London close: Stocks surge as US inflation undershoots expectations

Equity markets in London finished Wednesday well into the green, bolstered by inflation data from the US that came in below predictions.

The FTSE 100 index climbed 1.83% to close at 7,416.11, while the FTSE 250 displayed an even stronger performance, adding 2.42% to end the day at 18,579.54.

In the currency markets, sterling was last 0.44% on the dollar to trade at $1.2990, while it was 0.58%, weaker against the euro, changing hands at €1.1678.

“We’ve seen another day of strong gains for European markets, with the FTSE 100 undergoing its best one-day gain since early June, after US CPI came in softer than expected, and the latest set of UK bank stress tests gave the sector a clean bill of health,” said CMC Markets chief market analyst Michael Hewson.

“The FTSE 250 has also undergone a strong session led by a strong performance from pub chain JD Wetherspoon and Royal Mail owner International Distribution Services.

“Wetherspoon shares have surged to one-month highs after saying that current trading had been much better than expected with like for like sales rising 11% in the first quarter compared to the same period last year.”

US inflation slows as Bank of Canada hikes rates to two-decade high

In economic news, the slowing pace of cost of living increases in the United States offered a reprieve last month, with the core level of inflation also on the wane.

According to fresh data from the US Department of Labor, the nation's consumer price index (CPI) underwent a modest 0.2% rise month-on-month, undershooting the consensus forecast for 0.3%.

At the same time, the year-on-year headline CPI growth decelerated to 3.0%, marginally below the anticipated 3.1%.

Core CPI, which omits volatile components like food and energy costs, also displayed a moderated uptick of 0.2% for the month, in contrast to the projected 0.3%.

In annual terms, the rate of growth in core CPI eased to 4.8%, falling short of the 5.0% consensus.

Elsewhere, the Bank of Canada raised its benchmark interest rate by 25 basis points earlier, hitting a peak unseen in 22 years at 5%.

The move was on par with the expectations of economists.

Major banks rally, miners rise amid higher copper prices

On London’s equity markets, major banks enjoyed robust growth following the Bank of England's confirmation that eight key institutions passed their annual capital stress tests.

Barclays rose 1.56%, Lloyds Banking Group added 2.82%, HSBC Holdings climbed 2.51%, NatWest Group was ahead 3.19%, and Standard Chartered increased by 2.5%.

The other institutions to pass the stress tests were Santander UK, Nationwide Building Society, and Virgin Money UK.

Virgin Money itself experienced a significant 11.47% rise after it announced plans to resume its share buyback programme and maintain a 30% full-year dividend payout level during the year.

In the mining sector, shares were also on the rise, buoyed by surging copper prices.

Anglo American increased by 4.26%, Glencore climbed by 4.39%, while Rio Tinto experienced growth of 3.88%.

Elsewhere, pub operator JD Wetherspoon skyrocketed 9.96% as it upheld its annual profit guidance, with sales in the final quarter's last 10 weeks growing by 11%.

Building materials distributor and DIY retailer Grafton Group gained 5.29%, despite the cost-of-living crisis affecting volumes, as it held its annual guidance with first-half revenues rising 3.2%.

Recruitment firm PageGroup increased 3.12% despite a decline in second-quarter profits due to ongoing challenging trading conditions.

Meanwhile, Babcock International Group's shares advanced 4.84% after the UK Ministry of Defence awarded the company a £50m contract to support Ukraine’s military land assets.

Educational publisher Pearson saw a 3.15% increase after Citi opened a "positive catalyst watch" on its shares, predicting first-half results at the end of July to act as a positive catalyst.

Bytes Technology Group reported continued strong trading, leading to a 0.59% increase.

On the downside, British Airways owner IAG saw a 2.28% decrease due to a downgrade from 'buy' to 'hold' at Deutsche Bank.

Bunzl suffered a 1.91% drop after a downgrade from RBC Capital Markets, from 'sector perform' to 'underperform', with a revised price target of 2,550p, down from 2,850p, citing the impact of building deflationary forces.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,416.11 1.83%
FTSE 250 (MCX) 18,579.54 2.42%
techMARK (TASX) 4,381.85 1.77%

FTSE 100 - Risers

Antofagasta (ANTO) 1,515.50p 5.57%
Glencore (GLEN) 458.35p 4.87%
RS Group (RS1) 754.60p 4.46%
Smurfit Kappa Group (CDI) (SKG) 2,796.00p 4.41%
Anglo American (AAL) 2,323.50p 4.24%
Persimmon (PSN) 1,051.00p 4.21%
JD Sports Fashion (JD.) 150.15p 3.91%
Rio Tinto (RIO) 5,140.00p 3.90%
Land Securities Group (LAND) 604.20p 3.81%
Johnson Matthey (JMAT) 1,774.50p 3.71%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 156.60p -2.28%
Bunzl (BNZL) 2,816.00p -2.02%
London Stock Exchange Group (LSEG) 7,986.00p -0.22%
Airtel Africa (AAF) 105.30p 0.00%
Reckitt Benckiser Group (RKT) 5,746.00p 0.17%
Smith & Nephew (SN.) 1,177.50p 0.21%
Compass Group (CPG) 2,082.00p 0.39%
Unilever (ULVR) 3,983.50p 0.58%
Diageo (DGE) 3,311.00p 0.65%
Sainsbury (J) (SBRY) 269.10p 0.71%

FTSE 250 - Risers

Virgin Money UK (VMUK) 162.80p 11.47%
Wetherspoon (J.D.) (JDW) 731.00p 10.34%
Marshalls (MSLH) 261.00p 7.85%
Liontrust Asset Management (LIO) 714.00p 7.69%
IWG (IWG) 145.40p 7.46%
International Distributions Services (IDS) 250.40p 6.78%
Close Brothers Group (CBG) 921.00p 6.41%
LXI Reit (LXI) 89.20p 5.81%
UK Commercial Property Reit Limited (UKCM) 52.20p 5.45%
Quilter (QLT) 80.65p 5.36%

FTSE 250 - Fallers

Digital 9 Infrastructure NPV (DGI9) 53.70p -2.01%
Aston Martin Lagonda Global Holdings (AML) 329.80p -0.96%
Carnival (CCL) 1,295.00p -0.96%
easyJet (EZJ) 491.80p -0.65%
Apax Global Alpha Limited (APAX) 182.60p -0.54%
Bakkavor Group (BAKK) 96.40p -0.21%
Hikma Pharmaceuticals (HIK) 1,815.00p -0.19%
Caledonia Investments (CLDN) 3,135.00p 0.00%
NB Private Equity Partners Ltd. (NBPE) 1,550.00p 0.00%
Petershill Partners (PHLL) 165.00p 0.00%