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(Alliance News) - Stock prices in London edged into the green around midday on Tuesday as markets were in wait-and-see mode ahead of a key inflation reading for the US economy.
"Anything below the 7.3% pencilled in by analysts [for US CPI] could give stocks a boost as it solidifies the case for the Fed to start easing up on rate hikes. Anything above this number could see investors take fright as they assume it means they will have to take more of the central bank's painful medicine to curb rising prices," said AJ Bell investment director Russ Mould.
The FTSE 100 index was up 31.41 points, or 0.4%, at 7,477.38. The FTSE 250 was up 130.78 points, or 0.7%, at 18,950.22, and the AIM All-Share was up 0.58 of a point, or 0.1%, at 831.16.
The Cboe UK 100 was up 0.4% at 748.14, the Cboe UK 250 up 0.6% at 16,362.34, and the Cboe Small Companies up 0.4% at 13,095.45.
The US will publish the November consumer price index at 1330 GMT. The inflation reading comes before the Federal Open Market Committee starts its two-day policy meeting, ending with an interest rate decision on Wednesday at 1900 GMT.
"The consensus is that the rise in consumer prices slowed down in November, with the inflation rate expected to drop to 6.1%. This scenario, if confirmed, is unlikely to have much of an impact on the performance of the dollar," said Ricardo Evangelista at ActivTrades.
"However," he continued, "last time around inflation read lower than expected, triggering a dollar sell off and making November the worst monthly performance for the greenback since 2010. If today's numbers are once again lower than predicted there will be scope for further dollar softness, as investors may start to price-in expectations of a more dovish Fed."
The pound was quoted at USD1.2296 at midday on Tuesday in London, higher compared to USD1.2267 at the close on Monday. The euro stood at USD1.0544, higher against USD1.0538. Against the yen, the dollar was trading at JPY137.59, up a touch from JPY137.54.
Stocks in New York were called higher. The Dow Jones Industrial Average was pointed up 0.5%, the S&P 500 index up 0.5%, and the Nasdaq Composite up 0.6%.
In European equities early Tuesday afternoon, the CAC 40 in Paris was up 0.8%, while the DAX 40 in Frankfurt was up 0.9%.
In London, International Consolidated Airlines rose 3.2%, despite Oddo BHF cutting the British Airways owner to 'underperform' from 'neutral'.
Meanwhile, Rolls-Royce remained the blue-chip index's worst performer at midday, down 2.6%. The jet engine maker was put on JPMorgan's 'negative catalyst watch'.
In the FTSE 250, easyJet was down 3.2%. The lost-cost airline was cut by Oddo BHF to 'underperform' from 'neutral', and cut by Deutsche Bank to 'sell' from 'hold'.
Synthomer jumped 10%. The chemicals firm agreed to sell its laminates, films and coated fabrics businesses to Surteco North America for an enterprise value of USD255 million. Synthomer expects the proceeds from the sale to total USD245 million, which will be used to repay debt.
"This divestment is consistent with our recently announced strategy to increase the specialty weighting of our portfolio and focus on higher value, higher growth markets where we have strong and sustainable leadership positions. The proceeds represent excellent value for our shareholders and the transaction is a significant step in the deleveraging of the group," said Chief Executive Michael Willome.
HgCapital Trust was up 2.9% as its investment manager Hg sold cloud-based transportation management software company Transporeon to US software and services technology company Trimble for EUR1.88 billion.
The sale price values HgCapital Trust's investment in Transporeon at GBP107.8 million, which is 17% above the stake's carrying value in the trust's net asset value on September 30 of GBP92.5 million.
Elsewhere in London, Capita climbed 7.8% as it delivered adjusted revenue growth of 2.0% in the 11 months ended November 30, in line with full-year guidance.
Capita Chief Executive John Lewis said he is pleased with the progress made across the firm in the second half of the year, noting "consistently good" client service delivery and the wins of "important" contract renewals and new work.
On AIM, Invinity Energy Systems soared 21% after it sold a 1.5 megawatt hour VS3 flow battery system to Hyosung Heavy Industries for use by South Korea's national electricity utility, Korea Electric Power.
Invinity said that the delivery and commissioning of all seven VS3 systems is expected towards the end of the first half of 2023, with the remaining revenue due to be recognised in the second half of the same year.
The energy storage manufacturer did not provide any financial details for the sale.
Brent oil was quoted at USD78.73 a barrel at midday in London on Tuesday, up from USD78.33 late Monday. Gold was quoted at USD1,787.37 an ounce, higher against USD1,782.67.
By Heather Rydings, Alliance News senior economics reporter
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