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(Alliance News) - Stocks in London are called lower on Wednesday, following a hotter-than-expected inflation reading for the UK and a day before UK Chancellor Jeremy Hunt unveils his autumn budget.
Annual inflation in the UK reached a never-before-seen high last month, data from the Office for National Statistics showed.
The consumer price index rose 11.1% in October from a year before, and up from 10.1% in September.
This was the highest annual CPI rate in the current National Statistic series, which began in January 1997.
The figure also came in higher than anticipated, with a reading of 10.7% expected according to FXStreet.
Despite the introduction of the UK government's Energy Price Guarantee, gas and electricity prices made the largest upward contribution to the change in CPI annual inflation rates between September and October.
"The government is expected to announce billions of pounds worth of spending cuts and tax rises on tomorrow. This could impact household incomes, potentially making life even harder if tax bills and energy costs continue to rise. Where investors put their money from here could reflect any change in sentiment towards the UK," commented Kate Marshall at Hargreaves Lansdown.
US President Joe Biden said Wednesday it was "unlikely" a missile strike on Poland was launched from Russia, speaking after emergency talks with allies in Bali about the deadly attack.
Here is what you need to know ahead of the London market open:
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MARKETS
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FTSE 100: called down 4.74 points, or 0.1%, at 7,364.70
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Hang Seng: down 0.5% at 18,258.87
Nikkei 225: closed up 0.1% at 28,028.30
S&P/ASX 200: closed down 0.3% at 7,122.20
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DJIA: closed up 56.22 points, 0.2%, at 33,592.92
S&P 500: closed up 0.9% at 3,991.73
Nasdaq Composite: closed up 1.5% at 11,358.41
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EUR: flat at USD1.0388 (USD1.0385)
GBP: down at USD1.1857 (USD1.1891)
USD: up at JPY139.66 (JPY139.16)
Gold: up at USD1,774.87 per ounce (USD1,770.82)
Oil (Brent): up at USD93.35 a barrel (USD93.03)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
09:30 GMT UK house price index
14:15 GMT UK BoE Governor Andrew Bailey appears before Treasury Committee
07:00 EST US MBA mortgage applications survey
08:30 EST US retail sales
08:30 EST US import and export price index
09:15 EST US industrial production
10:00 EST US NAHB housing market index
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UK Chancellor Jeremy Hunt is expected to lift the cap on bankers' bonuses when he delivers his autumn budget on Thursday. The Financial Times first reported the chancellor will make the lifting of the cap one of the few measures to survive from Kwasi Kwarteng's disastrous mini-budget, as he bids to use the autumn statement to restore the UK's economic credibility. Earlier, UK Prime Minister Rishi Sunak urged bosses to keep down their pay in order not to exacerbate inflation. "Of course I would say to all executives to embrace pay restraint at a time like this and make sure they are also looking after all their workers," Sunak told ITV News. Speculation continues about what exact measures will form part of the budget on Thursday, which has come with warnings from both the PM and the chancellor of "difficult decisions" to be taken as Hunt tries find up to GBP60 billion from a combination of hikes and spending cuts.
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UK Prime Minister Rishi Sunak described the US as the UK's "closest ally" as he met US President Biden for bilateral talks on the sidelines of the G20 summit in Bali. The pair's first full in-person talks, held on Wednesday at a luxury resort hotel on the Indonesian island, came after a missile – initially thought to be Russian-made – fell in Poland and Moscow pounded targets across Ukraine with missiles. In brief remarks at the top of the meeting, the US president said: "This morning we've already met with our fellow Nato and G7 leaders to address Russia's latest missile strikes against Kyiv and Western Ukraine – it's merciless."
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Initial findings suggest the missile that hit Poland was fired by Ukrainian forces at an incoming Russian missile, according to US officials. It comes after Biden said it is "unlikely" the missile that killed two people in Nato-ally Poland was fired from Russia, but pledged support for Poland's investigation into what it had called a "Russian-made" missile. Three US officials said preliminary assessments suggested the missile was fired by Ukrainian forces at an incoming Russian one amid the crushing salvo against Ukraine's electrical infrastructure on Tuesday. The officials spoke on condition of anonymity. Biden's comments after he convened an "emergency" meeting of the G7 and Nato leaders in Indonesia early on Wednesday morning for consultations on the attack that killed two people in the eastern part of Poland near the Ukraine border. "There is preliminary information that contests that," Biden told reporters when asked if the missile had been fired from Russia. "It is unlikely in the lines of the trajectory that it was fired from Russia, but we'll see."
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BROKER RATING CHANGES
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Deutsche Bank raises BAE Systems price target to 1,000 (970) pence - 'buy'
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Berenberg raises Kainos to 'buy' ('hold') - price target 1,700 (1,200) pence
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Jefferies cuts ITM Power to 'hold' ('buy') - price target 105 (185) pence
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COMPANIES - FTSE 100
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SSE swung to a pretax loss in the six months ended September 30, as the electricity provider saw its cost of sales soar. The firm posted a pretax loss of GBP511.0 million, versus a profit of GBP1.69 billion a year prior. This came as costs rocketed to GBP6.13 billion from GBP1.19 billion the previous year. In addition, SSE noted the negative impact of fair value remeasurements totalling GBP1.5 billion, principally arising on forward commodity contracts. More positively, SSE posted revenue of GBP5.63 billion, up 59% from GBP3.54 billion. Looking ahead, the company said it expects adjusted earnings per share for the full-year of at least 120 pence and added it remains on course to make record capital expenditure in excess of GBP2.5 billion.
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COMPANIES - FTSE 250
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CMC Markets said pretax profit ticked up to GBP36.6 million in the six months that ended September 30 from GBP36.0 million a year previous. The contracts-for-difference trading platform posted total revenue of GBP174.4 million, up 17% from GBP149.1 million a year prior. Trading net revenue rose by 27% year-on-year to GBP128.4 million, while CMC's Investing net revenue fell 14% to GBP20.8 million. Chief Executive Peter Cruddas said that the period saw an acceleration in activity across FX and commodities, in addition to the normal activity across the company's index flow. He added that CMC is on track to deliver its three-year expansion initiatives, aimed at driving higher revenue. CMC Markets declared a dividend of 3.50 pence, unchanged from a year prior.
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OTHER COMPANIES
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Deliveroo announced it will end its operations in Australia. The food delivery firm explained that the market in Australia is highly competitive and said it does not hold a broad base of strong local position there. As a result, Deliveroo determined it cannot reach a "sustainable and profitable scale" in the country without "considerable" financial investment, which it added the expected return on such investment would not "commensurate with Deliveroo's risk/reward thresholds". The company's subsidiary in Australia, Deliveroo Australia, has therefore been placed into voluntary administration. Chief Operating Officer Eric French said: "This was a difficult decision and not one we have taken lightly."
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By Heather Rydings; heatherrydings@alliancenews.com
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