somewhat mixed day for markets in Europe today, this time the FTSE100 has been the outperformer, helped by some decent numbers from ITV, a decent read across in the retail sector after some spectacular numbers from Marks and Spencer, and a surge in the gold price, boosting miners," CMC Markets analyst Michael Hewson commented.
The FTSE 100 closed up 66.11 points, or 0.9%, at 7,340.15. The FTSE 250 index ended up 66.11 points, or 0.3%, at 23,433.25. The AIM All-Share index closed up 3.54 points, 0.3%, at 1,244.88.
The Cboe UK 100 index rose 0.7% to 726.05. The Cboe 250 ended up 0.4% at 20,977.40, though the Cboe Small Companies fell marginally to 15,624.98.
In mainland Europe, the CAC 40 stock index in Paris closed marginally higher, while the DAX 40 in Frankfurt ended up 0.2%.
US equities struggled, meanwhile.
The Dow Jones Industrial Average was down 0.1% around the time of the closing bell in London. The S&P 500 was also down 0.1%, while the Nasdaq Composite was 0.4% lower.
Oanda analyst Craig Erlam commented: "It's been a relatively calm week for the markets; that is until the release of the US CPI data on Wednesday. It's getting harder and harder for the Fed to describe inflation as transitory and the response to today's data suggests the narrative won't work on investors any more."
Annual US inflation in October accelerated at its fastest pace since November 1990 amid pandemic-related supply shortages, according to the Bureau of Labor Statistics.
On an annual basis, the US consumer price index rose 6.2% in October, ticking up from a 5.4% rise in September. The latest reading was higher than the market forecast, cited by FXStreet, of 5.3%.
Earlier data showed inflationary pressures are also ramping up in China. China's factory-gate inflation hit a 26-year high in October while fresh virus outbreaks and soaring food and energy prices sent consumer prices up more than forecast, official figures showed.
The producer price index, which measures the cost of goods at the factory gate, jumped a bigger-than-expected 14% on-year in October. PPI reached 11% in September, which was then the highest on record in NBS data since the mid-1990s.
Consumer price inflation hit 1.5%, accelerating from 0.7% in September.
Worries about inflation could soon spell trouble for equity markets again, Oanda's Erlam added.
"This is a big downside risk for equities now and with earnings season now drawing to a close, they may start to buckle under the pressure. Earnings have kept investors on board but the next couple of months could become very uncomfortable. In fairness, they've recovered well already after the initial dip but that resilience will likely be tested plenty more," Erlam explained.
Separately, the number of US jobless claims fell to its lowest since the virus pandemic hit, figures from the Department of Labor showed Wednesday. For the week to November 6, initial jobless claims were 267,000, edging lower from 271,000 the week before. The latest figure was just above market expectations of 265,000.
The dollar was higher across the board on Wednesday. The pound was quoted at USD1.3492 at the London equities close on Wednesday, slipping from USD1.3530 late Tuesday.
The euro was priced at USD1.1529, down from USD1.1577. Against the Japanese yen, the dollar was trading at JPY113.86, up from JPY112.94.
Gold shook off the stronger greenback, rallying to USD1,856.96 an ounce late Wednesday, from USD1,825.74 late Tuesday. The precious metal is often seen as a hedge against rampant inflation.
ThinkMarkets analyst Fawad Razaqzada commented: "If you ever doubted investors still see gold as an effective hedge against inflation, then you got your answer when the latest inflation data was released earlier."
In London, Fresnillo shares closed up 3.5%, while fellow gold miner Polymetal added 3.0%.
ITV shares rose 13%, the best large-cap performer in London.
The broadcaster said it saw an "outstanding" nine months with strong performances from its Studios and Media & Entertainment businesses driving revenue growth.
For the nine months to September 30, revenue was GBP2.79 billion, up 29% from GBP2.17 billion at the same time last year. Total advertising revenue came in at GBP1.36 billion, rising 31% from GBP1.04 billion.
Studios revenue was up 32% to GBP1.19 billion, while M&E revenue was 26% higher at GBP1.59 billion.
Looking ahead, ITV said total advertising revenue for 2021 is expected to be the highest in the company's 66-year history.
Marks & Spencer jumped 16%, the best FTSE 250 performer. The food, clothing and homewares retailer raised its annual profit outlook for the second time in less than three months after a sales rebound.
M&S reported pretax profit of GBP187.3 million in the six months to October 2, swung from a loss of GBP87.6 million a year earlier at the height of the pandemic, and up 18% on two years ago before Covid-19 struck.
M&S said it expects full-year underlying profit to beat expectations, now guiding for around GBP500 million - having already upgraded its guidance in late August to above GBP350 million.
For the half year to October 2, revenue rose to GBP5.11 billion from GBP4.09 billion last year as the retailer swung to a pretax profit GBP187.3 million from a pandemic-driven loss of GBP87.6 million.
JD Wetherspoon lost 7.2%. The pub operator said it is struggling to hit pre-pandemic levels as trends show that older customers are still staying home amid virus worries.
For the 15 weeks to November 7, like-for-like sales were 8.9% lower than the record sales achieved in the same period in 2019.
Elsewhere, cycling products retailer Halfords surged 20%, on the back of a guidance raise.
For the six months to October 1, revenue rose to GBP694.8 million from GBP638.9 million last year and pretax profit jumped to GBP64.3 million from GBP55.4 million. It reinstated its dividend with a 3 pence per share payout.
Halfords raised its financial 2022 underlying pretax profit outlook to a GBP80 million to GBP90 million range, up from previous guidance of above GBP75 million.
Brent oil was quoted at USD84.12 a barrel late Wednesday, up ever-so-slightly from USD84.08 late Tuesday.
Thursday's economic calendar has a UK third quarter gross domestic product report at 0700 GMT.
The local corporate calendar has a trading statement from insurer Aviva and housebuilder Taylor Wimpey. Retailers B&M European Value and Burberry both post interim results.
By Eric Cunha; ericcunha@alliancenews.com
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