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(Alliance News) - The FTSE 100 index was lower at midday on Wednesday, after a quick slowdown in UK inflation called into question the country's economic recovery, but the mid-cap FTSE 250 was getting a boost from Network International.
Annually, the UK consumer price index rose by 2.0% in July, slowing from 2.5% to June, and behind the 2.2% rise predicted by the market according to FXStreet.
"In 2021, price rises in transport were largely offset by price falls for clothing and footwear, and a variety of recreational good," the ONS explained.
CPI was unchanged in July versus the previous month, following June's 0.5% rise from May. Market consensus, according to FXStreet, had predicted consumer prices to rise by 0.3% in July from June.
"This is good news for those fretting about rising prices but potentially raises some questions about the strength of the UK economic recovery," remarked AJ Bell investment director Russ Mould.
The FTSE 100 index was down 27.71 points, or 0.4%, at 7,153.40 on Wednesday at midday. The mid-cap FTSE 250 index was up 73.97 points, or 0.3%, at 23,767.50. The AIM All-Share index was up 0.5% at 1,265.41.
The Cboe UK 100 index was down 0.3% at 712.05. The Cboe 250 was up 0.6% at 21,608.33, and the Cboe Small Companies was flat at 15,412.36..
The pound was quoted at USD1.3756 midday Wednesday, firm on USD1.3742 at the London equities close Tuesday. The euro was priced at USD1.1718, up slightly from USD1.1715 at the European equities close on Tuesday.
Against the Japanese yen, the dollar was trading at JPY109.65, soft on JPY109.60.
AJ Bell's Mould said: "The turmoil in Afghanistan and continuing threat posed by the Delta variant of Covid is seeing funds flow into the dollar - a traditional safe haven – with Chinese and US equities both falling overnight."
US stock market futures were pointed to a lower open Wednesday, with focus on the minutes of the US Federal Reserve's most recent monetary policy meeting, due this evening.
The Dow Jones Industrial Average was called down 0.3%, while the S&P 500 and the Nasdaq Composite were both seen down 0.1%.
Oanda analyst Jeffrey Halley said: "Although the [Federal Open Market Committee] minutes will likely be a non-event tonight, yet another Fed president suggested tapering is much nearer, and notably, [Federal Reserve Bank of Minneapolis President Neel] Kashkari is a dove. Jackson Hole assumes greater importance, as does the September FOMC meeting. I do not expect a move at the meeting. Still, they may signal a December tapering start which will boost the US dollar once again, especially at the expense of Asian currencies whose monetary policy is not aligned. I am therefore expecting the US dollar to move higher through Q4."
The summer meeting of central bankers in Jackson Hole, Wyoming is hosted by the US Federal Reserve Bank of Kansas City. This year's event, formally called the Economic Policy Symposium, is being held in-person from August 26 to 28, so starting on Thursday next week. The event has been held every year since 1978, and the Fed chair traditionally gives a policy speech.
In London, Just Eat Takeaway was atop the FTSE 100, up 2.9%, adding to Tuesday's 2.9% gain, after the food delivery platform said on Tuesday that profitability will start to improve from the second half.
Revenue in the first half of 2021 more than doubled year-on-year to EUR1.77 billion from EUR675 million. The company's pretax loss widened to EUR395 million from EUR26 million. On a combined basis - including the acquired Just Eat and Grubhub businesses for both periods - revenue was up 47% to EUR2.61 billion from EUR1.78 billion.
BHP was down 5.1%, holding back the FTSE 100 index and erasing Tuesday's 3.4% gain. The miner said on Tuesday it will move its primary listing from London to Sydney, as part of a deal to merge its oil assets with those of Woodside Petroleum. This will result in BHP's removal from the FTSE 100.
"This move will mean products which track the FTSE 100 and funds with investment policies barring them from buying shares with their main listing overseas will have to exit their shareholding," AJ Bell's Mould said.
Fellow miners Evraz, Antofagasta, Anglo American, Rio Tinto and Glencore were down 2.5%, 2.4%, 1.9%, 2.2% and 1.8%, respectively.
Brent oil was quoted at USD69.58 a barrel midday Wednesday, down from USD69.75 late Tuesday. Gold was trading at USD1,788.00 an ounce, up against USD1,783.45.
In the FTSE 250, Balfour Beatty gave back 7.2%, as troubles with its London projects hurt profit.
The construction firm restarted interim payouts and reiterated its 2021 outlook after a profitable start to 2021.
In the half-year ended July 2, the company reported pretax profit of GBP35 million, compared to a GBP26 million loss a year before. However, pretax profit remained 44% below the GBP63 million reported in the corresponding period in 2019.
Revenue increased slightly year-on-year to GBP4.15 billion from GBP4.12 billion, up 7.0% from the GBP3.88 billion reported in the equivalent period in 2019.
After withholding interim payouts in 2020, FTSE 250-listed Balfour declared an dividend of 3.0p at its half-year mark, up 43% from the 2.1p interim payout issued in 2019.
Balfour ended the first half with an order book of GBP16.1 billion, down from GBP17.5 billion 12 months earlier and lower than the GBP16.4 billion seen six months prior.
Looking ahead, the company reiterated its 2021 profit from operations outlook for earnings-based businesses to be in line with the GBP172 million reported in 2019.
Balfour said the underlying loss from operations at its UK Construction arm was GBP23 million in the first half of 2021, unchanged from a year ago, while the US Construction business improved to an underlying profit of GBP20 million from GBP6 million a year ago.
"Losses on London property construction contracts mean Balfour's UK construction business has not made any progress year-on-year," commented Nicholas Hyett, an equity analyst at Hargreaves Lansdown.
"Balfour Beatty will no longer bid for fixed price residential property projects in central London.
At the other end of the midcaps, Network International was up 11%, after it posted a first-half profit jump and said it expects revenue to beat the pre-virus level.
The Middle East and Africa-focused payment solutions provider said revenue in the six months to June 30 rose 17% year-on-year to USD156.4 million from USD134.2 million. Pretax profit jumped to USD17.0 million from USD1.2 million a year earlier.
The company also hailed a "recovery of its key performance indicators". Total processed volumes rose 19% to USD19.0 million from USD16.0 million. The total number of transactions was 29% higher at 459.8 million from 355.6 million.
In mainland Europe, the CAC 40 stock index in Paris was down 0.4%, while the DAX 30 in Frankfurt was 0.2% lower.
Consumer prices in the euro area continued to climb in July, exacerbating inflationary fears for the single currency area's economy. Annual inflation for July accelerated to 2.2% in the euro area compared to 1.9% in June.
Inflation for the EU as a whole hit 2.5%, up from 2.2% a month earlier. The figures are in stark contrast to a year previous, when euro area and EU inflation rates were just 0.4% and 0.9% respectively.
However, compared to June, prices edged down by 0.1% in July.
"The final euro-zone inflation data for July show that global supply problems have not pushed up goods prices dramatically, and 're-opening inflation' has been limited so far. We think that base effects will cause core inflation to roughly double in August, but we expect it to fall again in 2022 to well below 2%," Capital Economics said.
By Paul McGowan; paulmcgowan@alliancenews.com
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