London close: Stocks slide after China inflation miss

UK stocks slumped on Thursday as Chinese inflation figures missed forecasts and as a Bank of England policymaker pushed back against some market expectations for a 2019 interest rate hike.

China’s consumer inflation increased 1.8% year-on-year in January, compared to 1.6% in December. While it marked an improvement on the previous month, it missed analysts’ estimates of 1.9%.

“The pick-up in inflation last month was mostly seasonal,” Capital Economics said, referring to the benefits of the Lunar New Year holiday. “That said, underlying price pressures also appear to be edging up which ought to ease deflation concerns.”

Meanwhile, BoE deputy governor for financial stability Jon Cunliffe said market pricing for an interest rate in 2019 was not his central view.

Amid risks of a global economic slowdown some analysts have anticipated an increase in borrowing costs would not come for another three years and have seen a case for a rate cut.

“I can’t see anything in the economic news over the last three-to-four weeks that would lead to a shift like that,” Cunliffe said at an event in Brussels.

“My big picture of the world, I think, hasn’t changed with the market-yield curve. I think we are, particularly in the last couple of years, we are in the slow healing process from a financial bust.”

The pound strengthened 0.20% at $1.43 at 1643 GMT.

In commodities, the rally in oil prices receded as government data showed a rise in US crude stockpiles. The Energy Information Administration reported crude inventories increased by 2.1 million barrels in the last week, compared to analysts’ expectations for a rise of 3.9 million barrels.

The report came in contrast to data from the American Petroleum Institute which showed crude stocks unexpectedly fell by 3.3 million barrels last week.

Brent crude fell 0.46% to $34.34 per barrel and West Texas Intermediate rose 0.45% to $30.80 per barrel at 1648 GMT.

In the US, the Department of Labor showed the number of jobless claims fell by 7,000 to 262,000 in the week ending 13 February. This marked a three-month low and was much better than economists’ expectations for a 6,000 increase to 275,000.

The US Conference Board’s leading economic indicators fell 0.2% to 123.2 in Janury, in line with consensus forecasts and following a 0.3% decrease in December and a 0.5% increase in November.

Manufacturing conditions in the Philadelphia region remained weak in February, albeit not as bad as expected, according to the latest report from the Federal Reserve Bank of Philadelphia. The diffusion index for current activity rose to -2.8 from -3.5 in January, slightly ahead of consensus estimates for a reading of -3 but marking the sixth consecutive month in negative territory. A reading below zero signals a contraction.

On the company front, Anglo American was under the cosh after its credit rating was downgraded to junk for the third time this week, this time by Standard & Poor’s. S&P cut the rating to BB from BBB- with a stable outlook. Fitch had cut it to BB+ from BBB- on Wednesday, while Moody’s had downgraded it three notches to Ba3 on Monday.

Centrica’s shares gained after it reported full year results that beat expectations.

Pharmaceutical giants AstraZeneca and GlaxoSmithKline were firmly lower as they went ex-dividend, while Standard Life slipped ahead of its full year results on Friday.

BAE Systems rallied after posting full year results that were in line with analysts’ forecasts and issued guidance that underlying earnings per share will rise between 5-10% in 2016 as it enters a what it says is an improved business environment.

Go-Ahead was higher after reporting a solid performance across most of its operations in the six months to 26 December with a 6.8% rise in overall revenue to £1.67bn.

Indivior edged higher after reporting a better-than-expected drop in profit in sales in the first full year since being demerged from Reckitt Benckiser.

Tullow Oil tumbled after the oil and gas exploration company said it had identified a potential issue with the turret bearing on the vessel serving its Jubilee field offshore Ghana.

Market Movers

FTSE 100 (UKX) 5,974.54 -0.92%
FTSE 250 (MCX) 16,187.62 0.19%
techMARK (TASX) 3,094.17 -0.14%

FTSE 100 - Risers

Centrica (CNA) 208.00p 7.16%
Rolls-Royce Holdings (RR.) 661.00p 4.67%
International Consolidated Airlines Group SA (CDI) (IAG) 541.50p 2.56%
Persimmon (PSN) 2,045.00p 2.35%
Berkeley Group Holdings (The) (BKG) 3,370.00p 2.25%
Barratt Developments (BDEV) 583.50p 2.01%
Taylor Wimpey (TW.) 183.10p 1.95%
Fresnillo (FRES) 919.00p 1.43%
Randgold Resources Ltd. (RRS) 6,205.00p 1.39%
BAE Systems (BA.) 505.50p 1.24%

FTSE 100 - Fallers

Anglo American (AAL) 432.00p -7.70%
Standard Chartered (STAN) 421.80p -5.48%
Barclays (BARC) 161.75p -3.81%
AstraZeneca (AZN) 4,129.50p -3.51%
Rio Tinto (RIO) 1,888.50p -3.20%
GlaxoSmithKline (GSK) 1,380.00p -3.09%
Royal Dutch Shell 'B' (RDSB) 1,587.00p -3.00%
Royal Dutch Shell 'A' (RDSA) 1,594.00p -2.92%
Sports Direct International (SPD) 409.90p -2.31%
Standard Life (SL.) 338.50p -2.25%

FTSE 250 - Risers

Indivior (INDV) 171.20p 15.91%
Allied Minds (ALM) 318.00p 10.19%
Poundland Group (PLND) 175.80p 7.33%
Go-Ahead Group (GOG) 2,384.00p 6.00%
Nostrum Oil & Gas (NOG) 271.80p 5.92%
Henderson Group (HGG) 231.60p 5.61%
Aveva Group (AVV) 1,415.00p 5.44%
Dechra Pharmaceuticals (DPH) 1,074.00p 4.99%
Countrywide (CWD) 333.70p 4.35%
Cable & Wireless Communications (CWC) 73.35p 4.04%

FTSE 250 - Fallers

Tullow Oil (TLW) 169.80p -11.29%
Petrofac Ltd. (PFC) 745.00p -5.04%
Amec Foster Wheeler (AMFW) 364.50p -4.33%
Millennium & Copthorne Hotels (MLC) 390.00p -3.37%
Mediclinic International (MDC) 873.00p -3.32%
Just Retirement Group (JRG) 125.00p -3.10%
Acacia Mining (ACA) 223.90p -3.07%
Just Eat (JE.) 360.50p -2.88%
Synthomer (SYNT) 290.00p -2.82%
Jimmy Choo (CHOO) 120.40p -2.67%