London midday: Stocks little changed ahead of Fed announcement

(Sharecast News) - London stocks were little changed by midday on Wednesday as investors digested a sharp decline in UK inflation and eyed a rate announcement by the US Federal Reserve.
The FTSE 100 was down 0.1% at 6,099.91, while the pound was up 0.5% against the dollar at 1.2949.

Figures released earlier by the Office for National Statistics showed that inflation plunged in August as the government's Eat Out to Help Out scheme cut the cost of restaurant bills.

Annual consumer price inflation fell to 0.2% from 1% in July as the Chancellor Rishi Sunak's subsidy for meals out and a VAT cut for the hospitality industry reduced prices. On average, economists had expected the rate of price increases to drop to zero.

Prices in the hotels and restaurant sector fell 2.8% compared with a 1.8% increase in July. Clothing and footwear prices also fell as retailers delayed price rises for autumn ranges and air fares fell in August for the first time on record.

The unusually big drop for inflation showed the effects of the Covid-19 crisis hitting large swathes of the economy. Recreation and culture was the only sector to register a small increase to 2.8% from 2.6%.

ONS statistician Jonathan Athow said: "The cost of dining out fell significantly in August thanks to the Eat Out to Help Out scheme and VAT cut, leading to one of the largest falls in the annual inflation rate in recent years."

Capital Economics said August was probably the low point for inflation after the Eat Out to Help Out subsidy finished at the end of August.

"The VAT cut for the hospitality industry will expire on 12 January [and] the drag on inflation from the previous collapse in the oil price will continue to fade," said economist Thomas Pugh. "But the big picture is that it will be a few years before the economy is strong enough to sustain CPI inflation at the 2% target."

Market participants were awaiting the latest interest rate decision from the US Federal Reserve, due after the close of European markets. The central bank is widely expected to leave its target Fed Funds range unchanged between 0.00 and 0.25%.

IG analyst Joshua Mahony said: "Today's FOMC meeting looks set to provide the main event of the day, with Powell expected to flesh out the new inflation targeting proposed in his Jackson Hole speech. With few expecting any shift in monetary policy, today will be as much about any shift in economic forecasts and the new inflation policy than rates or QE."

In equity markets, engine maker Rolls-Royce was the worst performer on the FTSE 100, closely followed by GKN owner Melrose Industries and British Airways parent IAG.

Supermarket retailer Morrisons was also in the red after a downgrade to 'underweight' from 'neutral' at JPMorgan Cazenove.

Trading platform Plus500 fell despite saying it was very confident about its outlook after momentum from the first half continued into the second half. Revenue has stayed strong supported by higher customer numbers and use of its platform is at "elevated levels", it said.

On the upside, Redrow reversed earlier losses despite saying that full-year profits slumped 66% due to the coronavirus and associated lockdowns, as reservations were up in the first 11 weeks of the new fiscal year and the housebuilder expects to resume dividend payments in 2021.

B&Q and Castorama owner Kingfisher rallied, having fallen sharply on Monday on the back of French DIY sales data.

Oil and gas exploration company Energean was the standout gainer on the FTSE 250 after securing two new gas shale agreements for its flagship Karish project off Israel.



Market Movers

FTSE 100 (UKX) 6,099.91 -0.09%
FTSE 250 (MCX) 17,787.02 -0.16%
techMARK (TASX) 3,877.09 -0.40%

FTSE 100 - Risers

Ferguson (FERG) 7,644.00p 2.94%
Kingfisher (KGF) 280.20p 2.45%
Auto Trader Group (AUTO) 578.60p 1.94%
JD Sports Fashion (JD.) 815.80p 1.75%
Experian (EXPN) 3,044.00p 1.67%
Fresnillo (FRES) 1,317.00p 1.62%
Mondi (MNDI) 1,567.00p 1.59%
3i Group (III) 964.00p 1.47%
Informa (INF) 403.50p 1.41%
Aveva Group (AVV) 4,906.00p 1.22%

FTSE 100 - Fallers

Rolls-Royce Holdings (RR.) 191.85p -5.63%
Melrose Industries (MRO) 121.10p -3.27%
International Consolidated Airlines Group SA (CDI) (IAG) 130.00p -2.55%
Morrison (Wm) Supermarkets (MRW) 174.00p -2.30%
HSBC Holdings (HSBA) 317.25p -1.72%
InterContinental Hotels Group (IHG) 4,355.00p -1.67%
ITV (ITV) 64.96p -1.34%
Aviva (AV.) 299.80p -1.22%
CRH (CRH) 2,995.00p -1.19%
Whitbread (WTB) 2,233.00p -1.15%

FTSE 250 - Risers

Energean (ENOG) 614.00p 17.44%
Future (FUTR) 1,930.00p 2.88%
Weir Group (WEIR) 1,333.50p 2.77%
Investec (INVP) 139.85p 2.72%
Pets at Home Group (PETS) 307.80p 2.60%
Hochschild Mining (HOC) 242.20p 2.45%
Royal Mail (RMG) 235.60p 2.43%
Vivo Energy (VVO) 73.70p 2.08%
Travis Perkins (TPK) 1,177.00p 1.99%
Sirius Real Estate Ltd. (SRE) 75.20p 1.90%

FTSE 250 - Fallers

SSP Group (SSPG) 206.40p -5.23%
Biffa (BIFF) 214.00p -3.82%
Virgin Money UK (VMUK) 89.28p -3.69%
Micro Focus International (MCRO) 276.70p -3.42%
Carnival (CCL) 999.20p -3.41%
Meggitt (MGGT) 269.80p -3.40%
Network International Holdings (NETW) 385.00p -2.78%
TBC Bank Group (TBCG) 969.00p -2.61%
Plus500 Ltd (DI) (PLUS) 1,463.50p -2.40%
Kainos Group (KNOS) 1,008.00p -2.33%