London close: FTSE finishes higher as investors look to Fed minutes
London’s top-flight index finished in the green on Wednesday, amid growing tensions between the US and China, as investors digested an unexpected jump in UK inflation and awaited the US Fed minutes later in the global day.
The FTSE 100 ended the session up 0.58% at 6,111.98, while the FTSE 250 was down 0.22% at 17,583.39.
Sterling was weaker against its major trading pairs, last falling 0.57% against the dollar to $1.3163, and losing 0.14% on the euro to €1.1081.
CMC Markets analyst David Madden said that in the last 24 hours, there was increased optimism over whether US lawmakers would reach an agreement on a fresh coronavirus stimulus package.
“Nancy Pelosi, from the Democrats, suggested her side might row back on some of their previous demands in an effort to try and reach a compromise with the Republicans,” he said.
“Dealers are looking ahead to the release of the minutes from the latest Fed meeting.
“The update is likely to provide more details as to why the Fed is keen to do what it takes to assist the economy.”
Madden added that it was worth noting that since the last Fed meeting, the US unemployment rate had fallen to 10.2%.
Sino-US trade relations were also in focus, after US President Donald Trump told reporters on Tuesday that he had cancelled talks between the two.
"I don’t want to talk to them now," Trump told reporters in Yuma, Arizona.
"If you know what they’ve done to this country and the world, I don’t want to talk to China just yet. So yes, I cancelled the talks."
Spreadex analyst Connor Campbell said that was "another inflammatory comment” from Trump, stoking the flames of conflict given it was only days after the most recent Huawei restrictions announcement.
On home shores, figures from the Office for National Statistics showed consumer price inflation increased to 1% in July from 0.6% in June, versus expectations for it to remain unchanged.
That marked the highest level since March.
Meanwhile, core inflation - which strips out volatile energy, food, alcohol and tobacco prices - rose to 1.8% in July from 1.4% in June.
Economists had expected the rate to dip to 1.3%.
“Inflation has risen, in part, due to the largest monthly pump price increase in nearly a decade, as international oil prices rose from their lows earlier this year,” said ONS deputy national statistician for Economic Statistics, Jonathan Athow.
“The largest upward movement came from clothing where prices fell on the month but by less than a year ago, partly due to different sales patterns throughout the year so far.
“In addition, prices for private dental treatment, physiotherapy and haircuts have increased with the need for PPE contributing to costs for these businesses.”
Athow said the office’s new experimental numbers, taking into account changing spending patterns throughout the pandemic, showed prices rising just slightly higher than its headline inflation figures.
“Today’s rise in UK inflation does highlight a pickup in demand despite pandemic ill-effects that had dragged on prices worldwide,” said analysts at IG.
“While a significant degree of the headline inflation figure could be explained away by the rebound in energy prices, the fact that core inflation is now back at a lofty 1.8% does highlight some optimism for the UK economic picture.”
In equity markets, British Airways and Iberia parent IAG was 7.6% higher following two days of losses, with traders pointing to an upbeat note from Redburn.
Morrisons was ahead 1.17% as it emerged that the supermarket’s customers could now do their entire grocery shop on Amazon.
Capita surged 10.06% a day after suffering heavy losses on the back of its first-half results, amid speculation there has been some interest in the outsourcer’s education software solutions business.
Primark owner Associated British Foods was boosted 1.88% by an upgrade to ‘outperform’ from ‘sector perform’ at RBC Capital Markets, which said ABF has been left behind in the recent sector rally even though the prospects for its two main businesses are improving.
On the downside, South America-focused miner Hochschild was in the red by 8.27% after it reported a sharp fall in interim profits as operations were shuttered during the coronavirus lockdown.
Market Movers
FTSE 100 (UKX) 6,111.98 0.58%
FTSE 250 (MCX) 17,583.39 -0.22%
techMARK (TASX) 3,830.01 -0.11%
FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 201.00p 7.60%
Smith (DS) (SMDS) 284.30p 2.93%
Rolls-Royce Holdings (RR.) 262.30p 2.86%
NATWEST GROUP PLC ORD 100P (NWG) 115.15p 2.77%
Glencore (GLEN) 176.12p 2.38%
ITV (ITV) 61.80p 2.28%
Melrose Industries (MRO) 104.40p 2.20%
Johnson Matthey (JMAT) 2,392.00p 2.05%
London Stock Exchange Group (LSE) 8,836.00p 1.96%
Barclays (BARC) 110.20p 1.92%
FTSE 100 - Fallers
Persimmon (PSN) 2,752.00p -2.48%
Compass Group (CPG) 1,149.50p -2.42%
Barratt Developments (BDEV) 522.60p -2.21%
Avast (AVST) 536.50p -1.92%
Fresnillo (FRES) 1,252.50p -1.46%
Aveva Group (AVV) 4,290.00p -1.27%
Land Securities Group (LAND) 548.00p -1.26%
Evraz (EVR) 345.80p -1.20%
Berkeley Group Holdings (The) (BKG) 4,649.00p -1.19%
Polymetal International (POLY) 1,989.00p -1.09%
FTSE 250 - Risers
Capita (CPI) 33.03p 15.09%
Frasers Group (FRAS) 305.80p 8.13%
Avon Rubber (AVON) 3,705.00p 7.14%
Hammerson (HMSO) 52.00p 6.08%
William Hill (WMH) 156.30p 5.97%
Provident Financial (PFG) 180.00p 4.65%
easyJet (EZJ) 575.00p 3.31%
Wizz Air Holdings (WIZZ) 3,594.00p 3.16%
Carnival (CCL) 941.40p 3.16%
Ascential (ASCL) 298.40p 2.90%
FTSE 250 - Fallers
Hochschild Mining (HOC) 255.00p -8.27%
Morgan Advanced Materials (MGAM) 233.50p -5.26%
GCP Student Living (DIGS) 129.20p -5.11%
Equiniti Group (EQN) 115.00p -5.05%
Aston Martin Lagonda Global Holdings (AML) 63.55p -4.44%
National Express Group (NEX) 135.50p -4.31%
Chemring Group (CHG) 234.50p -4.08%
PayPoint (PAY) 625.00p -3.85%
Go-Ahead Group (GOG) 628.50p -3.62%
Calisen (CLSN) 165.05p -3.54%