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(Alliance News) - Stock prices in London closed up on Wednesday as local consumer price inflation slowing faster than expected boosted investor sentiment.
The FTSE 100 index closed up 77.65 points, 1.0%, at 7,715.68. The FTSE 250 ended up 313.11 points, 1.6%, at 19,629,09, and the AIM All-Share closed up 6.05 points, or 0.8%, at 751.44.
The Cboe UK 100 ended up 1.1% at 771.19, the Cboe UK 250 closed up 1.7% at 17,102.34, and the Cboe Small Companies ended up 1.5% at 14,629.04.
UK consumer price inflation eased faster than expected last month, according to data from the Office for National Statistics.
The ONS said the consumer price index rose 3.9% annually in November, cooling sharply from the 4.6% increase recorded in October. The inflation reading came in below FXStreet-cited market consensus of 4.4%.
The recent peak for annual inflation in the UK was 11.1% in October 2022, which the ONS estimated to be the highest since 1981. November's reading was the lowest since September 2021.
Last week, the Bank of England kept bank rate at the historically high level of 5.25%, with some of its policymakers even voting in favour of a further 25 basis point hike.
According to Trading Economics forecasts, investors are now pricing in a 25 basis point rate cut in the second quarter of next year, with another to follow in the third quarter.
"While disinflation is expected to slow, there's now a lot of evidence that it's doing so to a much lesser extent than thought which could demand a quicker and more forceful response from the central bank. And that's exactly what markets have priced in this morning," said Oanda analyst Craig Erlam.
"Before the release, markets were eyeing around four 25 basis point rate cuts next year which already looked aggressive compared with recent BoE commentary but now it's somewhere between 125 and 150 bps in total. That's much more aligned with the Fed and ECB and suggests the UK isn't as far behind its peers as thought," he added.
In European equities on Wednesday, the CAC 40 in Paris ended up 0.1%, while the DAX 40 in Frankfurt ended down 0.1%.
The decline in German producer prices continued in November, but slowed somewhat annually, according to Destatis.
Annually, Germany's producer price index fell by 7.9% in November, slowing from an 11% drop in October. According to FXStreet, markets were expecting a 7.5% fall.
In September, Destatis recorded a 15% drop in annual producer prices, which was the largest annual decline since data collection began in 1949.
The pound was quoted at USD1.2673 at the equities close on Wednesday in London, down markedly compared to USD1.2734 on Tuesday. The euro stood at USD1.0968, lower against USD1.0972. Against the yen, the dollar was trading at JPY143.75, lower compared to JPY143.88.
In the FTSE 100, housebuilders edged slightly higher. Barratt Developments rose 1.3% and Taylor Wimpey up 0.5%. Berkeley Group rose 0.6%.
UK house prices fell at a steeper pace on an annual basis in October, according to government data on Wednesday.
The Office for National Statistics said average house prices in the UK fell 1.2% in October from a year before. This was faster than the 0.6% annual fall in September, which was revised downwards from a 0.1% decline.
In England, the average house price fell 1.4% annually to GBP306,000. In Wales, it fell 3.0% to GBP214,000; however, in Scotland, it rose 0.2% to GBP191,000.
Shell closed up 1.5%, after its subsidiary Shell Offshore Inc announced its final investment decision for Sparta, a deep-water development in the US Gulf of Mexico, expecting to begin production in 2028.
The London-based oil major owns 51% of Shell Offshore, with Equinor Gulf of Mexico, part of Stavanger, Norway-based Equinor, owning 49%.
Shell said Sparta is expected to reach a peak output of about 90,000 barrels of oil equivalent per day and currently has an estimated discovered recoverable resource volume of 244 million barrels of oil equivalent.
It will be Shell's 15th deep-water host in the Gulf of Mexico and is scheduled to begin production in 2028.
In the FTSE 250, John Wood Group rose 4.1%.
The engineering and consulting group announced the appointment of replacements for its outgoing human resources leader and group general counsel, hiring Marla Storm and Michael Rasmuson as chief human resources officer and group general counsel, respectively.
Storm is the former CHRO at Balfour Beatty, while Rasmuson is the former senior vice president, general counsel and chief compliance officer at Nabors Industries, a provider of technology for the energy industry.
These appointments follow the retirement of Lesley Birse, John Wood's current human resources leader, and Martin McIntyre, its current group general counsel and company secretary. McIntyre will stay on as company secretary until a replacement is appointed.
The changes will take effect on January 2, and both individuals will be based in Texas, US, where they will report to Chief Executive Officer Ken Gilmartin.
Among London's small-caps, Petrofac rocketed 42%.
The energy infrastructure firm announced said it has seen "exceptional" new order intake across Engineering & Construction and Asset Solutions, totalling USD6.8 billion in 2023 so far. It expects the backlog to be around USD8.0 billion by the year.
It announced the second contract award under the six-project USD14 billion framework agreement with TenneT, working alongside Hitachi Energy, with Petrofac's portion of the contract worth around USD1.4 billion.
On AIM, Angus Energy rose 21%, after the UK-focused onshore oil and gas developer agreed a GBP20 million debt facility with Trafigura to refinance all its existing debt, as well as to fund additional capital expenditure projects to raise production at Saltfleetby field. Trafigura expects a closing date in the first month of 2024.
Brent oil was quoted at USD80.44 a barrel at the equities close in London on Wednesday, up from USD78.81 late Tuesday.
Stocks in New York were higher at the London equities close, with the DJIA and the S&P 500 index up 0.1% and the Nasdaq Composite up 0.3%
Gold was quoted at USD2,034.50 an ounce at the equities close in London on Wednesday, lower against USD2,039.44 late Tuesday.
In Thursday's UK corporate calendar, Carnival and JPMorgan Indian Investment Trust post their half-year results.
The economic calendar has gross domestic product data out for the US.
By Greg Rosenvinge, Alliance News senior reporter
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