- FTSE 100 adds 47 points
- US CPI set to hit 30 year high
- ITV jumps after update
1.22pm: FTSE 100 hits peak for the day so far
Utilities are in demand, giving further support to the leading index as it hits a high for the day.
With the rise in these defensive stocks, the FTSE 100 is up 47.55 points or 0.65% at 7321.53, a peak for the day so far.
12.08pm: US markets cautious ahead of inflation news
US stocks are expected to open lower as investors await the latest inflation data and stocks take a breather from their recent strong run.
Futures for the Dow Jones Industrial Average declined 0.24% in Wednesday pre-market trading, while the broader S&P 500 index shed 0.34% and those for the tech-heavy Nasdaq Composite fell 0.57%.
US stocks closed lower on Tuesday, ending an eight-day winning streak, with a 12% slide in Tesla’s share price weighing on the Nasdaq after company founder Elon Musk discussed in a Twitter post the possible sale of 10% of his shares in the electric vehicle maker.
At the close, the Dow was 0.31% lower at 36,320, while the S&P 500 shed 0.35% to 4,685 and the Nasdaq sank 0.6% to 15,887.
October’s US consumer price index data is expected to show a 0.6% jump from the previous month and a year-on-year acceleration to 5.9%. The producer price index for the same month, released on Tuesday, also increased 0.6% month over month, in line with the consensus estimate but was still up 8.6% from October 2020.
Neil Wilson, chief market analyst at markets.com, said: “Wall Street closed lower, ending one of its best win streaks in years.
“The decline in Tesla was a factor, but ultimately such a straight charge up will just run out of gas sooner or later.”
Back in the UK, the FTSE 100 is off its best levels but remains in positive territory.
The leading index is up 25.72 points or 0.36% at 7299.33, having earlier reached 7315.
11.21am: Markets higher ahead of US inflation figures
The positive mood remains in place, with the FTSE 100 up 39.5 points or 0.54% at 7312.66 despite worries about China’s inflationary pressures being exported to the rest of the world.
AJ Bell investment director Russ Mould said: “Some strong corporate updates helped outweigh continued concerns about inflation as the FTSE 100 made a positive start on Wednesday.
“China continued to offer evidence of mounting inflationary pressures as factory gate prices saw their biggest increase since 1995.
“Given Chinese goods are widely exported around the globe, there is a risk that inflation gets exported too. There will be significant focus on US inflation figures when they are released later today.
“Both the Bank of England and the US Federal Reserve surprised the markets by adopting a softer stance on tightening monetary policy but if prices continue to rise then the pressure to act more quickly on scaling back financial stimulus and raising rates will build too.”
ITV PLC (LSE:ITV) continues to lead the FTSE 100 risers, and is now up 12.08%.
10.18am: Burberry out of style
Worries about the Chinese economy after its inflation rate hit a 26 year high have sent shares in Burberry Group PLC (LSE:BRBY) lower.
The luxury goods retailer, which counts China as one of its main markets, is down 1.54% at 1956.5p, making it the biggest faller in the leading index.
Overall though investors appear to be ignoring rising pricing pressures around the globe despite the Chinese increase and the prospect of a high figure when the US reports later.
The FTSE 100 is currently up 39.51 points or 0.54% at 7313.14, close to the day’s high.
The FTSE 250 is 0.43% better, helped by a near 15% surge in Marks and Spencer Group PLC (LSE:MKS) after it raised its profit forecast.
9.34am: Halfords takes the brakes off
Halfords Group PLC (LSE:HFD) joins the list of companies getting a positive response to their updates.
Its shares have accelerated 10.91% after first half revenues rose to GBP694.8m, 19.2% ahead of the pre-pandemic figure.
Underlying profits before tax nearly doubled to GBP57.9m, and it has raised its full year profit guidance from GBP75mln to GBP80mln-GBP90mln.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “A very strong set of results in Halford’s retail business has seen full year profit guidance upgraded – no mean feat given the disruption the group has faced. Retail sales have climbed despite the closure of some 40 stores over the last two years, reflecting significant overtrading by remaining stores and resulting in substantially lower costs. The shift of gears to online has paid off here and as a result retail profits have more than doubled.
“Autocentres are less promising. Despite recent acquisitions boosting revenues substantially, profits have gone nowhere. The group expects an increase in lucrative MOTs in the second half to improve profitability, but 2.4% operating margins in a business where revenues can be volatile is as much of a risk as an asset.
“Overall though these are good numbers, and support our long term belief that Halfords’ mixed online and bricks & mortar offer makes sense in an increasingly digital world. With management increasing focussed on upskilling its workforce to deliver great service as well as good products that fundamental strength should grow. Together with diminished supply chain disruption that bodes well for the second half of the year.”
Meanwhile markets overall remain positive.
The FTSE 100 is 23.19 points or 0.33% better at 7296.54, while the FTSE 250 is up 0.34% at 23,447.98.
