London open: Stocks edge higher, buoyed by Chinese inflation data

UK stocks are seeing small gains, tracking overnights gains on Wall Street that saw the Dow Jones Industrials and S&P 500 establish fresh record highs and after stronger than expected readings on Chinese consumer and producer prices.

That followed the European Central bank´s latest policy moves which left economists a tad divided as to whether they in fact constituted a tightening or an easing of policy; although in the end equity traders appeared to opt for the latter of the two possible interpretations.

In government debt markets it was another story, with 10-year bonds from various euro area periphery countries coming under selling presure.

Commenting on the day´s events, Jim Reid at Deutsche Bank had this to say: "So still lot of QE for 2017 but now they've tapered once and if inflation prospects edge up by the time we get to the second half we'll likely see a lot of speculation as to a more aggressive slow down in purchases. So a lot now rests on euro inflation in 2017 and we think yesterday's news gives plenty of ammunition for our increased [interest] rate volatility story from our 2017 outlook."

For his part, Michael Hewson, Chief Market Analyst at CMC Markets UK, commented: "Looking at the wider picture all the ECB has done is reduce the monthly asset purchase amount back to the levels it was in March this year, when they were still some concerns that deflation was becoming entrenched. This is clearly not the case now with EU CPI at 31 month highs and therefore the governing council feels comfortable with the idea of reverting back to the original program amount.

"The resultant sell-off in the euro speaks to the fact that ECB and Fed policy are likely to be divergent for much longer than bond markets were pricing in 24 hours ago, while the spike in yields speaks to the fact that we could well see further upwards pressure on inflation."

Acting as a backdrop, on Friday morning Chinese price data released overnight revealed that consumer prices in Asia´s largest economy rose at a 2.3% year-on-year pace in November, up from 2.1% in October (consensus: 2.2%).

Factory gate inflation accelerated even more quickly, with the country´s producer price index rising at a 3.3% clip year-on-year, a five-year high, up from 1.2% in the month before, with industrial commodity price increases the main culprit.

Visible trade and construction output data for the month of October in UK were scheduled for release later in the session, followed by the latest reading on US consumer confidence later in the day.

Achtung Bitte, UK spreadbetters respond to BaFin plans

UK spreadbetters reacted to German market regulator BaFin´s announcement it was planning to clampdown on contracts-for-difference trading. Under the new proposals, CfD providers would need to ensure retail clients cannot lose more money than is deposited in their account. CMC Markets said this functionality was already available to its clients in Germany and on the basis of the consultation paper, there are no other requirements from BaFin including no leverage limits, and where retail clients' risk is limited to their deposits, there is no prohibition on marketing, distribution and sale of CfDs.

Textile services company Berendsen confirmed its UK Cleanroom business was being investigated by the Competition and Markets Authority (CMA). In a statement, the company said the probe related to a joint venture to which a Berendsen subsidiary was a party, including in relation to agreements entered into by the joint venture in May 2012.

International originator, active investor and manager of infrastructure projects, John Laing Group, posted a pre-close update for the year to 31 December on Friday.The FTSE 250 firm said primary Investment activity remained strong in each of its three geographical regions of Asia Pacific, North America and Europe - including the UK.Total investment commitments to date were £181m, in line with guidance for 2016, while total realisations agreed to date in 2016 were £255m.

Landscape products group Marshalls said on Friday that it is confident of meeting its expectations for 2016 as it reported a rise in revenue for the 11 months to 30 November. Revenue grew 3% to £375m, with sales in the domestic end market, which represent around 31% of group sales, up 10% compared with the prior year period. Marshalls said UK revenue since the half year is up 4% compared with 2015 and was particularly strong in the domestic end market, where sales in the five months to the end of November were 15% higher.

Electra Private Equity posted its preliminary results for the year to 30 September on Friday, with a net asset value per share of 5,149p, representing a total return of 35% for the year. The FTSE 250 firm’s share price was 4,310p, a total return of 36% for the year, compared with 17% for the FTSE All-Share Index. Its investment return was £751m, or 46% on the opening portfolio.

Market Movers

FTSE 100 (UKX) 6,940.56 0.13%
FTSE 250 (MCX) 17,716.94 0.20%
techMARK (TASX) 3,262.35 0.69%

FTSE 100 - Risers

Intertek Group (ITRK) 3,320.00p 2.09%
Smith & Nephew (SN.) 1,152.00p 1.95%
Sky (SKY) 803.50p 1.77%
Paddy Power Betfair (PPB) 8,325.00p 1.77%
Shire Plc (SHP) 4,399.50p 1.59%
Worldpay Group (WPG) 261.90p 1.16%
Informa (INF) 658.00p 1.15%
GlaxoSmithKline (GSK) 1,475.50p 1.06%
United Utilities Group (UU.) 888.50p 1.02%
Severn Trent (SVT) 2,123.00p 1.00%

FTSE 100 - Fallers

Capita (CPI) 453.50p -6.55%
Travis Perkins (TPK) 1,412.00p -1.74%
Barclays (BARC) 235.30p -1.55%
Lloyds Banking Group (LLOY) 61.85p -1.47%
Babcock International Group (BAB) 925.00p -1.39%
Taylor Wimpey (TW.) 154.20p -1.09%
Royal Mail (RMG) 457.90p -0.91%
easyJet (EZJ) 1,000.00p -0.70%
Prudential (PRU) 1,617.00p -0.65%
Standard Life (SL.) 369.20p -0.62%

FTSE 250 - Risers

Derwent London (DLN) 2,681.00p 3.83%
Bodycote (BOY) 622.00p 3.24%
CMC Markets (CMCX) 108.00p 2.56%
Electra Private Equity (ELTA) 4,685.00p 1.89%
Ladbrokes Coral Group (LCL) 125.80p 1.78%
Great Portland Estates (GPOR) 649.00p 1.72%
Greencore Group (GNC) 222.60p 1.69%
BGEO Group (BGEO) 3,371.00p 1.63%
BTG (BTG) 566.00p 1.62%
Smith (DS) (SMDS) 425.40p 1.50%

FTSE 250 - Fallers

Euromoney Institutional Investor (ERM) 1,006.00p -10.18%
Countryside Properties (CSP) 223.50p -2.74%
Sports Direct International (SPD) 281.50p -2.53%
Berendsen (BRSN) 822.50p -2.08%
Capital & Counties Properties (CAPC) 295.20p -2.02%
Crest Nicholson Holdings (CRST) 463.80p -1.95%
Marshalls (MSLH) 311.30p -1.80%
Berkeley Group Holdings (The) (BKG) 2,831.00p -1.67%
John Laing Group (JLG) 270.20p -1.49%
Evraz (EVR) 258.30p -1.45%