LONDON MARKET PRE-OPEN: UK inflation eases; Persimmon sales grow

(Alliance News) - Stocks in London opened slightly higher Wednesday, with focus this morning on inflation in Europe, after the UK's eased in July, with the same for the eurozone due later.

In early company news, Persimmon's new home sales blossomed. Wealth management platform AJ Bell is in search of a new chief financial officer after two internal promotions. Miner Hochschild is on track to meet its 2021 targets.

IG futures indicate the FTSE 100 index opened 14.69 points higher at 7,195.80 on Wednesday. The blue-chip index closed up 27.13 points, or 0.4%, at 7,181.11 on Tuesday.

UK consumer price inflation slowed in July, data from the Office of National Statistics showed Wednesday.

The consumer prices index was unchanged in July versus the previous month, following June's 0.5% rise from May. Market consensus, according to FXStreet, had predicted consumer prices to rise 0.3% in July from June.

"In 2021, price rises in transport were largely offset by price falls for clothing and footwear, and a variety of recreational good," the ONS explained.

Annually, the CPI rose by 2.0% in July, slowing from 2.5% to June, and behind the 2.2% rise predicted by the market according to FXStreet.

The pound was quoted at USD1.3746 early Wednesday, firm on USD1.3742 at the London equities close Tuesday.

"It's not been a great week thus far from European markets, although losses have been modest thus far, given the gains we've already seen this month," CMC Markets analyst Michael Hewson said.

In Tokyo, the Nikkei 225 index closed up 0.6% on Wednesday. In China, the Shanghai Composite was up 1.0%, while the Hang Seng index in Hong Kong was up 0.5%. The S&P/ASX 200 in Sydney closed 0.1% lower.

Hewson continued: "This uncertainty about a slowing global recovery may well have prompted a little bit of weakness in the past two days, however Asia markets appear to be shrugging that off after the [Reserve Bank of New Zealand] kept rates unchanged instead of raising them in response to the new lockdown imposed in New Zealand. Consequently Asia markets have found a bit of a bid and as a result markets here in Europe look set to open higher, despite concerns that increasing outbreaks of the delta variant will stall the economic recovery completely."

A coronavirus case that plunged New Zealand into a snap national lockdown was confirmed as the Delta variant on Wednesday, Prime Minister Jacinda Ardern said, as four more cases emerged.

Ardern said one of the new cases was a nurse at Auckland Hospital, which had been placed in "internal lockdown" while all staff and patients were tested. The prime minister said the spread of the virus justified her decision to issue nationwide stay-at-home orders on Tuesday after the initial case was identified.

The first case, a 58-year-old Auckland man, ended a six-month run without community transmission in New Zealand, which has recorded only 26 Covid-19 deaths in a population of five million since the start of the global pandemic.

Following BHP's announcement on Tuesday of a merger of oil assets with Australia's Woodside Petroleum and the transfer of its primary listing to Sydney, the miner's share closed down 7.1% on the ASX on Wednesday, while Woodside closed down 2.1%.

Woodside on Wednesday declared a 15% dividend increase, as post-tax profit doubled in the first half.

In London, blue-chip housebuilder Persimmon saw a "robust" first half.

In the six months to June 30, pretax profit surged to GBP480.1 million from GBP292.4 million a year before, as revenue grew to GBP1.84 billion from GBP1.19 billion.

This came as Persimmon's new home completions almost doubled to 7,406 from 4,900 and its new home average selling price increased to GBP236,199 from GBP225.066.

"We anticipate successfully delivering about 10% growth in sales completions this year. The group has a great platform and good momentum to deliver further disciplined growth into the medium term, creating value for all," Chief Executive Dean Finch said.

The housebuilder's current forward sales position, at June 30, was GBP2.23 billion, down from GBP2.48 billion at the same point a year before.

FTSE 250-listed construction firm Balfour Beatty reiterated its 2021 outlook and has returned to profit.

In the half-year ended July 2, pretax profit was GBP35 million, compared to a GBP26 million loss a year before.

Revenue increased slightly to GBP4.15 billion from GBP4.12 billion

Balfour declared an interim dividend of 3.0 pence, after withholding its shareholder payout last amid amid its loss-making, but noted the dividend is up 43% from the 2019 level.

Looking ahead, the company reiterated its 2021 profit from operations outlook for earnings-based businesses to be in line with 2019.

Balfour ended the first half with an order book of GBP16.1 billion, down from GBP17.5 billion 12 months earlier and lower than the GBP16.4 billion seen six months prior.

AJ Bell underwent a board shake up on Wednesday, promoting Chief Financial Officer Michael Summersgill to the newly created role of deputy chief executive officer.

"Michael has held the position of chief financial officer since 2011 and is currently responsible for the company's finance and operations functions. In his new role, Michael will support CEO Andy Bell with the development and execution of the Company's strategy to drive the future growth of AJ Bell's platform propositions," AJ Bell explained.

The investment platform also named current Finance Director Roger Stott to the newly created role of chief operating officer.

As a result of these changes, AJ Bell is currently conducting an external search for a new CFO.

Hochschild Mining said it was able to make "good progress" in the first half, as revenue exploded on a jump in gold and silver production.

In the six months to June 30, pretax profit surged to USD83.8 million from USD6.5 million a year before, thanks in part to the non-repetition of USD20.2 million in administrative expenses and USD12.7 million in exploration expenses.

Revenue grew sharply to USD394.8 million from USD232.0 million.

Attributable gold produced rose 34% year on year to 106,000 ounces, while attributable silver production was up 44% to 5.9 million ounces.

Looking ahead, Hochschild said it is on track to deliver its overall 2021 production target of 360,000 to 372,000 gold equivalent ounces and 31.0 to 32.0 million silver equivalent ounces.

Stocks in New York ended ended lower on Tuesday, easing from record-setting levels, following weak US retail sales numbers for July. The Dow Jones Industrial Average lost 0.8%. The S&P 500 ended down 0.7%, while the Nasdaq Composite finished 0.9% lower.

US retail sales slumped in July, data from the the US Census Bureau showed Tuesday, coming in far worse than market consensus.

Retail and food service sales in the US fell 1.1% in July compared to the previous month to USD617.7 billion, following June's revised 0.7% growth. Market consensus, cited by FXStreet, had expected a 0.3% fall in July.

Growing Delta variant fears will see the US government announce that Americans should get booster shots for coronavirus vaccines eight months after their last shot, part of a campaign that could begin as early as mid-September, according to US media.

The move could be announced as early as this week, the New York Times reported Tuesday, citing unnamed sources in President Joe Biden's administration.

The campaign is likely to kick off with booster shots for nursing home residents and health care workers, followed by the elderly, all of whom were among the first to be eligible to receive their initial vaccinations. The general public would then follow, according to the Times.

The euro was priced at USD1.1721, up from USD1.1715. Against the Japanese yen, the dollar was trading at JPY109.57, down slightly from JPY109.60.

"The broad-based risk sentiment downturn has been supportive for the USD, and we continue to see most Asian currencies losing ground to the greenback, though the JPY should probably outperform in this environment," analysts at ING said.

Brent oil was quoted at USD69.54 a barrel Wednesday morning, down from USD69.75 late Tuesday. Gold was trading at USD1,793.00 an ounce, up against USD1,783.45.

The economic events calendar on Wednesday has an inflation print for the eurozone 1000 BST.

In Europe headline CPI for July is expected to rise to 2.2%, slightly up from 1.9%, although core prices are much more subdued at 0.7%.

In the evening, there is the latest minutes from the US Federal Reserve's most recent monetary policy meeting.

By Paul McGowan; paulmcgowan@alliancenews.com

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