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London open: FTSE edges up after UK inflation data, ahead of Fed
London stocks edged higher in early trade on Wednesday as the latest UK inflation figures met expectations, and as investors eyed a policy announcement from the US Federal Reserve.
At 0825 GMT, the FTSE 100 was up 0.2% at 8,212.48, while sterling was down 0.2% against the dollar at 1.2683.
Data released earlier by the Office for National Statistics showed that inflation reached 2.6% in November, the second consecutive rise.
Consumer price inflation rose in the 12 months to November to 2.6%, from 2.3% in October.
Largely in line with expectations, it was the highest print since March.
The ONS said the prices of motor fuel and clothing had driven the increase, although that had been partially offset by a bigger-than-normal fall in air fares.
Although fares traditionally dip around this time of year, the decline was the largest drop in November since records began.
On a monthly basis, CPI rose by 0.1%, compared with a fall of 0.2% a year previously.
Core CPI, which strips out the more volatile elements of energy, food alcohol and tobacco, rose by 3.5% in the 12 months to November, up from 3.3% in October.
The Bank of England will meet on Thursday to make its latest decision on interest rates and is widely expected to keep the cost of borrowing on hold.
The Monetary Policy Committee has trimmed rates twice this year, but remains hesitant about sticky services inflation.
The ONS said the CPI services annual rate was unchanged in November at 5.0%.
Paul Dales, chief UK economist at Capital Economics, said the further rebound in CPI inflation could have been worse.
“But coming on the back of the stronger-than-expected rebound in wage growth in yesterday’s release, there is almost no chance of the Bank of England delivering an early Christmas present with another interest rate cut tomorrow,” he said.
Looking to the rest of the day, eyes will be on the Fed interest rate decision at 1900 GMT.
Danske Bank said: “We expect a 25bp cut, which is also fully discounted by markets. Apart from the rate decision, market attention will be on the updated rate projections, and especially on the FOMC’s latest view on the terminal rate level.
“We think Chair Powell will aim for a neutral tone in his remarks, but he is still likely to verbally open the door for slowing the pace of cuts.”
In equity markets, BA and Iberia owner IAG flew higher after Jefferies hiked its price target on the stock to 350p from 270p.
DIY group Kingfisher gained as it announced the sale of its Brico Dépôt business in Romania to retailer Altex Romania for €70m.
Kingfisher said the divestment will give it “greater strategic focus on markets and growth initiatives where we are most strongly positioned to deliver attractive returns and create shareholder value”.
Transact owner IntegraFin was in the red after full-year results.
Outside the FTSE 350, discount shoe retailer Shoe Zone tanked as it warned on profits and said it had been forced to close some stores due to changes announced in the Budget.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Wise Plc | +3.73% | +37.00 | 1,028.00 |
| 2 |  |
Next Plc | +1.45% | +142.00 | 9,948.00 |
| 3 |  |
Bp Plc | +1.41% | +5.35 | 385.45 |
| 4 |  |
Lloyds Banking Group Plc | +1.29% | +0.70 | 54.92 |
| 5 |  |
International Consolidated Airlines Group S.a. | +1.28% | +3.80 | 301.10 |
| 6 |  |
Ashtead Group Plc | +1.26% | +64.00 | 5,150.00 |
| 7 |  |
Relx Plc | +1.16% | +43.00 | 3,750.00 |
| 8 |  |
Rentokil Initial Plc | +1.01% | +4.10 | 409.30 |
| 9 |  |
Smith & Nephew Plc | +0.98% | +9.60 | 989.80 |
| 10 |  |
Marks And Spencer Group Plc | +0.95% | +3.70 | 392.60 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Bp 9% 2nd Prf | -1.59% | -2.50 | 154.50 |
| 2 |  |
Gen.acc.8se.pf | -1.45% | -2.00 | 135.50 |
| 3 |  |
Astrazeneca Plc | -0.69% | -72.00 | 10,434.00 |
| 4 |  |
Beazley Plc | -0.66% | -5.50 | 826.00 |
| 5 |  |
Centrica Plc | -0.55% | -0.70 | 125.80 |
| 6 |  |
Banco Santander S.a. | -0.40% | -1.50 | 371.00 |
| 7 |  |
Antofagasta Plc | -0.40% | -6.50 | 1,636.00 |
| 8 |  |
Severn Trent Plc | -0.39% | -10.00 | 2,564.00 |
| 9 |  |
National Grid Plc | -0.36% | -3.40 | 933.20 |
| 10 |  |
Legal & General Group Plc | -0.35% | -0.80 | 225.80 |
US close: Dow falls for ninth straight day as investors await FOMC
Wall Street’s three main equity benchmarks were in the red on Tuesday after stronger-than-expected economic data, with the Dow extending its recent losing streak and the Nasdaq retreating from a record high.
