LONDON MARKET MIDDAY: Stocks lower ahead of key US inflation report

Fri, 10th Dec 2021 12:17

(Alliance News) - Stock prices in London were lower at midday on Friday with investors looking tentatively ahead to a US inflation report at 1330 GMT, as the Biden administration sought to downplay the importance of the latest figures, saying they already are out of date.

The reading is expected to inform the US Federal Reserve's decision on the pace of its tapering of monetary stimulus when policymakers meet next week.

Deutsche Bank expects headline US inflation to have accelerated to 6.9% in November, the fastest pace since 1982, with core inflation at 5.1%, the highest since 1990. The bank said its economists expect the Fed to double the pace of tapering previously expected.

The FTSE 100 index was down 4.39 points, or 0.1%, at 7,316.87. The mid-cap FTSE 250 index was down 87.62 points, or 0.4%, at 23,060.85. The AIM All-Share index was down 4.08 points, or 0.3%, at 1,192.34.

The Cboe UK 100 index was down 0.5% at 724.60. The Cboe 250 was down 0.4% at 20,467.84, and the Cboe Small Companies was flat at 15,039.67.

In mainland Europe, the CAC 40 stock index in Paris was down 0.2%, while the DAX 40 in Frankfurt was down 0.2%.

Analysts at ActivTrades commented: "Investors chose to be cautious for the last trading session of the week, especially after the latest virus developments showed the Omicron strain spreads faster than the Delta variant. In addition, investors are waiting for the latest US inflation report due. This US consumer price index [print], due later today, is seen as highly important by most market operators as it could give significant hints on what the Fed may do at next week's policy meeting."

US stock market futures were pointed higher following a lower close on Thursday, after US President Joe Biden on Thursday attempted to downplay Friday's inflation report as not reflective of the latest economic trends.

The Dow Jones Industrial Average was called up 0.3%, the S&P 500 up 0.4% and the Nasdaq Composite up 0.5%, ahead of data, which will be issued before the New York open.

Voter confidence in Biden has taken a hit with inflation at 30-year highs and a supply chain crisis that threatens the availability of food and other essential goods as the holiday season gets underway.

In an unusual statement released ahead of the data, Biden said Thursday the report will not encompass declines in prices of energy and used cars, two drivers of the high inflation readings in recent weeks.

"The information being released tomorrow on energy in November does not reflect today's reality, and it does not reflect the expected price decreases in the weeks and months ahead, such as in the auto market," Biden said.

Among individual US shares, Oracle was up 12% in pre-market trade.

After the New York close on Thursday, the enterprise software company reported a swing to quarterly loss but posted better-than-expected revenue. In the second quarter ended November 30, revenue climbed 5.7% year-on-year to USD10.36 billion from USD9.80 billion. The Austin, Texas-based firm posted a pretax loss of USD1.25 billion, swinging from a USD2.97 billion profit a year earlier. Total operating expenses came in sharply higher at USD11.18 billion from USD6.22 billion.

In London on Friday, Associated British Foods was up 0.7%. The company said its Primark fashion chain traded ahead of expectations in the new financial year to date, with improved like-for-like sales compared to the fourth quarter of the previous year, which ended September 18.

Royal Dutch Shell 'A' and 'B' shares were up 0.3% and 0.2% respectively as shareholders in the oil major vote on plans to switch its headquarters from the Netherlands to the UK after a century and drop the 'Royal Dutch' part of its name.

Europe's biggest energy firm has said the move will simplify its tax and share arrangements, and accelerate its transition to net-zero emissions. But its chair also admitted the plan was driven by the Dutch government's scrapping of plans to withdraw a tax on dividends.

The Dutch government said it was "unpleasantly surprised" by the plan, while Britain conversely hailed it as a vote of confidence in the UK economy post-Brexit.

Anglo American was down 0.4%, giving back an earlier gain, after the miner confirmed 2021 guidance and promised 35% growth over next decade at an "attractive 50% margin".

The miner expects 2021 production to be up 7% from 2020, on strong platinum-group metals performance and higher rough diamond demand.

For 2022, Anglo expects capital expenditure in a range between USD6.2 billion to USD6.7 billion. Anglo also raised its performance improvement target to USD3.5 billion to USD4.5 billion by 2023

In the FTSE 250, Cineworld Group was the worst performer, down 4.0%, amid fears tighter UK restrictions will deter people from going to movie theatres.

Masks must be worn in more settings in the UK, including cinemas, theatres and churches from Friday, as measures are tightened in England in a bid to slow the spread of the latest coronavirus variant. Tougher restrictions have been branded a "necessary evil" by a scientist advising the UK government, who said the new approach "absolutely is not an overreaction".

Ashmore was 1.7% lower after Goldman Sachs downgraded the emerging markets-focused fund manager to Neutral from Buy.

Hilton Food Group was down 0.8%. The food packaging company said it has agreed to buy Dutch Seafood Co, the owner of smoked salmon producer Foppen, at enterprise value of EUR90.0 million.

The company said the move expands its presence in a growing protein category, as well as entering the US, a new geography for Hilton. Hilton Food launched an equity placing to raise gross proceeds of around GBP75 million to part fund the acquisition, with the remainder coming from a bridge debt facility. Hilton said the share placing is to be conducted by Numis as sole bookrunner.

The pound was quoted at USD1.3200 at midday on Friday, up from USD1.3191 at the London equities close Thursday.

The euro was priced at USD1.1273, lower from USD1.1332. Against the Japanese yen, the dollar was trading at JPY113.79, up from JPY113.52.

Brent oil was quoted at USD74.74 a barrel Friday at midday, down sharply from USD75.22 on Thursday evening. Gold stood at USD1,771.47 an ounce, lower against USD1,777.03.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com