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(Alliance News) - Stocks in London are expected to make gains at Wednesday's market open, following a wealth of hopeful economic data.
UK consumer price inflation cooled dramatically last month, undershooting the Bank of England's forecasts, and sealing a victory for Rishi Sunak in his goal to halve inflation by the end of the year.
"At the headline level at least, these numbers are cause for celebration. A substantial fall in inflation should help ease the cost-of-living crisis, while a pause in interest rate rises will be a huge relief to mortgage holders. Downing Street will be particularly pleased to wave goodbye to the UK's status as the inflation nation," said Wealth Club's Nicholas Hyett.
In a similar vein, global equity markets got a boost from Tuesday's US CPI print, which showed price rises slowed by more than expected last month. This put downward pressure on the dollar, with investors all but assured the Federal Reserve has already enacted its final interest rate hike for this cycle of monetary tightening.
Investors will also be considering US retail sales data due later in the day, to see how consumer spending has held up amid historically high interest rates.
Meanwhile, there was some positive data from China also driving sentiment. Retail sales saw their fastest pace of annual growth since May in October, beating market forecasts. Industrial production also saw a slight but unexpected acceleration from the prior year.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 37.0 points, 0.5%, at 7,477.47
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Hang Seng: up 3.7% at 18,045.88
Nikkei 225: closed up 2.5% at 33,519.70
S&P/ASX 200: closed up 1.4% at 7,102.30
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DJIA: closed up 489.83 points, or 1.4%, at 34,827.70
S&P 500: closed up 1.9% at 4,495.70
Nasdaq Composite: closed up 2.4% at 14,094.38
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EUR: up at USD1.0876 (USD1.0855)
GBP: up slightly at USD1.2477 (USD1.2475)
USD: down at JPY150.60 (JPY150.85)
Gold: up at USD1,969.45 per ounce (USD1,964.57)
Oil (Brent): down at USD82.90 a barrel (USD83.42)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
11:00 CET EU industrial production
11:00 CET EU foreign trade
09:30 GMT UK house price index
09:30 GMT UK forecasts for the economy statistical release
07:00 EST US MBA weekly mortgage applications survey
08:30 EST US PPI
08:30 EST US retail sales
10:00 EST US manufacturing and trade inventories
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The Office for National Statistics said UK consumer prices rose 4.6% annually in October, dropping sharply from the 6.7% pace in September. The reading was lower market consensus of 4.8%, as cited by FXStreet, which was also the forecast from the Bank of England. The annual rate was the lowest since October 2021, and means UK Prime Minister Rishi Sunak has fulfilled his pledge to halve inflation to below 5.4% by the end of this year. On a monthly basis, prices were unchanged in October, having risen 0.5% in September from August. October's reading was below market consensus of a 0.1% rise. Core consumer prices, which exclude energy, food, alcohol and tobacco, rose 5.7% annually, losing steam from September's 6.1%, and undershooting forecasts of 5.8%.
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Separately, the ONS reported data for producer input prices. On a monthly basis, producer input prices rose 0.4%, after rising 0.6% in September, which was revised upwards from 0.4%. Annually, producer input prices declined by 2.6%, falling at a faster pace than the 2.1% in September, which was revised from a what also had been a 2.6% decline. "The largest downward contributions to the annual input inflation rate in October 2023 came from inputs of metals and inputs of chemicals," the ONS commented.
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UK Chancellor Jeremy Hunt on Tuesday has said he will address labour supply issues and business investment when he delivers an "autumn statement for growth" next week. The chancellor claimed the government is starting to "win the battle" against inflation, which he argued allows him to "focus on the next stage". He gave a preview of the November 22 fiscal event after also dismissing Labour's criticism of the government's legislative plans contained in the King's Speech. Hunt's remarks came after a session of Treasury questions in which he faced Conservative calls to lower taxes and scrap the so-called "factory tax", which relates to the inability to fully expense investments in machinery and buildings.
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BROKER RATING CHANGES
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HSBC raises Oxford Instruments to 'buy' - price target 2,440 pence
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Liberum starts Jet2 with 'buy' - price target 1,500 pence
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HSBC raises Informa price target to 925 (880) pence - 'buy'
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COMPANIES - FTSE 100
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Energy company SSE reported that interim revenue in the six months to September fell to GBP4.79 billion from GBP5.63 billion a year before. However, swung to a pretax profit of GBP573.3 million from a loss of GBP511.0 million, thanks mostly to a sharply lower cost of sales, which dropped to GBP3.30 billion from GBP6.13 billion. It noted to "major progress" on its flagship progress, including first power at Dogger Bank and full power at Seagreen offshore wind farms. SSE confirmed its guidance for expected earnings growth and its plan for dividends. "Our performance in the first half of 2023/24 demonstrates SSE's well-balanced business mix and our ability to adapt and create value while maintaining capital discipline in a fast-evolving energy landscape," said Chief Executive Alistair Phillips-Davies.
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COMPANIES - FTSE 250
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Genuit Group said it expected to achieve full-year adjusted operating profit "marginally above" market expectations, which it cited as GBP89.7 million for 2023. The provider of sustainable water, climate and ventilation solutions said trading in the prior four months has been in line with management expectations, which its performance supported by the diversity of its market segment exposure. Revenue in the first 10 months of the year was GBP504.2 million, which was down 4.8% on a like-for-like basis from the prior year. "We have made good progress over the last four months, with demand in our drainage, storm water and ventilation markets holding up well, supported by structural and sustainability growth drivers," said CEO Joe Vorih.
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By Elizabeth Winter, Alliance News senior markets reporter
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