London close: Stocks fall as US inflation tops forecasts

London’s equity markets finished in negative territory on Thursday, driven by a flurry of stocks going ex-dividend and investor reactions to the latest US producer inflation and jobless data.

The FTSE 100 closed down 0.37% at 7,743.15 points, while the FTSE 250 declined 0.4%, settling at 19,486.01 points.

In currency markets, sterling was last down 0.34% on the dollar to trade at $1.2754, while it increased 0.19% against the euro to change hands at €1.1712.

“The steady rise in the Volatility Index does have some investors worried,” said IG chief market analyst Chris Beauchamp.

“Although still subdued compared to 2022, the Vix’s rise since January comes even as stocks hit record highs, but is a sign that trouble might be brewing beneath the surface.

“Today’s stronger PPI readings in the US couple with the CPI figures earlier in the week to suggest the Fed’s tone next week might not be quite what investors were hoping for.”

Beauchamp added that oil prices had been choppy lately, but said the overall move higher was intact.

“Ukraine appears to be planning on widening its campaign against Russian oil refineries, which poses supply risks for large parts of the world economy that still take Russian oil.

“While the price is still far below its 2022 highs, the position of central banks on rate cuts is now finely-balanced, and higher oil prices could easily tip policymakers back towards caution.”

Wholesale inflation picks back up in the US

In economic news, wholesale inflation in the United States was above expectations in February, largely fueled by higher energy prices, according to fresh data from the Department of Labor.

Producer prices rose 0.6% month-on-month and by 1.6% year-on-year in seasonally adjusted terms, outpacing economists' forecasts of 0.3% and 1.1% respectively.

Food prices rose by 1.0% on the month, while energy goods saw a notable uptick of 4.4% following four consecutive monthly declines.

Excluding food and energy, producer prices rose by 0.3% over the month, slightly above the consensus of 0.2%.

“On balance, the CPI and PPI reports this week reduce our subjective odds that the Fed will begin its easing cycle at the May Federal Open Market Committee meeting, as is the case in our baseline,” said Matthew Martin at Oxford Economics.

“Still, with broader evidence of decelerating wage growth and further disinflation in the pipeline from market rents, we still believe the Fed will begin cutting rates around mid-year.”

Meanwhile, in a surprise downturn, initial unemployment claims in the US decreased 1,000 last week, according to the Labor Department.

Seasonally adjusted figures showed a dip to 209,000, contrary to economists' expectations of a rise to 218,000.

The four-week moving average, aimed at smoothing out weekly fluctuations, declined by 500 to 208,000.

Secondary claims in the week ended 2 March increased 17,000 to 1.811 million.

Notably, there was a significant downward revision of 112,000 in the estimate of secondary claims for the week ended 24 February.

“The revised data for continued claims are consistent with a job market that is showing some signs of loosening but is still relatively strong,” said Nancy Vanden Houten, lead US economist at Oxford Economics, in a research note sent to clients.

“Our current forecast is for the Fed to begin lowering rates at its May meeting, but a healthy labour market and sticky inflation data have increased the risk the first cut comes later.

“A delay in cutting rates by a meeting or two, would not have a significant impact on our economic forecast.”

On home shores, despite ongoing pressure on prices, the housing market showed signs of stabilisation in February, according to the Royal Institution of Chartered Surveyors (RICS) residential market survey.

The net balance for house prices stood at -10 last month, marking the least negative reading since October 2022 and a significant improvement from last year's low of -6.

Looking ahead, respondents expressed optimism, with a net balance of 36 anticipating house price growth over the next year.

New buyer enquiries remained positive for the second consecutive month, holding steady at 6, while new instructions rose to 21, the highest since October 2020.

Although agreed sales eased slightly to -3 from 4 the previous month, RICS noted a stronger trend in sales volumes compared to much of the past year.

Expectations for sales activity over the coming year remained optimistic, with a balance of 42 anticipated to gain further momentum.

“The February survey provides some grounds for encouragement around the sales market, with not just buyer interest staying positive but also the uplift in new instructions to agents,” said Simon Rubinsohn, chief economist at RICS.

