(Alliance News) - Stocks in London inched higher on Wednesday morning with worrisome inflation figures in China and Germany keeping investors on the sidelines, with a US consumer price index reading waiting.
The FTSE 100 index was up 21.93 points, or 0.3%, at 7,265.15 early Wednesday. The mid-cap FTSE 250 index was up 66.70 points, or 0.3%, at 19,452.02. The AIM All-Share index was up 4.66 points, or 0.5%, at 949.91.
The Cboe UK 100 index was up 0.1% at 723.77. The Cboe 250 was up 0.2% at 17,111.67 and the Cboe Small Companies up 0.2% at 14,486.09.
In Paris, the CAC 40 stock index was up 1.0%. The DAX 40 in Frankfurt was 0.6% higher.
Consumer prices in Germany ticked to a new record high in April, as expected, data from the Federal Statistical Office showed on Wednesday.
The annual inflation rate accelerated to 7.4% in April from 7.3% in March.
The reading was in line with market consensus cited by FXStreet.
"The inflation rate thus reached an all-time high for the second month in a row since German reunification," said Georg Thiel, president of Destatis. "In March 2022, the inflation rate jumped to 7.3%, the main reason being the development of energy product prices. What stands out in April 2022 is the above-average increases in food prices. This is where the impact of the war in Ukraine is becoming more and more visible."
Versus the previous month, consumer prices were 0.8% higher in April, matching March's 0.8% rise from February.
In the US on Tuesday, the Dow Jones Industrial Average closed down 0.3%, while the S&P 500 advanced 0.3%, and the Nasdaq Composite closed 1.4% higher.
Later Wednesday, a US inflation print for April is due at 1330 BST.
"It's D-day of the week: we will see whether inflation in the US started easing in April after hitting a four-decade high in March, and if yes, by how much," Swissquote Bank analyst Ipek Ozkardeskaya said.
"The consensus of analyst estimates on Bloomberg hints that consumer price index may have eased to 8.1% in April, from 8.5% printed a month earlier. A soft inflation read will come as a relief that the Federal Reserve's efforts to tame inflation start paying off, and that the Fed doesn't need to get much more aggressive to bring inflation back towards its 2% policy target. In which case, a couple of 50-bp hikes and the announced balance sheet reduction should suffice to deal with inflation and cool the hawkish Fed expectations."
In London, Compass shot to the top of the FTSE 100 in early trading, rising 9.8%, after the contract caterer announced a GBP500 million share buyback and said it has achieved an "important milestone" with run rate revenue topping pre-virus levels.
In the six months to March 31, pretax profit jumped to GBP632 million from GBP133 million the year before, as revenue rose 36% to GBP11.5 billion from GBP8.4 billion. In the half-year ended March 31, 2020, largely before the Covid-19 lockdowns, Compass achieved pretax profit of GBP771 million on revenue of GBP12.62 billion.
Compass noted its underlying revenue in the second quarter of financial 2022 was double the year prior and maintained a run rate above its pre-Covid levels.
Compass said the first-half revenue surge was driven by "notable" volume recovery in its Business & Industry and Education businesses.
Due to its strong performance in the first half, Compass is upping its organic growth guidance, which is now expected to grow about 30%, lifted from the previous expectation of 20% to 25% growth.
In addition, it declared a 9.4p per share dividend, having not paid an interim payout a year prior. It is the company's first half-year dividend since the pandemic began, though it had paid a 14p final dividend in respect to financial 2021.
Compass also announced a GBP500 million share buyback during calendar 2022.
ITV was 1.1% higher, with the television broadcaster and programmer producer reporting a "strong" first quarter, with revenue growing across the business.
In the three months to March 31, total external revenue was up 18% to GBP834 million, with ITV Studios revenue up 23% to GBP458 million. Media & Entertainment revenue was up 13% to GBP545 million, aided by total advertising revenue rising 16%.
Looking ahead, ITV noted its second and third quarters face tough advertising comparatives as a result of the European Championships last summer. Advertising revenue is expected to fall about 6% in the second quarter from a year prior, with June in particular to see a 9% drop.
Among London mid-caps, TP ICAP was up 2.9%. The interdealer broker recorded a double-digit rise in revenue in the first quarter of 2022.
Total revenue was up 15% to GBP556 million in the three months to March 31 from GBP483 million a year prior. Global Broking revenue was up 4% to GBP322 million, while Energy & Commodities revenue was up 6% to GBP107 million.
Its Broking unit benefited from "increased market volatility" TP ICAP said, with revenue growth being driven by a strong performance in Rates, Credit, FX & Money Markets and Emerging Markets, but revenue was flat in Equities.
CLS Holdings was up 3.9%, after the office space investor proposed a tender offer to close the share price discount to its net tangible assets.
CLS said the discount is "unjustified", and it "will take steps" to reduce the discount. The firm intends to undertake a tender offer, the terms of which will be announced in its half-year results due in August.
LXi REIT shareholders were showing disapproval of the company's planned acquisition of smaller peer Secure Income REIT.
FTSE 250-listed LXi was down 3.7% at 137.00 pence, while Secure Income rose 12% to 459.50p, giving it a market cap of about GBP1.50 billion.
The merger will see Secure Income shareholders receive 3.32 new LXi shares. At LXi's closing price of 142.2 pence on Tuesday, this values Secure Income at GBP1.5 billion.
LXi noted a partial cash alternative will be offered, where Secure Income shareholders can receive 118.88p and 2.488 new LXi shares. The total cash being offered is capped at GBP385 million.
Once the deal is completed, LXi shareholders will own about 53% of the new, enlarged company.
"The boards of LXi and SIR believe there is a strong strategic, operational and financial rationale for the merger, bolstering the existing highly attractive investment case of each business to create a more compelling investment case for the combined group," the pair said in a statement.
The boards of both companies have unanimously recommended the deal.
In Asia on Wednesday, the Japanese Nikkei 225 index ended up 0.2%. In China, the Shanghai Composite closed 0.8% higher, while the Hang Seng index in Hong Kong was up 0.8% in late trade. The S&P/ASX 200 in Sydney closed up 0.2%.
China's consumer prices rose at their quickest pace in nearly half a year, official data showed Wednesday, reflecting the growing costs of the country's zero-Covid curbs and high commodity prices.
The damage from Beijing's strict zero-Covid strategy has been increasingly reflected in economic data, as lockdowns in key cities such as Shanghai have snarled supply chains and pushed up transportation prices.
April's consumer price index rose more than expected at 2.1% year-on-year, picking up from the pace of a month before, said the National Bureau of Statistics.
This was due to "factors like the domestic epidemic and continued rise in international commodity prices", the bureau's senior statistician Dong Lijuan said in a statement.
Since April, China's biggest city Shanghai had been almost entirely sealed off.
Brent oil was quoted at USD104.62 a barrel Wednesday morning, soft from USD104.75 late Tuesday. Gold stood at USD1,848.80 an ounce, higher against USD1,846.88.
The pound was quoted at USD1.2335 early Wednesday, higher from USD1.2300 at the London equities close Tuesday. During Tuesday's session, sterling fell to an intraday low of USD1.2295 in afternoon trade, its lowest level since mid-2020.
The euro was priced at USD1.0554, higher against USD1.0533. Against the yen, the dollar was trading at JPY129.98, down from JPY130.38.
By Paul McGowan; paulmcgowan@alliancenews.com
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