LONDON MARKET CLOSE: FTSE 100 down amid stubborn US inflation

(Alliance News) - Stock prices in London closed mixed on Thursday, after news that a key US inflation reading came in in line with market expectations.

The FTSE 100 index closed down 34.54 points, 0.5%, at 7,439.13. The FTSE 250 ended up 41.18 points, 0.2%, at 18,605.70, and the AIM All-Share closed down 0.2%, or 1.25 points, at 740.79.

The Cboe UK 100 ended down 0.4% at 741.54, the Cboe UK 250 closed up 0.2% at 16,256.02, and the Cboe Small Companies ended up marginally at 13,390.60.

Stocks in New York were higher at the London equities close, with the DJIA up 0.1%, the S&P 500 index up 0.2%, and the Nasdaq Composite up 0.4%.

"While today's PCE data wasn't lower than expected, the in-line readings were enough to put stocks on the front foot as the end of August loomed. While rate cuts are clearly off the table, the prospect of getting to the end of the year without any more US hikes has spurred fresh buying in equities," said IG analyst Chris Beauchamp.

The headline PCE reading was up 3.3% in July from a year before, the Bureau of Economic Analysis said, accelerating from a 3.0% annual rise in June. However, July's figure came in line with FXStreet-cited market consensus.

Annual core PCE, the Federal Reserve's preferred inflationary gauge, also came in line with market expectations. Core PCE inflation picked up to 4.2% in July from 4.1% in June.

Markets were hoping for the inflation data to be below or in line with market expectations.

"The markets are so data driven right now, aping the stance adopted by central bankers, and it feels like a worse than expected reading could extinguish the recently improved sentiment," AJ Bell's Russ Mould explained.

The reading comes ahead of the Federal Reserve's next meeting next month, and if it was higher than expected it could have added to nerves.

In recent days, a slew of softer economic data in the US has painted a picture of a slowing economy, fuelling hopes that interest rates in the world's largest economy have peaked.

Currently, according to the CME FedWatch Tool, the market sees an 89% chance of the US central bank holding rates steady at its next meeting in September and a 51% chance of rates holding steady again at the following meeting in November.

The pound was quoted at USD1.2671 at the London equities close Thursday, lower compared to USD1.2732 at the close on Wednesday. The euro stood at USD1.0847 at the European equities close Thursday, lower against USD1.0931 at the same time on Wednesday. Against the yen, the dollar was trading at JPY145.65, lower compared to JPY145.75 late Wednesday.

In the FTSE 100, Glencore closed down 4.1% as it went ex-dividend. It was the worst performer of the day on the index.

Sports Direct owner Frasers rose 1.4%, after it upped its stake in online fashion retailer boohoo Group.

Frasers upped its stake in boohoo to 9.1% on Thursday, from 7.8% previously. On Monday, it had upped its stake in Asos to nearly 20%.

boohoo and Asos have had a difficult year, as shoppers returned to the high street post-pandemic.

"More people have gone back to shopping on the high street since the end of the pandemic, preferring to try on clothes before buying rather than ordering them blindly off the internet. That's hurt online-only sellers like Boohoo," explained AJ Bell's Russ Mould.

Asos was up 8.7%, whilst boohoo rose 7.5%.

In the FTSE 250, Marks & Spencer added 0.8% amid the news the stock will be returning London's premier FTSE 100 index after nearly four years of absence.

Meanwhile, CMC Markets closed down 5.8% as FTSE Russell confirmed the online trading platform will be ousted from the FTSE 250.

The changes will take effect to its UK indices from the market open on Monday, September 18.

On London's AIM, Ovoca Bio plummeted 80%.

The women's health-focused biopharmaceutical company announced that the top-line results from its phase two dose-ranging study assessing Orenetide did not show statistically significant superiority versus placebo on its co-primary endpoints. The study evaluated the effect of a range of daily administered Orenetide doses on a lack or loss of sexual desire in 667 women.

Daniil Nemenov, senior vice president for Clinical Development & Operations said: "We are surprised and disappointed that the study did not have a positive conclusion regarding the superiority of Orenetide versus placebo."

Physiomics jumped 37%, after it said it won its first contract with an unnamed "UK-based biotech client". The contract is worth GBP125,000 and is for an immune-oncology project due to be completed by the end of the year.

The London-based mathematical modelling company also said it has been awarded a further contract by existing client Merck.

In European equities on Thursday, the CAC 40 in Paris ended down 0.4%, while the DAX 40 in Frankfurt ended up 0.5%.

In Paris, Pernod Ricard lost 6.0%, despite the alcohol drinks maker reporting a 13% annual jump in net sales. It warned that a challenging macroeconomic environment in China will lead to a decline in net sales in the first quarter of financial 2024.

AJ Bell's Mould on Thursday said the situation in China "feels fragile given the continued dismal news", with property developer Country Garden facing a crunch vote, as well as the manufacturing sector deteriorating for a fifth straight month in August.

Brent oil was quoted at USD85.88 a barrel at the London equities close Thursday, up from USD84.70 late Wednesday. Gold was quoted at USD1,942.51 an ounce at the London equities close Thursday, lower against USD1,945.03 at the close on Wednesday.

In Friday's UK corporate calendar, Diversified Energy Co will publish its half year results.

The economic calendar for Friday has a slew of manufacturing PMI's from China, the EU, Germany, the UK, and the US. There is also the UK Nationwide house price index at 0700 BST.

By Sophie Rose, Alliance News reporter

Comments and questions to newsroom@alliancenews.com

Copyright 2023 Alliance News Ltd. All Rights Reserved.