8.37am: Market holds on to early gains
ITV PLC (LSE:ITV) is leading the way in the FTSE 100.
Its shares have jumped 6.22% to 116p after a positive nine month update, which saw revenues rise 28% to GBP2.38bn. It said advertising revenues were set to hit a record high.
Keith Bowman, investment analyst at interactive investor said: “ITV continues to deliver a strong recovery from the depths of the pandemic…
“Its shares remain at a big discount to the big streamers like Netflix, and the dividend payment restarts soon. While ITV is a small player compared to the global giants, its strengths and pedigree are unlikely to be completely overlooked. As such and with analysts’ currently estimating a fair value price per share of around 139p, consensus opinion currently points towards a buy.”
Primark owner Associated British Foods PLC (LSE:ABF) continues to gain ground, adding another 1.35% in the wake of Tuesday’s trading statement.
And with the oil price remaining firm, BP PLC (LSE:BP.) is 1.9% better.
But Aveva Group (LSE:AVV), after an early jump, is now down 0.46%.
In contrast, the FTSE 100 is holding on to its gains, up 23.04 points or 0.33% at 7298.03.
8.23am: Leading shares defy expectations
Investors appear to have shrugged off renewed fears about inflation, with UK markets defying expectations and opening in positive territory.
The FTSE 100 is up 22.16 points or 0.29% at 7295 while the FTSE 250 has added 0.35% or 79.54 points to 23,449.36.
Marks and Spencer Group PLC (LSE:MKS) – now a mid-cap company of course – is certainly helping things along with a 15.76% surge in its share price to 225.48p.
The retailer said full year profits would be ahead of expectations and in the region of GBP500mln, up from a previous forecast of GBP300mln to GBP350mln.
The upgrade follows a strong first half performance from its food business and signs of revival in its struggling clothes business, which pushed it back into a profit of GBP187.3mln compared to a GBP87.6mln loss.
In the leading index, software group Aveva Group (LSE:AVV) has added 1.99% after a 33.9% rise in half-year adjusted profits.
But with Chinese and German inflation rising – the latter up from 4.1% in September to 4.5% in October – and a strong US figure expected later, the focus is set to remain on pricing pressures.
And when central bank’s will decide to hike interest rates to deal with the situation.
Jim Reid at Deutsche Bank said: “A lot is resting on this inflation being transitory. This will be the multi-trillion dollar question for 2022, that’s for sure…
“One factor that may help on the inflation front over the coming months was a major decline in natural gas prices yesterday, with both European (-8.16%) and US (-8.26%) futures witnessing substantial declines. This wasn’t reflected elsewhere in the energy complex though, with WTI (+2.71%) and Brent crude (+1.62%) oil prices seeing a further rise following reports that the US would not need to release strategic reserves due to the demand outlook.”
6.50am: UK market set for downbeat start
Borrowing from Sesame Street, today’s early market report is brought to you by the letter ‘I’.
Any need to spell it out? Inflation is on the agenda (again) with China’s producer price index advancing by at a faster-than-expected (and eye-watering) rate of 13.5%, which represented a 26-year high.
Predictably, this sent Asia’s main markets into a bit of a flap.
In the US, the consumer price index is set to hit a 30-year zenith, according to analysts paid to track and record these things. The last big high-water mark was 2008 when inflation hit 5.6%. You have to go back to 1990 to find a reading similar to the 5.9% expected later.
“With a number of Fed policymakers making louder noises about the need for rate hikes next year, a strong number here could well prompt a rebound in US yields which have declined quite sharply in the last week or so, with the 10-year down over 15 basis points from last week’s highs,” said Michael Hewson of CMC Markets.
“On a more positive note, we also have the latest weekly jobless claims numbers due to Veteran’s Day on Thursday, and which are expected to fall to 260,000, from 269,000, while continuing claims are expected to fall further from 2.1mln to just over 2mln, and closer to the pre-pandemic levels of 1.7mln, which was the average in the first three months of 2020.”
Around the markets
- Pound US$1.3554 (-0.02%)
- Bitcoin US$66,444.25 (-2.64%)
- Gold US$1,827.20 (-0.20%)
- Brent crude US$85.29 (+0.53%)
6.50am: Early Markets – Asia / Australia
Asia-Pacific stocks declined on Wednesday with shares of Chinese real estate developer Fantasia Holdings crashing 37.5% after returning to trade.
The Hong Kong-listed stock was suspended for more than a month after Fantasia failed to repay a $206 million bond that matured in early October.
China’s Shanghai Composite slipped 0.66% while Hong Kong’s Hang Seng index declined 0.73%
In Japan, the Nikkei 225 fell 0.61% and South Korea’s Kospi plunged 1.04%.
Australia’s S&P/ASX200 declined for the third consecutive day, finishing 0.14% lower at 7,423.90 points, with some major miners closing at 18-month lows.