London close: Stocks mixed after US, Europe inflation data

London’s markets finished with a mixed performance on Thursday, with the top-flight index lifted by the likes of BP and Shell.

Investors were also poring over the release of the latest inflation data from both the eurozone and the United States.

The FTSE 100 index gained 0.41% to reach 7,453.75 points, while the FTSE 250 saw a decline of 1.27%, settling at 18,233.47 points.

In currency markets, sterling was last down 0.41% on the dollar, trading at $1.2643, while it managed gains of 0.17% against the euro to change hands at €1.1593.

“It turns out that the surge in inflation was transitory, after all,” said IG chief market analyst Chris Beauchamp.

“Today’s PCE figures from the US will mean that Jerome Powell is now permitted to think about ticking off inflation from his 2023 to-do list.

“Having already rallied hard off the back of the CPI data a month ago, US stocks responded in muted fashion, but this November will go down as a very solid month for stocks on Wall Street.”

Beauchamp added that fresh signs of weakening inflation in the eurozone also gave stocks a lift on this side of the Atlantic.

“In both cases, the effect has been to bring forward the expected date of the first rate cuts, providing more hope that 2023’s era of higher rates will be left behind in 2024.”

Inflation eases in the US and the eurozone

In economic news, the US Bureau of Economic Analysis (BEA) reported that inflation eased as expected in October.

The personal consumption expenditures (PCE) index remained unchanged for the month, following a 0.4% increase in September.

That aligned with the Federal Reserve’s efforts to cool economic growth and manage price pressures.

Year-on-year, the PCE index slowed to 3.0% from 3.4% the previous month.

Similarly, core PCE, which excludes volatile items, decreased to 3.5% from 3.7%, in line with economists’ predictions.

In the eurozone, Eurostat revealed that inflation decelerated more than anticipated in November.

Consumer prices increased by 2.4% annually, the lowest rate since January 2021, nearing the European Central Bank’s (ECB) target of 2%.

That marked a decline from October’s 2.9% and was below the 2.7% forecast by economists.

Notably, food inflation fell to 6.9%, services price growth dropped to 4.0%, and energy prices deflated.

Month-on-month, consumer prices declined by 0.5%.

“While much of this disinflation can be associated with the recent slump in energy prices, the decline in core CPI does show continued headway being made by the ECB,” said Scope Markets analyst Joshua Mahony.

“With the target rate now in touching distance, there is a good chance we see the focus shift towards questions over whether we will see the ECB overshoot the target by driving inflation well below 2%.

“With the ECB now staring at a distinct possibility of below target inflation within the first quarter of 2024, markets will more than likely start bringing forward expectations over the first rate cut, currently priced for April.”

On home shores, official data from HM Revenue & Customs showed a significant decline in UK residential property transactions for October.

There were 90,920 residential transactions - a 2% drop from September and a 17% decrease from October last year.

Seasonally adjusted figures revealed a 21% year-on-year decrease and a 3% month-on-month decline to 82,910.

Non-residential transactions performed better, with a 3% increase from September and less than a 1% decline compared to October 2022, totalling 9,930 on a seasonally adjusted basis.

“The debacle that was the Liz Truss administration muted the property market throughout much of 2023 and is evident in this data,” said Ken James, director at mortgage broker Contractor Mortgage Services.

“We have seen a marked improvement in the last quarter of the year: mortgage ranges creeping down and the base rate not increasing are boosting confidence.

“However, the market remains on thin ice.”

In the US labour market, initial jobless claims increased to 218,000 in the week ended 25 November, up from 211,000 in the prior week but below market expectations of 220,000.

Continuing claims surged to 1.92 million, the highest level since November 2021.

However, the four-week moving average, designed to reduce week-to-week fluctuations, fell to 220,000.

In Germany, employment figures for October showed a marginal increase of 14,000 in the number of employed residents when seasonally adjusted.

A total of 46.1 million German residents were employed, according to provisional calculations from Destatis, the Federal Statistical Office.

Finally on data, retail sales in Germany exceeded expectations in October, rising by 1.1% after a 0.8% decline in September.

Non-food retail sales increased by 1.4%, with online and mail-order trade growing by 2.9%, while food retail sales declined by 1.3%.

Oil giants pace gains, Auction Technology tumbles on update

On London’s equity markets, energy giants BP and Shell saw their shares rise by 2.29% and 0.23%, respectively.

The uptick was attributed to the news that members of the OPEC+ cartel had agreed to further cut oil output by one million barrels per day, boosting oil prices.

