London close: Stocks reverse losses to finish slightly higher

London markets saw modest gains by the close on Wednesday, following Wall Street higher in afternoon trading.

Stocks had opened lower, after some solid data out of the US overnight sparked fresh uncertainty over the potential for interest rate cuts.

The FTSE 100 rose 0.03% to reach 7,937.44 points, while the FTSE 250 saw a slightly stronger increase of 0.2%, reaching 19,753.64 points.

In currency markets, sterling was last up 0.44% on the dollar, trading at $1.2633, while it slipped 0.09% against the euro to change hands at €1.1669.

“The FTSE 100 underperformed on Wednesday, ending the day in slightly negative fashion, while other European and US indices recovered slightly as the US ISM services PMI hit a three-month low and the Eurozone inflation rate unexpectedly slowed,” said IG senior market analyst Axel Rudolph earlier.

“Fed chair Jerome Powell's speech later in the day might add some volatility to the mix.

“While the gold price hovers marginally below its record high, the oil price rallied to levels last seen in October amid a meeting by OPEC+ members and heightened geopolitical tensions in the Middle East.”

Eurozone inflation slows, US private sector employment tops forecasts

In economic news, inflation in the eurozone showed an unexpected slowdown in March, with the core rate reaching its lowest point in over two years.

According to Eurostat data, the year-on-year change in the eurozone's harmonised consumer price index (CPI) dropped to 2.4% last month from 2.6% in February, contrary to economists' forecasts.

That marked the same rate as November 2023, the lowest level since July 2021.

The core rate, which excludes volatile items such as food and energy, also decelerated to 2.9% from 3.1%, falling below expectations of 3.0% and recording the lowest reading since February 2022.

Furthermore, the unemployment rate for the eurozone remained unchanged at 6.5% for February, following a revision of January's reading from 6.4% to 6.5%, in line with the consensus forecast of 6.4%.

Commenting on the data, analysts at Rabobank said the conditions for an interest-rate cut by the European Central Bank in June were “ripening”.

“The release of the eurozone March CPI inflation estimate at 2.4% y/y, is set to solidify market expectations of a June ECB rate cut,” they said.

In the United States, private sector employment exceeded expectations in March, according to data released by ADP on Wednesday.

Employment increased 184,000 from February, surpassing the anticipated 148,000 increase.

Small businesses with fewer than 50 employees added 16,000 jobs, while medium businesses with 50 to 599 employees added 93,000.

Large companies with over 500 employees created an additional 87,000 jobs.

Job-stayers' pay rose by 5.1% year-on-year, while job-changers experienced a significant increase to 10%.

“March was surprising not just for the pay gains, but the sectors that recorded them,” said Nela Richardson, chief economist at ADP.

“The three biggest increases for job-changers were in construction, financial services, and manufacturing.

“Inflation has been cooling, but our data shows pay is heating up in both goods and services.”

However, activity levels in the US services sector failed to meet economists' expectations, as revealed by the Institute for Supply Management's services sector purchasing managers' index (PMI).

The PMI dipped to 51.4 for March, down from 52.6 in February, contrary to the forecasted increase to 52.7.

Notably, a sub-index tracking prices paid by companies declined from 58.6 to 53.4, while the new orders sub-index slipped modestly from 56.1 to 54.4.

The employment sub-index inched up from 48.0 to 48.5.

“The renewed fall in the ISM services index in March is consistent with the message from the hard data that economic growth is slowing from the unsustainably strong pace in the second half of last year,” said Stephen Brown, deputy chief North America economist at Capital Economics.

“Moreover, the plunge in the prices paid index to the lowest level since the pandemic began, implies that core services ex-housing inflation, aka supercore, will resume falling back toward its pre-pandemic normal rate.”

Finally on data, activity in China’s services sector grew as anticipated in March, with the Caixin services PMI rising to 52.7 from 52.5 in February, in line with expectations.

Renishaw in the red, banks and miners pace gains

On London’s equity markets, FTSE 250 engineering company Renishaw declined 2.53% following confirmation from Germany’s Siemens that it was not pursuing an offer for the company.

The news came after takeover speculation circulated, spurred by the Betaville blog suggesting Renishaw was a target for acquisition by a major European industrial conglomerate.

Miner Glencore closed down 0.25%, reversing earlier gains to close lower.

On the upside, precious metals miner Fresnillo was a standout performer, jumping 3.66% as gold prices continued to climb.

Financial institutions and mining companies also contributed to the upside, with NatWest Group, Standard Chartered, HSBC Holdings, and Antofagasta all recording gains.

Hilton Food Group registered a positive finish after reporting a 20% increase in profits for 2023, despite modest revenue growth, buoyed by improvements in its seafood division.

Royal Mail parent International Distributions Services advanced 4.32% following proposals for operational changes aimed at cutting costs by £300m, in response to Ofcom's call for universal service reforms amid declining letter volumes.

Outside the FTSE 350, Topps Tiles declined 3.86%, after it reported a weaker market and a decrease in revenues, impacting first-half profitability.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,937.44 0.03%
FTSE 250 (MCX) 19,753.64 0.20%
techMARK (TASX) 4,461.74 -0.38%

FTSE 100 - Risers

Fresnillo (FRES) 524.00p 3.66%
Barclays (BARC) 188.54p 2.40%
Standard Chartered (STAN) 693.80p 2.24%
Glencore (GLEN) 458.30p 2.21%
NATWEST GROUP (NWG) 272.70p 2.10%
Weir Group (WEIR) 2,032.00p 1.90%
Marks & Spencer Group (MKS) 266.70p 1.79%
Smith (DS) (SMDS) 402.60p 1.72%
Antofagasta (ANTO) 2,100.00p 1.65%
HSBC Holdings (HSBA) 631.10p 1.56%

FTSE 100 - Fallers

BT Group (BT.A) 104.70p -4.60%
RS Group (RS1) 688.00p -3.17%
Admiral Group (ADM) 2,694.00p -3.02%
Prudential (PRU) 720.40p -2.65%
Smiths Group (SMIN) 1,627.00p -1.93%
B&M European Value Retail S.A. (DI) (BME) 528.80p -1.86%
Croda International (CRDA) 4,746.00p -1.43%
Unilever (ULVR) 3,879.00p -1.42%
Reckitt Benckiser Group (RKT) 4,220.00p -1.29%
Unite Group (UTG) 934.00p -1.27%

FTSE 250 - Risers

Close Brothers Group (CBG) 427.80p 6.36%
International Distributions Services (IDS) 236.40p 4.32%
Watches of Switzerland Group (WOSG) 353.20p 3.64%
Harbour Energy (HBR) 284.00p 3.27%
Indivior (INDV) 1,717.00p 3.19%
Me Group International (MEGP) 169.40p 3.17%
Dr. Martens (DOCS) 92.80p 3.05%
Man Group (EMG) 274.00p 3.01%
Bakkavor Group (BAKK) 110.50p 2.71%
AO World (AO.) 106.80p 2.50%

FTSE 250 - Fallers

Moonpig Group (MOON) 161.20p -4.62%
Bridgepoint Group (Reg S) (BPT) 248.20p -3.57%
Quilter (QLT) 102.70p -3.48%
Future (FUTR) 599.50p -2.99%
TBC Bank Group (TBCG) 3,135.00p -2.79%
Renishaw (RSW) 4,240.00p -2.53%
Syncona Limited NPV (SYNC) 117.20p -2.50%
Empiric Student Property (ESP) 92.20p -2.43%
Ithaca Energy (ITH) 119.80p -2.12%
Great Portland Estates (GPE) 376.50p -2.08%