LONDON MARKET CLOSE: Europe shrugs off hotter-than-expected US CPI

(Alliance News) - European markets closed higher on Tuesday, as investors shrugged off higher-than-expected inflation data from the US.

The FTSE 100 index closed up 78.58 points, 1.0%, at 7,747.81. The FTSE 250 ended up 35.12 points, 0.2%, at 19,565.21, and the AIM All-Share closed down 0.23 of a point at 738.04.

The Cboe UK 100 ended up 1.0% at 775.93, the Cboe UK 250 closed up 0.3% at 16,970.72, and the Cboe Small Companies ended down 0.1% at 14,730.73.

In European equities on Tuesday, the CAC 40 in Paris ended up 0.9%, while the DAX 40 in Frankfurt ended up 1.2%.

Stocks in New York were higher at the London equities close, with the DJIA up 0.5%, the S&P 500 index up 0.8%, and the Nasdaq Composite up 1.2%.

The US consumer price inflation rate unexpectedly sped up last month, numbers showed on Tuesday.

The Bureau of Labor Statistics said the pace of year-on-year consumer price growth picked up to 3.2% in February, from 3.1% in January, where it had been expected to remain, according to FXStreet cited consensus.

The inflation reading comes ahead of the next Federal Reserve interest rate decision, scheduled for a week on Wednesday.

"The February consumer price index will not instill more confidence among the Federal Reserve members that inflation is on a sustainable path toward their 2% objective, reducing our subjective odds that the central bank will cut interest rates at its May meeting," said analysts at Oxford Economics.

The Fed is not the only central bank grabbing market attention, with the Bank of England's next move also being next week.

The BoE will announce its decision on Thursday, and will take into account Tuesday's unemployment data.

The data raised the chances of the BoE cutting interest rates "sooner rather than later", according to AJ Bell's Russ Mould.

According to the Office for National Statistics, the nation's unemployment rate in the three months to January increased to 3.9%, from 3.8% in the three months to December.

The jobless rate was expected to remain at 3.8% for the period, according to FXStreet-cited market consensus.

The ONS said average earnings excluding bonuses rose 6.1% on-year in the period, with the pace of growth easing from 6.2% in the three months to December, where it had been expected to remain. Including bonuses, growth eased to 5.6% from 5.8%. According to FXStreet, a slowdown to just 5.7% was expected.

Analysts at Lloyds Bank commented: "the outturns may boost hopes of an UK interest rate cut, although most Bank of England policymakers will still want to move cautiously."

Before the BoE's next interest rate decision, there is the UK gross domestic product report for January on Wednesday this week, and a consumer price index reading exactly a week later. Both could play a role in decision-making.

The pound was quoted at USD1.2783 at the London equities close Tuesday, down compared to USD1.2801 at the close on Monday. The euro stood at USD1.0916 at the European equities close Tuesday, lower against USD1.0923 at the same time on Monday. Against the yen, the dollar was trading at JPY147.76, higher compared to JPY146.89 late Monday.

Entain closed the day at the top of the FTSE 100 index, up 3.8%.

The gambling operator said its Interim Chief Executive Officer Stella David, together with spouse Peter, bought GBP1.4 million in shares.

David moved to interim CEO from non-executive director in mid-December when Jette Nygaard-Andersen left suddenly after Entain settled a case involving bribery offences at its former Turkish business.

On the flipside, Persimmon ended the day down 3.4%, the worst FTSE 100 performer on Tuesday.

York, England-based Persimmon said in 2023 pretax profit slumped to GBP351.8 million from GBP730.7 million in 2022, hit by lower volumes and build cost inflation. Diluted earnings per share tumbled to 79.5 pence from 174.3p.

Total revenue decreased 27% to GBP2.77 billion from GBP3.82 billion.

Persimmon said it expects market conditions to remain subdued throughout 2024.

In the FTSE 250, TP ICAP rose 10%.

The interdealer broker reported an annual revenue rise, said it will launch a new share buyback programme and added that it is mulling a minority float of its Parameta Solutions arm.

TP ICAP said revenue in 2023 expanded 3.6% to GBP2.19 billion, from GBP2.12 billion in 2022. Pretax profit, however, fell 15% to GBP96 million from GBP113 million. On an adjusted basis, it rose 20% to GBP271 million from GBP226 million. The adjusted figure strips out "significant items" such as amortisation and impairment costs.

TP ICAP lifted its final dividend by 27% to 10.0p, and upped its total annual dividend by 19% to 14.8p.

It also announced the launch of a GBP30 million share buyback programme, after completing one of the same size in January.

Among London's small-caps, Synthomer shot up 18%.

The Essex, England-based chemicals manufacturer said revenue fell 15% to GBP1.97 billion in 2023 from GBP2.33 billion the year before. Pretax loss widened significantly to GBP106.8 million from GBP34.2 million as a result.

Looking ahead, Synthomer said trading since the start of 2024 has been "cautiously encouraging", due to short-term restocking by customers. "We remain confident that Synthomer's medium-term earnings power is more than double recent levels, through a combination of our near-term actions, end market volume recovery and strategic delivery," it added.

Regional REIT lost 30%.

The commercial property investor confirmed that it is mulling "a range of refinancing options" in respect to an existing GBP50 million retail bond that matures in August. Options include a debt or equity raise.

Regional REIT, in a statement ahead of the market open, said any equity issue would likely be "at a material discount" to its share price. The stock had closed at 20.15p on Monday.

Brent oil was quoted at USD82.49 a barrel at the London equities close Tuesday, up from USD82.36 late Monday. Gold was quoted at USD2,163 an ounce at the London equities close Tuesday against USD2,184.09 at the close on Monday.

In Wednesday's UK corporate calendar, thee are full year results from Balfour Beatty and Ferrexpo. Supermarket Income REIT will publish half year results.

As well as UK GDP data, the economic calendar for Wednesday has a eurozone industrial production reading at 1000 GMT.

By Sophie Rose, Alliance News senior reporter

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