NatWest Group also made gains, with a 1.15% increase, following an upgrade to ‘overweight’ at JPMorgan, which included the stock in its top picks portfolio.

Metro Bank Holdings added 3.5% after it announced plans to reduce its workforce by around 20% and review its branch opening policies, aiming to save £50m annually.

In the papers and packaging sector, Smurfit Kappa Group and DS Smith both experienced positive momentum, with gains of 4.74% and 2.18%, respectively.

Cybersecurity and software escrow company NCC Group rose by 1.96% after a trading update confirmed its performance in the first half aligned with expectations, maintaining its full-year outlook.

Harbour Energy extended its gains from the previous session, rising by 3.64%, as it reaffirmed its full-year production targets and expressed interest in significant merger and acquisition opportunities.

On the downside, Severn Trent, Bellway, and Johnson Matthey faced declines of 4.97%, 6.15%, and 3.51%, respectively, as they traded without entitlement to dividends.

B&M European Value Retail experienced a modest decline of 0.42% despite an upgrade to ‘buy’ at Peel Hunt and ‘equal weight’ coverage initiation by Morgan Stanley.

Auction Technology Group tumbled 23.02% following a 24% decrease in full-year pre-tax profit and revenue, missing expectations.

Bootmaker Dr Martens tumbled by 21.43% as it warned of weaker profits due to warm weather, softer trading in the US, and lower traffic.

Publisher and media group Future faced downward pressure after a downgrade to ‘sell’ at Canaccord Genuity, causing an 11.35% decline.

Meanwhile, Mitchells & Butlers reported a substantial decline in annual profits, leading to an 8.09% drop in its share price.

Vending machine operator Me Group International also faced losses, as it anticipated annual revenues below guidance despite a record financial performance for the year, resulting in a 5.54% decrease in its stock price.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,453.75 0.41%
FTSE 250 (MCX) 18,233.47 -1.27%
techMARK (TASX) 4,068.87 -0.21%

FTSE 100 - Risers

Smurfit Kappa Group (CDI) (SKG) 3,008.00p 4.74%
Smith (DS) (SMDS) 290.60p 2.25%
Rolls-Royce Holdings (RR.) 268.80p 2.05%
Bunzl (BNZL) 3,002.00p 2.00%
Standard Chartered (STAN) 653.20p 2.00%
BP (BP.) 479.10p 1.51%
BAE Systems (BA.) 1,050.00p 1.45%
GSK (GSK) 1,419.40p 1.31%
CRH (CDI) (CRH) 4,986.00p 1.28%
HSBC Holdings (HSBA) 602.10p 1.23%

FTSE 100 - Fallers

Severn Trent (SVT) 2,601.00p -4.23%
United Utilities Group (UU.) 1,091.00p -3.02%
Beazley (BEZ) 536.00p -2.63%
Airtel Africa (AAF) 109.70p -1.88%
Rentokil Initial (RTO) 428.70p -1.36%
Fresnillo (FRES) 582.80p -1.29%
Frasers Group (FRAS) 884.00p -1.17%
Unite Group (UTG) 971.00p -1.17%
IMI (IMI) 1,562.00p -1.08%
SEGRO (SGRO) 812.20p -1.00%

FTSE 250 - Risers

Pets at Home Group (PETS) 320.20p 3.69%
Crest Nicholson Holdings (CRST) 185.50p 3.06%
Harbour Energy (HBR) 229.50p 2.78%
Watches of Switzerland Group (WOSG) 654.00p 2.43%
Bridgepoint Group (Reg S) (BPT) 231.80p 2.39%
easyJet (EZJ) 453.30p 1.55%
Hilton Food Group (HFG) 737.00p 1.52%
NCC Group (NCC) 121.40p 1.00%
PZ Cussons (PZC) 146.80p 0.96%
Fidelity China Special Situations (FCSS) 213.00p 0.95%

FTSE 250 - Fallers

Auction Technology Group (ATG) 485.00p -23.02%
Dr. Martens (DOCS) 90.20p -21.43%
Future (FUTR) 851.00p -11.35%
Mitchells & Butlers (MAB) 221.60p -8.58%
888 Holdings (DI) (888) 70.70p -7.34%
Telecom Plus (TEP) 1,532.00p -6.59%
Digital 9 Infrastructure NPV (DGI9) 31.80p -6.47%
Vistry Group (VTY) 744.00p -6.24%
Bellway (BWY) 2,318.00p -6.23%
Ferrexpo (FXPO) 72.85p -5.88%