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(Alliance News) - Stocks in London finished broadly but cautiously higher on Thursday, rebounding after two consecutive downbeat sessions following disappointing inflation prints from both the UK and the US.
"Markets seem torn between a bearish sentiment on one hand, supported by lingering macro threats in a tighter liquidity environment, and dip buyers on the other who continue to bet on the inflation peak," said Pierre Veyret of ActivTrades.
"Most benchmarks aren't registering strong and significant bullish correction following last Tuesday's sell-off, but continue to trade sideways in a volatile manner, which highlights the "wait and see" situation ahead of... tomorrow's EU CPI report and next week's Fed decision on rates," Veyret continued.
The US Federal Reserve will unveil its latest interest rate decision on Wednesday next week, before the Bank of England reveals its own interest rate decision the next day.
The EU inflation print comes in at 1000 BST on Friday.
The FTSE 100 index closed up 4.77 points, or 0.1% at 7,282.07 on Thursday. The FTSE 250 ended up 37.12 points, or 0.2%, at 18,886.32. The AIM All-Share closed down 0.96 points, or 0.1%, at 867.38.
The Cboe UK 100 ended up 0.1% at 728.12, the Cboe UK 250 closed down 0.1% at 16,258.97, and the Cboe Small Companies ended up 0.1% at 12,782.79.
Confidence among UK consumers has fallen into negative territory for the first time since June 2020, according to a survey.
The Consumer Confidence Index from YouGov and the Centre for Economics & Business Research fell by 4.2 points in August to 98.8 from 103.0, the largest decline since the early stages of the pandemic.
It comes as inflation, largely driven by energy price rises, piles pressure on consumers ahead of winter.
The survey was taken between August 1 and 31, before Prime Minister Liz Truss announced her plan to freeze energy bills at GBP2,500 a year for a typical household.
"This latest dip in consumer confidence exemplifies a longer trend of sustained decline," said Emma McInnes, global head of financial services at YouGov.
The pound was quoted at USD1.1494 at the London equities close Thursday, down from USD1.1588 at the close on Wednesday.
In the FTSE 100, Melrose Industries closed down 3.6% as the stock went ex-dividend, meaning new buyers no longer qualify for the latest payout.
Shares in Ocado rebounded after a disappointing few sessions. The stock closed up 3.5%.
In the FTSE 250, Hilton Food plummeted 29% after it said it expects annual profit to be below expectations due to cost pressures on consumers, as well as a hit from start-up costs and rising interest rates.
In the 28 weeks to July 17, the food packaging business said pretax profit declined by 9.7% year-on-year to GBP19.6 million from GBP21.7 million a year earlier.
Hilton Food's operating margin weakened to 2.0% from 2.3% due to raw material price inflation, while its total administrative expenses rose by 11% to GBP139.0 million from GBP123.4 million.
Chief Executive Philip Heffer admitted the company had "not been immune" from the impact of heightened inflation but nonetheless looked to the future with confidence.
"While we remain watchful of any near-term changes in consumer sentiment, we believe that our international scale, strong customer relationships, and diversified protein offer leaves us well-placed within a growing global market," Heffer said.
Redrow finished 3.7% higher. On Wednesday, the housebuilder raised its dividend but saw annual profit decline as it booked one-off costs related to a UK government pledge surrounding fire safety measures.
Elsewhere in London, Wickes was up 9.5%. The home improvement retailer backed its full-year guidance on solid interim revenue growth, due to a recovery in 'do-it-for-me' sales.
It reported a pretax profit of GBP33.5 million for the six months that ended July 2, down 6.2% from GBP35.7 million a year before, mainly due to IT separation costs, it said.
More positively, revenue grew 1.3% to GBP822.3 million from GBP812.0 million thanks to a strong recovery in delivered do-it-for-me service sales.
"While the macroeconomic environment remains uncertain, we are confident that we have the right model to continue outperforming the market," Wickes stated.
The company backed its full-year guidance of an adjusted pretax profit in the range of GBP72 million to GBP82 million. In financial 2021, it generated an adjusted pretax profit of GBP85 million.
On AIM, Tertiary Minerals soared 65% on the signing of a technical cooperation agreement with First Quantum Minerals to "turbo-charge" two of its copper exploration projects in Zambia.
Together, Tertiary and First Quantum will set up a technical committee with the objective to work collaboratively to advance and develop its two projects, Mukai and Mushima North.
In European equities on Thursday, the CAC 40 in Paris ended down 1.0%, while the DAX 40 in Frankfurt ended down 0.6%.
The euro stood at EUR0.9996 at the European equities close Thursday, down against EUR0.9997 at the same time on Wednesday.
"The single currency continues to languish relative to the greenback despite the 75-basis points rate hike earlier this month, and the growing belief amongst traders that the ECB will repeat the move in October. The scenario in Europe remains challenging, with a lingering energy crisis that is generating pessimism over the region's economic prospects," said Ricardo Evangelista, senior analyst at ActivTrades.
Stocks in New York were in the red at the London equities close, with the Dow Jones Industrial Average down 0.2%, the S&P 500 index down 0.6%, and the Nasdaq Composite down 1.0%.
US retail sales notched some unexpected growth in August, data from the Census Bureau showed on Thursday, though largely due to car sales.
Separately, figures from the Department of Labor showed initial jobless claims totalled 213,000 in the week to September 10, down from 222,000 the week before. Continuing claims for the week to September 3 were broadly flat at 1.4 million.
US industrial production unexpectedly fell in August. Output was down 0.2% month-on-month, swinging from growth of 0.5% in July. Consensus, according to FXStreet, was for a rise of 0.1%.
Against the yen, the dollar was trading at JPY143.36 late Thursday, up compared to JPY142.70 late Wednesday.
The rising costs of energy imports combined with a weak yen have brought Japan's trade balance deep into the red, with the country's trade deficit in August reaching a record JPY2.8 trillion, about USD19 billion, the Finance Ministry said on Thursday.
The August figures mean that the resource-poor country, despite being the world's third largest economy, has now been in the red for 13 months in a row.
Brent oil was quoted at USD90.04 a barrel at the London equities close Thursday, down from USD95.38 late Wednesday.
"Brent crude oil prices are once again on the back foot as demand concerns once again weigh on prices, after the IEA suggested that demand growth could well grind to a halt in Q4," explained CMC Markets' Michael Hewson.
Gold was quoted at USD1,667.03 an ounce at the London equities close Thursday, down sharply against USD1,705.20 at the close on Wednesday.
"Gold continues being baffled by the hawkish Fed expectations – which push the dollar and US yields higher and weigh on gold, and by the dovish Fed expectations, which eases the strong dollar pressure, but get investors on board of riskier and better yielding assets," said Ipek Ozkardeskaya at Swissquote.
In Friday's UK corporate calendar, there are half-year results from Dunedin Enterprise Investment Trust and full-year result from Pacific Horizon Investment Trust.
In the economic calendar, there is CPI data from the EU at 1000 BST after UK retail sales at 0700 BST.
By Heather Rydings; heatherrydings@alliancenews.com
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