London close: Commodities help keep FTSE in positive territory

London stocks closed above the waterline on Wednesday, as investors welcomed less hawkish comments from US Federal Reserve chair Jerome Powell.

The FTSE 100 ended the session up 0.81% at 7,551.72, and the FTSE 250 was ahead 0.08% at 23,047.16.

Sterling was trading in a mixed state, last gaining 0.46% on the dollar at $1.3698, while it weakened 0.08% against the euro to change hands at €1.1986.

“It is good to be a bit of a commodity index sometimes,” quipped IG chief market analyst Chris Beauchamp, referring to London’s top-flight board.

“The FTSE 100’s big-name mining and oil contingent have been bolstered by the weaker dollar and the accompanying rise in commodity prices.

“Plus, if inflation’s rise does moderate a bit then central banks generally might be less keen to put the brakes on, helping to maintain the rebound in global GDP.”

In economic news from across the pond, the cost of living in the US increased more quickly than expected last month.

According to the US Department of Labor, the headline US consumer price index rose at a month-on-month pace of 0.5% in December.

That pushed the year-on-year rate of CPI inflation from 6.8% in November to 7.0% for December.

At the core level, which excludes the effects of food and energy prices, CPI was 5.5% higher on the year.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, attributed the rise in core CPI to a 0.4% month-on-month rise in rents and a 3.5% jump in the prices of used cars and trucks.

Rents and used car and truck prices accounted for 39% and 10% of the core index, respectively.

Shepherdson said he expected to see "rapid" monthly gains in rents until mid-2022, albeit alongside outright falls in used car and truck prices as microchip supplies and inventories of new and used cars grow.

"Headline CPI inflation matters more to the media and to politicians than the core, at least in the short-term, so December’s increase to 7.0% - the highest since June 1982 - will attract a great deal of attention,” he said.

Sentiment was boosted earlier in the session by a testimony before Congress overnight, where Fed chair Powell offered reassurances that the central bank could trigger rate hikes to rein in inflation without harming economic recovery.

On home shores, the financial wellbeing of UK households fell sharply at the end of 2021 according to a survey released earlier, as savings came under pressure and the cost of living rose.

The Scottish Widows Household Finance Index, which measures households’ overall perceptions of financial wellbeing, fell to 40.1 in the fourth quarter from 44.0 in the third.

It was the fastest fall since the second quarter of 2020, when the UK was in the first national lockdown.

The survey also showed that savings had been squeezed to the greatest extent since the end of 2013, with one in five respondents reporting they were not saving any money at all.

Expectations for future financial wellbeing also fell, from 49.2 three months previously to 43.8, the lowest since the third quarter of 2020.

In equity markets, miners remained buoyant on the back of higher metal prices, with BHP up 4.27%, Antofagasta rising 7.3%, Rio Tinto ahead 2.43%, Glencore 3.09% firmer, and Anglo American 3.87% higher.

Supermarket giant J Sainsbury was up 3.11% after it raised its full-year profit forecasts, despite a fall in underlying sales over Christmas.

Dunelm advanced 5.15% after the homewares retailer upped annual profit guidance after a record performance in the 13 weeks to Christmas, driven by online sales and higher margins.

Savills pushed 7.95% higher after saying its full-year performance was "very significantly" ahead of expectations following an "extraordinarily strong" final trading period since its last update in November.

Grafton Group gained 2.45% as the building materials distributor and DIY retailer upgraded its full-year operating profit expectations after a positive end to the year.

On the downside, housebuilders Barratt Developments and Taylor Wimpey lost 3.39% and 4.8%, respectively, after share placings.

Sector peer Vistry lost 4.04% despite saying it expected full-year adjusted pre-tax profit to rise in line with guidance, after a strong increase in completed sales.

Johnson Matthey was 3.8% weaker after it announced the proposed closure of its battery materials business and the sale of its individual assets after talks over the sale of the entire division failed to result in an agreement.

Premier Inn owner Whitbread reversed earlier gains to close down 1.78%, after it said trading in pubs and restaurants remained challenging despite a resilient third-quarter performance amid the emergence of the Omicron variant of Covid-19.

JD Sports Fashion ticked 3.34% lower even after it lifted annual profits guidance as revenues rose 10% in the 22 weeks to 1 January, and US fiscal stimulus boosted trading.

Jupiter Fund Management was 4.39% weaker after a downgrade to ‘neutral’ from ‘overweight’ at JPMorgan.

Market Movers

FTSE 100 (UKX) 7,551.72 0.81%
FTSE 250 (MCX) 23,047.16 0.08%
techMARK (TASX) 4,491.41 -0.22%

FTSE 100 - Risers

Antofagasta (ANTO) 1,442.50p 7.49%
BHP Group (BHP) 2,370.50p 4.46%
Anglo American (AAL) 3,364.50p 3.87%
Glencore (GLEN) 399.80p 3.47%
BP (BP.) 381.45p 3.21%
Sainsbury (J) (SBRY) 288.00p 3.11%
Rio Tinto (RIO) 5,452.00p 2.85%
Royal Dutch Shell 'A' (RDSA) 1,806.40p 2.73%
Royal Dutch Shell 'B' (RDSB) 1,807.20p 2.71%
Evraz (EVR) 614.80p 2.68%

FTSE 100 - Fallers

Taylor Wimpey (TW.) 161.80p -4.80%
Smith & Nephew (SN.) 1,276.50p -4.56%
Barratt Developments (BDEV) 684.20p -3.39%
JD Sports Fashion (JD.) 211.50p -3.34%
Ocado Group (OCDO) 1,527.00p -2.86%
Melrose Industries (MRO) 169.00p -2.59%
Legal & General Group (LGEN) 299.80p -2.54%
Persimmon (PSN) 2,610.00p -2.20%
Electrocomponents (ECM) 1,167.00p -1.93%
Berkeley Group Holdings (The) (BKG) 4,534.00p -1.85%

FTSE 250 - Risers

Savills (SVS) 1,425.00p 7.95%
Games Workshop Group (GAW) 9,285.00p 6.79%
Dunelm Group (DNLM) 1,409.00p 5.15%
Darktrace (DARK) 443.40p 5.07%
Ferrexpo (FXPO) 316.60p 4.76%
Ibstock (IBST) 206.00p 4.04%
Volution Group (FAN) 514.00p 3.84%
Reach (RCH) 278.50p 3.36%
BlackRock World Mining Trust (BRWM) 621.00p 3.33%
Chrysalis Investments Limited NPV (CHRY) 225.00p 3.21%

FTSE 250 - Fallers

TP Icap Group (TCAP) 151.10p -8.17%
Hill & Smith Holdings (HILS) 1,622.00p -7.00%
Jupiter Fund Management (JUP) 248.40p -4.39%
Wetherspoon (J.D.) (JDW) 917.50p -4.28%
Vistry Group (VTY) 1,116.00p -4.04%
Johnson Matthey (JMAT) 1,963.50p -3.80%
Babcock International Group (BAB) 331.70p -3.69%
Convatec Group (CTEC) 181.30p -3.49%
Dr. Martens (DOCS) 345.80p -3.41%
Crest Nicholson Holdings (CRST) 339.20p -3.36%