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(Alliance News) - Stocks in London were staging a minor rebound on Thursday, casting off a shaky few sessions caused by hotter-than-expected US inflation data, as focus shifts to US retail sales due later in the day.
In early UK company news, shares in food packaging firm Hilton Food Group and online beauty retailer THG tumbled after both issued guidance downgrades.
The FTSE 100 index was up 50.10 points, or 0.7%, at 7,327.40 early Thursday. The mid-cap FTSE 250 index was up 102.26 points, or 0.5%, at 18,951.46. The AIM All-Share index was up 1.23 points, or 0.1%, at 869.57.
The Cboe UK 100 index was up 0.7% at 731.89. The Cboe 250 was up 0.3% at 16,322.35, and the Cboe Small Companies flat at 13,631.75.
In mainland Europe, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was up 0.4% early Thursday.
European markets were rebounding after a higher-than-expected inflation print in the US earlier this week, which showed the core rate of inflation continuing to rise.
The surprise inflation data sparked fears that the US Federal Reserve could surprise with a full percentage point interest rate hike next week. However, the majority of analysts still expect a 75 basis point hike.
Investors will now be looking to US retail sales, due out at 1330 BST, to assess how well consumers are holding up in the face of inflationary pressures.
"The consumer is core to economic growth in the US, and the optimistic hope is that a reduction in gasoline prices may have encouraged spending in other areas of the economy. The release should also add further colour to the underlying demand situation, and whether the interest rate hikes already implemented have cooled propensity to spend," said Richard Hunter, head of markets at iInteractive investor.
The dollar remained on the front foot heading into the data.
Sterling was quoted at USD1.1527 early Thursday, down from USD1.1588 at the London equities close on Wednesday.
The euro traded at USD0.9964 early Thursday, down from USD0.9997 late Wednesday.
Gold was quoted at USD1,686.79 an ounce, lower than USD1,705.20 on Wednesday. Brent oil was trading at USD93.73 a barrel, down from USD95.38 late Wednesday.
In London, there were broad-based gains throughout the FTSE 100 as London stocks staged a rebound.
Banks including NatWest, up 2.2%, and Lloyds, up 1.8%, were higher ahead of the Bank of England's next interest rate meeting, postponed to Thursday next week. The BoE is expected to raise UK interest rates by 50 basis points.
Shell shares edged up 0.8% after saying Chief Executive Officer Ben van Beurden will step down at the end of 2022. Taking his place from January 1 of next year will be Wael Sawan, currently Shell's head of integrated gas & renewables.
Slumped at the bottom of the mid-caps was Hilton Food Group, tumbling 26% after warning annual profit will 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. Revenue was 20% higher to GBP2.0 billion from GBP1.7 billion.
Elsewhere, THG shares fell 16% after cutting guidance. The online beauty products retail platform now expects full-year adjusted earnings before interest, tax, depreciation and amortisation to come in at a range of GBP100 million to GBP130 million. Earlier this year, it had been expecting adjusted Ebitda of GBP161 million, in line with the previous year.
Wickes shares rose 8.1% after reaffirming full-year guidance despite a "softening" of the DIY market. It expects to report full-year adjusted pretax profit in the range of GBP72 million to GBP82 million.
In Asia on Thursday, the Japanese Nikkei 225 index closed up 0.2%. In China, the Shanghai Composite ended down 1.2%, while the Hang Seng index in Hong Kong was up 0.2%. The S&P/ASX 200 in Sydney closed up 0.2%.
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 its trade balance for 13 months in a row.
The data hit the beleaguered Japanese yen. Against the yen, the dollar was quoted at JPY143.71, up versus JPY142.70.
By Lucy Heming; lucyheming@alliancenews.com
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