“Whether the increase in stock coming back to the market will be sustained is likely to be a critical factor in explaining how things play out over the balance of the year, especially with new build likely to remain constrained.”

Trainline jumps on sales rise, ex-divs prove a drag

On London’s equity markets, online ticketing platform Trainline surged 13.02% following a robust increase in sales.

The company reported a 22% rise in total group sales for the year to 29 February, driven by strong performances in both international ticketing and the UK market.

Housebuilder Vistry Group rose 8.15% after reporting a jump in annual profits and announcing a new share buyback programme.

Other housebuilders such as Barratt Developments, Taylor Wimpey, and Crest Nicholson Holdings also experienced gains.

Helios Towers finished ahead 7.3% as its full-year results met expectations, coupled with a positive outlook.

Informa, buoyed by an upgraded price target from UBS, saw its shares increase by 0.42%, with analysts citing potential for outperformance and valuation growth.

On the downside, NatWest Group, Anglo American, Segro, Haleon, Lancashire Holdings, Entain, Dunelm Group, and Abrdn all experienced downturns as they traded without entitlement to dividends.

OSB Group saw a significant tumble of 16.01% despite beating profit expectations, due to disappointing guidance on net interest margin.

Moonpig Group declined 3.29%, although it maintained that trading remained in line with expectations for the current financial year.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,743.15 -0.37%
FTSE 250 (MCX) 19,486.01 -0.40%
techMARK (TASX) 4,504.42 -0.32%

FTSE 100 - Risers

Informa (INF) 825.40p 2.46%
Smurfit Kappa Group (CDI) (SKG) 3,492.00p 1.69%
Weir Group (WEIR) 1,986.00p 1.66%
Convatec Group (CTEC) 287.60p 1.63%
Berkeley Group Holdings (The) (BKG) 4,678.00p 1.56%
Ashtead Group (AHT) 5,158.00p 1.50%
Centrica (CNA) 129.75p 1.29%
Admiral Group (ADM) 2,683.00p 1.25%
Pershing Square Holdings Ltd NPV (PSH) 3,964.00p 1.12%
BP (BP.) 490.00p 1.03%

FTSE 100 - Fallers

Anglo American (AAL) 1,840.00p -5.34%
NATWEST GROUP (NWG) 240.00p -5.06%
SEGRO (SGRO) 850.80p -3.69%
International Consolidated Airlines Group SA (CDI) (IAG) 148.95p -3.25%
Whitbread (WTB) 3,216.00p -2.43%
Ocado Group (OCDO) 462.20p -2.01%
Endeavour Mining (EDV) 1,445.00p -1.90%
Haleon (HLN) 324.90p -1.83%
St James's Place (STJ) 428.40p -1.81%
Persimmon (PSN) 1,286.00p -1.57%

FTSE 250 - Risers

Trainline (TRN) 369.80p 13.02%
Vistry Group (VTY) 1,207.00p 8.15%
Helios Towers (HTWS) 85.25p 7.30%
Darktrace (DARK) 490.40p 7.00%
Savills (SVS) 979.50p 4.20%
FirstGroup (FGP) 167.70p 3.24%
IG Group Holdings (IGG) 727.00p 3.05%
Domino's Pizza Group (DOM) 373.40p 2.92%
Wood Group (John) (WG.) 145.80p 2.39%
Barr (A.G.) (BAG) 537.00p 2.28%

FTSE 250 - Fallers

OSB Group (OSB) 387.20p -16.01%
Lancashire Holdings Limited (LRE) 606.00p -6.48%
Pets at Home Group (PETS) 257.20p -5.65%
Abrdn (ABDN) 140.60p -5.51%
Dunelm Group (DNLM) 1,085.00p -4.99%
Apax Global Alpha Limited (APAX) 146.40p -4.44%
Derwent London (DLN) 2,060.00p -4.28%
FDM Group (Holdings) (FDM) 388.50p -4.19%
Watches of Switzerland Group (WOSG) 373.60p -4.01%
Wizz Air Holdings (WIZZ) 2,150.00p -3.54%