London midday: FTSE 100 breaches 7,500 for first time; UK inflation spikes

The FTSE 100 had extended gains by midday on Tuesday as the pound fell back after a brief pop higher on news that UK inflation spiked to its highest level since 2013 in April.

The index was up 0.6% to 7,497.09, having breached the 7,500 level for the first time earlier in the session to trade at 7,505. Meanwhile, the pound was down 0.1% against the dollar at 1.2890 and 0.7% weaker versus the euro at 1.1658.

Data from the Office for National Statistics showed inflation is spiking higher than expected, with consumer prices rising well above the Bank of England's 2% target and at their fastest in three and a half years. The consumer price index rose 0.5% in April compared to March, when it had risen 0.4%, a rate that was expected again last month.

Compared to last year, consumer prices inflation leapt to 2.7% from 2.3% the month before and ahead of the 2.6% consensus forecast - but in line with the BoE forecast from last week. Core CPI, which strips out more volatile prices like food and energy, was up 0.5% month-on-month and 2.4% year-on-year, up from 1.8% the months before and above forecast as retailers hiked prices to account for sterling’s depreciation.

CPIH, the ONS's new headline measure of inflation that includes a measure of owner occupiers' housing costs and council tax, was 2.6% in April versus 2.3% in March.

CPI was lifted by a later Easter in 2017 compared to 2016, meaning air fares jumped 18.6% year-on-year in April, while several energy companies hiked prices in March and April and clothes prices were also cited by the ONS, while the headline number could have been even higher were it not for a fall in petrol prices.

The pound initially jumped on the news, but the move higher was extremely brief, with market participants highlighting the fact that there is no rate hike on the horizon any time soon.

Spreadex analyst Connor Campbell said: "Investors are instead choosing to focus on just how tightly squeezed real wages are becoming - analysts are expecting the average earnings index to creep up to 2.4% tomorrow - and what this means for the UK’s services-fuelled economy."

In corporate news, mobile-focused telco Vodafone rallied. Although the company posted a €6.1bn loss for the year to the end of March, mostly on the back of a €3.7bn writedown of its Indian unit, investors welcomed its EBITDA guidance for full-year 2018 of €14bn to €14.5bn versus consensus expectations of €13.8bn.

Inmarsat pushed higher after it successfully launched the fourth satellite of its Global Xpress high-speed broadband programme, allowing it to offer guaranteed global connectivity worldwide.

FTSE 250 housebuilder Crest Nicholson edged up after saying it was on track to deliver revenue growth of around 10% for the year to the end of October 2017. The company said average selling prices rose 12% in the six months to the end of April, while forward sales at the end of April were 5% ahead of last year.

Countryside Properties got a boost as Berenberg initiated coverage of the stock at 'buy'.

Easyjet bucked the trend, flying lower after reporting a larger than expected headline loss before tax of £212m, which included around a £45m impact from Easter not falling in the first half and a negative net currency impact of £82m. The airline said it flew a record number of passengers in the first six months of its financial year, though revenue per seat decreased and cost per seat increased.

Business support group DDC was on the back foot as it said full year pre-tax profits rose 23.7% to £268.2m on the back of a 17% rise in revenue to £12.2bn, while CYBG fell as its first-half underlying pre-tax profit of £123m missed consensus expectations of £131m.

Specialist healthcare company BTG tumbled after it posted a drop in pre-tax profit for the year to the end of March, while Micro Focus International was weaker as it emerged it had not been included in the MSCI as many had expected.

Market Movers

FTSE 100 (UKX) 7,497.09 0.57%
FTSE 250 (MCX) 19,788.07 0.19%
techMARK (TASX) 3,592.19 0.03%

FTSE 100 - Risers

Vodafone Group (VOD) 219.40p 3.93%
Ashtead Group (AHT) 1,638.00p 1.93%
Kingfisher (KGF) 355.00p 1.72%
Reckitt Benckiser Group (RB.) 7,486.00p 1.67%
British American Tobacco (BATS) 5,471.00p 1.43%
Diageo (DGE) 2,313.50p 1.38%
BT Group (BT.A) 307.45p 1.30%
Unilever (ULVR) 4,166.00p 1.23%
Lloyds Banking Group (LLOY) 70.24p 1.22%
Convatec Group (CTEC) 299.40p 1.18%

FTSE 100 - Fallers

easyJet (EZJ) 1,240.00p -5.34%
Hargreaves Lansdown (HL.) 1,389.00p -4.01%
Micro Focus International (MCRO) 2,428.00p -2.88%
DCC (DCC) 7,165.00p -2.72%
United Utilities Group (UU.) 1,011.00p -1.46%
Severn Trent (SVT) 2,399.00p -1.24%
Hikma Pharmaceuticals (HIK) 1,720.00p -1.04%
Glencore (GLEN) 291.25p -0.94%
Direct Line Insurance Group (DLG) 348.00p -0.77%
Centrica (CNA) 190.90p -0.73%

FTSE 250 - Risers

Countryside Properties (CSP) 290.10p 4.39%
NMC Health (NMC) 2,159.00p 3.55%
Virgin Money Holdings (UK) (VM.) 309.40p 3.20%
Kaz Minerals (KAZ) 474.80p 2.64%
Evraz (EVR) 193.70p 2.54%
Hill & Smith Holdings (HILS) 1,350.00p 2.43%
Ascential (ASCL) 345.20p 2.10%
Dechra Pharmaceuticals (DPH) 1,816.00p 2.02%
Cairn Energy (CNE) 200.20p 1.99%
Ocado Group (OCDO) 269.40p 1.81%

FTSE 250 - Fallers

BTG (BTG) 651.00p -9.83%
CYBG (CYBG) 276.80p -4.58%
Crest Nicholson Holdings (CRST) 615.50p -3.30%
Ted Baker (TED) 2,538.00p -2.05%
Aldermore Group (ALD) 252.60p -1.83%
Wizz Air Holdings (WIZZ) 1,913.00p -1.54%
Indivior (INDV) 319.60p -1.11%
Saga (SAGA) 202.50p -1.07%
Savills (SVS) 915.50p -1.03%
Henderson Group (HGG) 241.00p -1.03%