The Dow fell for the ninth straight session – its longest losing streak in nearly 50 years – dropping 0.6%, while S&P 500 declined 0.4% and the Nasdaq slipped 0.3%.
Investors were beginning to look ahead to Wednesday’s Federal Open Market Committee meeting, with a 25-basis point reduction in the Fed Funds Rate more or less priced into markets.
However, stronger-than-expected retail sales data out during Tuesday’s session may have tempered projections for further monetary easing in 2025. Strong auto sales drove national retail sales up 0.7% in November, up from 0.5% in October and ahead of the 0.5% increase expected.
Dan Coatsworth, investment analyst at AJ Bell, said the upside surprise suggests “the economy is ticking over nicely and the Federal Reserve might need to slow down the pace of monetary policy easing”.
He said that the focus of the FOMC statement will be on any comments regarding the future path for interest rates, with growing expectations that the Fed could pause its current rate-cutting cycle early in the new year.
“It might simply be investors locking in some profit before Christmas with a view to taking a short break. Any sense that rate cuts might become more pedestrian in the new year could cause a wobble on markets and some investors could be reducing their exposure until conditions move more in their favour,” Coatsworth said.
In other economic news, US industrial production fell by 0.1% in November following a 0.4% decline the month before, surprising economists who had pencilled in a rebound of 0.3%.
Finally, the National Association of Home Builders’ housing market index was unchanged at 46 in December, slightly below forecasts for a modest uptick to 47 as elevated home prices and mortgage rates offset renewed hopes for a better regulatory business climate in 2025.
Market movers
Shares in pharmaceutical and biotech giant Pfizer were on the rise on Tuesday after the New York-based outfit delivered guidance for 2025 that met analysts’ forecasts. The company pointed to annual revenues of $61bn to $64bn for next year, in line with guidance for 2024, despite an expected $1bn negative hit from changes to the US government’s drug price controls. Current FactSet consensus is for a figure close to $63.2bn.
Chip stocks were out of favour, with Nvidia extending its recent losses after dropping into correction territory the day before. The stock, which declined 1.2%, has now fallen in eight of the past nine sessions, losing a total of 10% of its value.
Sector peer Broadcom was pulling back 4% after having surged 38% over the previous two days on the back of better-than-expected quarterly results.
Health insurer Humana slumped 10% after Donald Trump suggesting cutting out the “middle man” in the health insurance sector. Unitedhealth also fell, with the company still reeling from the fallout of the killing of Brian Thompson, the head of its insurance unit, two weeks ago.
Wednesday newspaper round-up: Amazon, Lloyds Banking, Heathrow
Amazon is to settle a group claim from delivery drivers that it deprived them of thousands of pounds, the Guardian has learned, ending a suit that lawyers had said could cost the company £140m. Drivers who deliver for the internet marketplace through its “delivery service partners” (DSPs) are classed as self-employed, meaning they are not entitled to benefits such as holiday pay and the minimum wage, while they also do not have an employment contract. – Guardian
A Lloyds Banking Group advert has been banned for making false environmental claims, making it the second major lender to break the UK advertising watchdog’s rules against greenwashing. The ruling by the Advertising Standards Authority (ASA) follows an investigation into a billboard poster and three paid-for posts on the networking website LinkedIn, all of which hailed the lender’s climate credentials. – Guardian
Honda and Nissan are plotting a historic merger as they struggle to survive the seismic worldwide shift to electric cars. The two Japanese carmakers are in early discussions about a possible combination, according to Japanese paper Nikkei. The deal, which may involve cost-cutting, will raise concerns on the impact of British jobs. Nissan employs 7,000 workers in the UK. – Telegraph
Heathrow has unveiled plans to spend more than £2.3bn upgrading the airport, days after Saudi Arabia finalised its investment in the transport hub. The funds will pay for improvements including new baggage systems, runway resurfacing work and the completion of the rollout of higher-specification security scanners. – Telegraph
UK exporters suffered a £27 billion drop in goods sales to the European Union after Brexit, with smaller firms bearing the brunt of new trade barriers. Research from the Centre for Economic Performance, a think tank based at the London School of Economics, said Brexit led to a 6.4 per cent drop in the UK’s global exports and a 3.1 per cent decline in imports into the UK from the rest of the world. “The decline in exports was concentrated among smaller firms, but insignificant for the largest firms,” the report said. – The Times
