LONDON MARKET OPEN: Lower start with eyes on JPMorgan earnings, US CPI

(Alliance News) - Stocks in London got off to a mixed start on Wednesday, with the FTSE 100 slipping alongside counterparts in Europe as investors duck into wait-and-see mode ahead of some key data and earnings from JPMorgan.

The FTSE 100 index was down 34.54 points, or 0.5%, at 7,095.69 early Wednesday. The mid-cap FTSE 250 index was up 24.90 points, or 0.1%, at 22,493.80. The AIM All-Share index was up 0.89 point, or 0.1%, at 1,207.16.

The Cboe UK 100 index was down 0.5% at 703.95. The Cboe 250 was up 0.1% at 20,271.45, and the Cboe Small Companies flat at 15,474.81.

In mainland Europe, the CAC 40 in Paris was down 0.4% while the DAX 40 in Frankfurt was down 0.1% early Wednesday.

The mood was cautious in Europe ahead of the day's two main events: US inflation and the start of quarterly earnings season on Wall Street.

Due at 1330 BST, a US inflation reading for September is expected to show annual consumer price growth remained stable at 5.3% year-on-year.

The data comes after a Federal Reserve official said Tuesday the US is nearly ready for the central bank to pull back on its stimulus.

The Fed last month signalled it would "soon" be ready to begin the process of ending its massive monthly purchases of bonds and other securities intended to help the country weather the Covid-19 downturn.

In a speech to the Institute of International Finance, Fed Vice Chair Richard Clarida said the world's largest economy was nearing completion of the "substantial further progress" test the central bank has set to determine when to back off its stimulus policies.

Fed meeting minutes are due on Wednesday at 1900 BST.

Inflation also was in focus in Europe, as data confirmed German consumer prices ticked up 4.1% year-on-year in September, accelerating from 3.9% in August. This was the highest inflation rate since 1993, when German prices rose 4.3%.

There was gross domestic product data out for the UK, with the economy growing 0.4% month-on-month in August to bring output 0.8% below pre-virus levels. This was slightly below consensus for 0.5% growth, according to FXStreet, while July's reading was revised down to a contraction of 0.1% from growth of 0.1%.

"The creaking UK economy is taking its time to spring back to life. The problems lie now not with demand but with supply," said Paul Craig, portfolio manager at Quilter Investors.

Sterling was quoted at USD1.3614 early Wednesday, up from USD1.3595 at the London equities close on Tuesday. The euro traded at USD1.1548, flat against USD1.1544 late Tuesday. Against the yen, the dollar advanced to JPY113.60 versus JPY113.34.

The mood was subdued in Asia overnight, with the Japanese Nikkei 225 index closing down 0.3%. In China, the Shanghai Composite was up 0.4%, while trading in Hong Kong was suspended due to a typhoon. The S&P/ASX 200 in Sydney ended down 0.1%.

Topping and tailing the FTSE 100 in early dealings were Barratt Developments and Informa.

Barratt, up 2.8%, backed its outlook after seeing ongoing strength in demand for homes.

For the financial year to date, it has seen net private reservations per average week of 281, down slightly from 288 in the same period a year ago but up on 262 two years ago.

"Whilst the net private reservation rate was 2.3% below that reported in the prior year period, this was a particularly active period reflecting both pent-up demand following the initial national lockdown, and increased Help to Buy reservation activity," the housebuilder explained.

Despite global supply chain issues, Barratt said it has not experienced any significant disruption to its build programme. It continues to expect build cost inflation of between 4% and 5% for the full-year.

"Whilst there continues to be some macroeconomic uncertainty, the board believes that our strong financial position provides us with the platform and flexibility to react to any changes in FY22 and beyond," said Barratt.

Informa fell 3.0% after UBS downgraded the business publisher and events organiser to Sell from Neutral.

Centrica was down 2.4% after the British Gas parent decided to delay its November capital markets day to retain focus amid the "current unprecedented commodity price environment".

A surge in natural gas prices since the start of the 2021 has put pressure on UK energy providers, with a number of smaller utility firms failing in recent weeks.

Centrica said its performance since July has been in line with expectations, and it is "well hedged" for the winter and beyond. The balance sheet remains strong, it added.

"In this current unprecedented commodity price environment we remain focused on looking after our residential and business customers, whilst working as part of wider industry efforts in the UK to support the customers of failed suppliers and drive the regulatory reforms which are urgently required to make sure this situation never recurs," said Chief Executive Chris O'Shea.

THG shares partially rebounded after Wednesday's 35% slump. THG shares were up 8.0% in early trade as it aimed to reassure shareholders following a capital markets day on Tuesday, which - though intended to do the same - spooked shareholders into dumping stock.

THG on Wednesday noted the share price fall and stressed that it has "consistently" delivered ahead of its targets since floating in September last year.

"The group also has a very strong liquidity position as it enters its peak trading season," THG added.

Focus on the corporate side for the remainder of Wednesday lies on the US, with JPMorgan kicking off the start of US banking third quarter earnings.

By Lucy Heming; lucyheming@alliancenews.com

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