LONDON MARKET CLOSE: Stocks rise as annual US inflation slows in April

(Alliance News) - Stocks in London ended higher on Wednesday after data showed annual US inflation moderated in April.

The FTSE 100 index closed up 105.44 points, or 1.4%, at 7,347.66. The FTSE 250 ended up 262.19 points, or 1.4%, at 19,647.15. The AIM All-Share closed up 8.65 points, or 0.9%, at 953.90.

The Cboe UK 100 ended up 1.2% at 731.78, the Cboe UK 250 closed up 1.3% at 17,305.47, and the Cboe Small Companies ended up 1.2% at 14,630.91.

In European equities, the CAC 40 in Paris stock index ended up 2.5%, while the DAX 40 in Frankfurt closed up 2.2%.

"Beleaguered stock markets have recovered to an extent this afternoon, following a slowing of US CPI growth, but concerns about further tightening remain," said IG Group's Chris Beauchamp.

In the FTSE 100, Compass Group ended the best performer, up 7.6%, after the contract caterer announced a GBP500 million share buyback alongside strong results.

In the six months to March 31, pretax profit jumped to GBP632 million from GBP133 million the year before, as revenue rose 36% to GBP11.5 billion from GBP8.4 billion.

Compass declared a 9.4 pence per share dividend, having not paid an interim payout a year prior. It is the company's first half-year dividend since the pandemic began, though it had paid a 14p final dividend for financial 2021.

Due to its strong performance in the first half, Compass is upping its organic growth guidance, which is now expected to grow about 30%, lifted from the previous expectation of 20% to 25% growth.

ITV added 2.3%. The FTSE 100-listed television broadcaster and programmer producer reported a first-quarter revenue rise, as it looks towards to the launch of its video streaming service later this year.

At the other end of the large-caps, Airtel Africa ended down 3.3%. The telecommunications and mobile money services provider reported a sharp increase in full-year profit and revenue due to healthy customer base growth.

Airtel generated a pretax profit of USD1.22 billion in the year ended March 31, up 75% versus USD697 million the year prior. This was on revenue growth of 21% to USD4.71 billion from USD3.91 billion.

The firm said it delivered strong double-digit growth across all its key services. It credited this to customer base growth of 8.7% to 128.4 million and growth in average revenue per user of 15%.

In the FTSE 250, CLS Holdings closed up 9.2% after it announced an updated dividend policy for 2022, following the conversion of its UK business to a real estate investment trust.

The UK, Germany and France-focused property investor said it will maintain a progressive dividend policy, with a dividend cover of 1.2 to 1.6 times EPRA earnings, compared with 1.5 to 2.0 times. It is expected that 2022 dividend cover will be around the middle of the new range.

Tui closed up 5.7% after the Anglo-German tour operator posted a sharp first half revenue jump.

Tui said revenue in the first half ended March 31 soared to EUR4.50 billion from EUR716.3 million a year earlier. In the second quarter alone, revenue jumped to EUR2.13 billion from EUR248.1 million.

The Hanover, Germany-based firm said its pretax loss narrowed in the first half of financial 2022. Tui posted a pretax loss of EUR871.0 million, slimmed from EUR1.54 billion a year prior. In the second quarter, Tui's pretax loss narrowed to EUR466.5 million from EUR736.9 million.

At the other end of the mid-caps, Marshalls ended the worst performer, down 9.3%, after the paving stone maker cautioned about uncertainty ahead and said that revenue in its Domestic division took a hit.

Marshalls said revenue in the four months to April 30 was up 5% at GBP201 million compared to the same period in 2021. Marshalls explained that revenue growth was supported by the implementation of price increases at the start of 2022.

But in the Domestic market, meaning private homes, revenue dropped 9% due to a reduction in installer capacity in March and April, despite end-customer demand being buoyant. The sector represents 26% of Marshalls's total revenue.

The dollar was lower across the board. The pound was quoted at USD1.2323 at the London equities close, up from USD1.2300 at the close Tuesday.

The euro stood at USD1.0540 at the European equities close, up slightly from USD1.0533. Against the yen, the dollar was trading at JPY130.23, down from JPY130.38.

The common currency for the euro area was finding some support after European Central Bank chief Christine Lagarde hinted Wednesday at a first interest rate hike in July to tackle soaring inflation, echoing the actions of other major central banks and heralding the end of the eurozone's cheap money era.

The ECB should end its bond-buying stimulus "early in the third quarter" and could raise interest rates "only a few weeks" later, Lagarde said in a speech in the Slovenian capital Ljubljana.

The comment is the clearest sign yet from Lagarde that the ECB is ready to move on rates sooner rather than later, as the institution trails rate hikes made by the US Federal Reserve and others to tame global inflation.

Any hike would be the ECB's first in over a decade and would lift rates from their current historically low levels.

Stocks in New York were mostly higher at the London equities close after data showed US inflation eased in April but remained near 40-year high levels.

The DJIA was up 0.7%, the S&P 500 index up 0.5% and the Nasdaq Composite down 0.4%.

US inflation slowed in April, official data showed on Wednesday, but still came in higher than anticipated.

Data from the US Bureau of Labor Statistics showed the consumer price index rose 8.3% in April from a year before, slowing from March's 8.5% annual rise, but faster than the 8.1% expected by the market.

Energy prices were up 30%, while food costs saw their highest annual increase since April 1981 of 9.4%.

Compared to the previous month, the consumer price index was 0.3% higher in April, slowing from the 1.2% growth reported in March, but ahead of the 0.2% rise that was forecast.

On Wall Street, Electronic Arts was up 12% after the video game publisher, late Tuesday, reported a rise in fourth-quarter earnings and raised its guidance for the next financial year.

Brent oil was quoted at USD107.27 a barrel at the equities close, up from USD104.75 at the close Tuesday.

Gold stood at USD1,849.37 an ounce at the London equities close, slightly higher from USD1,846.88 late Tuesday.

The economic events calendar on Thursday has UK economic growth figures at 0700 BST and US producer prices at 1330 BST.

The UK corporate calendar on Thursday has annual results from private equity investor 3i Group and from telecommunications firm BT Group. Soft drinks bottler Coca-Cola HBC reports first-quarter earnings.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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