London close: Stocks finish positive as US inflation moderates

London's stock markets finished with moderate gains on Thursday, buoyed by a combination of factors including a slowdown in US inflation, robust UK earnings reports, and encouraging mortgage approvals figures.

The FTSE 100 index edged up by 0.07% to reach 7,630.02 points, while the FTSE 250 performed slightly better, gaining 0.22% to close at 19,054.87 points.

In currency markets, sterling was last down 0.26% on the dollar to trade at $1.2629, while it recorded a slight uptick of 0.05% against the euro, changing hands at €1.1688.

“The morning session saw the FTSE 100 surge from a two-week low, but signs of weakness are returning in the afternoon session,” said IG chief market analyst Chris Beauchamp.

“The contrast with the DAX could not be more stark - UK data hasn’t been great, but German data has been dire, and yet the latter index has touched a new record high.

“Flows, it seems, trump valuation, leaving the FTSE 100 left out once more.”

Beauchamp added that in recent memory, markets would have sold off heavily on news that US inflation was in line with forecasts.

“But for the moment any sign that inflation is holding steady is a welcome one.

“While jobless claimants rose last week on both an initial and continuing basis, this has failed to put much of a dent in sentiment, especially with hopes of a Fed May rate cut rising again.”

Fed’s favoured inflation indicator moderates at start of 2024

In economic news, personal incomes surged at the beginning of 2024, outpacing expectations, while spending growth remained subdued according to fresh data.

According to the Department of Commerce, personal incomes saw a robust increase of 1.0% month-on-month, while spending edged up by a modest 0.2%, falling short of economists' forecasts.

Disposable personal incomes grew by a more restrained 0.3% compared to December.

On the price front, the price deflator for personal consumption expenditures rose by 0.3%, with core PCE prices increasing by 0.4%.

However, annual gains in headline and core PCE prices moderated slightly from previous levels.

The personal savings rate inched higher by one-tenth of a percentage point to 3.8%.

In the US labour market, unemployment claims saw a rise, particularly among those not filing for the first time.

According to the Department of Labor, initial unemployment claims increased by 13,000 to 215,000 for the week ended 24 February, slightly surpassing economists' expectations.

However, the four-week moving average declined by 3,000 to 212,500, indicating some stabilisation in the labour market.

Secondary claims, referencing the week ending on 17 February, also rose by 45,000 to 1.905 million.

“More generally, both initial and continuing claims are still very low by historical standards,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

“We expect that to change soon - the WARN numbers, capturing advance notice of plant closures and mass layoffs, have jumped recently and point to initial claims rising significantly over the next few months.

“But we suspect the labour market will start to look significantly weaker by around the middle of the spring.”

On home shores, mortgage approvals in the UK surged in January, reaching the highest level since the government's challenging mini-budget in 2022.

According to the Bank of England's Money and Credit report, net mortgage approvals rose to 55,200 last month, exceeding consensus expectations and signalling a rebound in demand.

Additionally, the effective interest rate on newly-drawn mortgages decreased to 5.19%, contributing to the recovery in the housing market.

The report also highlighted an increase in net borrowing of consumer credit by individuals and a rise in households' total liquid assets.

CRH and Drax in the green, ex-divs prove a drag

On London’s equity markets, building materials group CRH jumped 6.03% after reporting a significant increase in full-year earnings and revenue, buoyed by strong demand across its end-use markets.

Consumer health firm Haleon increased 5.56% after announcing flat annual earnings but projecting revenue growth for the current year.

Ocado Group climbed 4.22% following news of returning to an underlying profit in 2023, driven by its successful joint venture with Marks & Spencer.

Another notable riser was Howden Joinery Group, which rose by 7.04% despite reporting lower-than-expected profits for the year due to challenges in the DIY and housing market.

Drax Group rocketed 11.17% after it announced a surge in full-year profits and raised its dividend amid ongoing energy cost concerns in the UK, while Serco Group gained 4.52% after it forecast slightly lower revenues for the year but anticipated a 5% rise in profits, building on its strong performance in 2023.

Vodafone Group climbed by 3.64%, fueled by takeover speculation, while Man Group edged up by 0.95%, reporting record assets under management despite a decline in annual profits.

On the downside, Barclays was down 3.23%, Diageo lost 1.4%, Hargreaves Lansdown was off 2.94%, Hays slipped 0.42%, Diversified Energy Company was 4.93% lower, and Plus500 weakened 5.97% as they all traded without entitlement to dividends.

Precision instrumentation and controls company Spectris declined 2.85% despite reporting record adjusted profits for 2023.

While sales growth and improving margins were noted positives, sales slightly missed forecasts, impacting investor sentiment.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,630.02 0.07%
FTSE 250 (MCX) 19,054.87 0.22%
techMARK (TASX) 4,369.15 0.37%

FTSE 100 - Risers

CRH (CDI) (CRH) 6,574.00p 6.03%
Haleon (HLN) 331.45p 5.57%
Ocado Group (OCDO) 511.40p 4.22%
Croda International (CRDA) 4,757.00p 3.61%
Taylor Wimpey (TW.) 137.85p 2.99%
Rentokil Initial (RTO) 438.30p 2.96%
Ashtead Group (AHT) 5,680.00p 2.86%
Standard Chartered (STAN) 667.60p 2.83%
Admiral Group (ADM) 2,666.00p 2.58%
Antofagasta (ANTO) 1,817.50p 2.48%

FTSE 100 - Fallers

Whitbread (WTB) 3,303.00p -4.57%
International Consolidated Airlines Group SA (CDI) (IAG) 147.25p -3.63%
Barclays (BARC) 164.46p -2.63%
Weir Group (WEIR) 1,839.50p -2.32%
InterContinental Hotels Group (IHG) 8,380.00p -2.03%
AstraZeneca (AZN) 9,983.00p -1.94%
Prudential (PRU) 777.60p -1.67%
Marks & Spencer Group (MKS) 236.80p -1.62%
Sainsbury (J) (SBRY) 250.60p -1.58%
Diageo (DGE) 2,962.00p -1.40%

FTSE 250 - Risers

Drax Group (DRX) 465.70p 11.17%
Howden Joinery Group (HWDN) 831.00p 7.04%
Vistry Group (VTY) 1,050.00p 5.21%
Serco Group (SRP) 187.30p 4.52%
Energean (ENOG) 1,020.00p 4.13%
Elementis (ELM) 141.40p 3.36%
Hammerson (HMSO) 25.40p 2.50%
Bank of Georgia Group (BGEO) 4,710.00p 2.39%
W.A.G Payment Solutions (WPS) 72.60p 2.25%
Just Group (JUST) 83.90p 2.19%

FTSE 250 - Fallers

Plus500 Ltd (DI) (PLUS) 1,700.00p -5.97%
Aston Martin Lagonda Global Holdings (AML) 172.80p -5.83%
Diversified Energy Company (DEC) 935.50p -4.93%
Spire Healthcare Group (SPI) 225.50p -4.65%
North Atlantic Smaller Companies Inv Trust (NAS) 3,610.00p -3.73%
Hargreaves Lansdown (HL.) 728.40p -3.63%
Tullow Oil (TLW) 28.14p -3.30%
Spectris (SXS) 3,505.00p -2.85%
Wizz Air Holdings (WIZZ) 2,137.00p -2.69%
WH Smith (SMWH) 1,236.00p -2.37%