London close: Stocks manage positive finish as inflation falls
London stocks managed to stay positive by the close Wednesday as investors brushed aside the latest UK inflation figures and worries about a spike in Covid-19 infections in Beijing, with SSE pacing the gains after results.
The FTSE 100 ended the session up 0.17% at 6,253.25, and the FTSE 250 was 0.67% firmer at 17,582.36.
Sterling was in a mixed state against its major trading pairs, last falling 0.37% against the dollar to $1.2526, but eking out gains of 0.01% on the euro to €1.1163.
“It has been a lacklustre session today as there was an absence of new major news,” said CMC Markets UK market analyst David Madden.
“Yesterday it was announced that Dexamethasone, a low-dose steroid, performed well in clinical trials as a possible treatment for Covid-19.
“A team from Oxford University is heading up the trials, and the drug lowered the fatality rate of Covid-19 patients.”
Madden said there a large supply of the drug existed and it is cheap, so there was a sense of hope surrounding the story.
“European equity markets were showing respectable gains for much of the session but trading ranges were small as there wasn’t much in terms of news flow to inspire traders.”
In fresh economic data, the latest from the Office for National Statistics showed consumer price inflation declining to a four-year low in May amid falling fuel prices.
The CPI declined to 0.5% from 0.8% in April, in line with consensus expectations and marking the lowest level since June 2016.
Meanwhile, core inflation - which strips out energy, food, alcohol and tobacco - slipped to 1.2% in May from 1.4% the month before, coming in slightly below consensus expectations of 1.3% and marking a three-and-a-half year low.
Most of the decline in CPI was down to a slump in fuel inflation, which accelerated to -16.7% from -12.2% the month before as oil prices plummeted during lockdown.
Prices for toys and games were also lower, while the cost of food and drink rose.
“May’s further fall in inflation is probably only the beginnings of a prolonged period of very soft price pressure that we think will prompt the Bank of England to announce a total of £350bn more QE, starting with £100bn - or maybe even £150bn - at tomorrow’s policy meeting,” said Paul Dales, chief UK economist at Capital Economics.
ING economist James Smith said he was expecting the CPI gauge to stay between 0 and 0.5% until the autumn, and probably below 1% through to the beginning of 2021.
In equity markets, renewable energy firm SSE surged 8.9% after it maintained its dividend and reported better-than-expected full-year profits, but warned of a hit this year from the coronavirus pandemic.
Housebuilder Berkeley rallied 4.14% even as it deferred returning £455m of surplus capital to shareholders for two years and reported a 35% drop in annual profit and £1.9bn of forward sales.
Serco rocketed 15.71% after the government outsourcer reinstated financial guidance and said it expected an increase of about 50% in first-half profit based on strong revenue growth.
DIY retail group Kingfisher was 6.15% higher as it pulled current year guidance but said second-quarter like-for-like sales to 13 June rose 21.8% as coronavirus lockdowns were eased across Europe.
On the downside, Domino’s Pizza Group lost 5.84% after saying that first-half core earnings are set to be slightly lower year-on-year as costs incurred to ensure safe trading during lockdown more than offset increased sales.
William Hill was 5.51% weaker after it raised £224m in a discounted stock sale as it looked to bolster its balance sheet and cash in on the growing US market.
Market Movers
FTSE 100 (UKX) 6,253.25 0.17%
FTSE 250 (MCX) 17,582.36 0.67%
techMARK (TASX) 3,779.98 1.10%
FTSE 100 - Risers
SSE (SSE) 1,385.00p 9.14%
Berkeley Group Holdings (The) (BKG) 4,397.00p 4.14%
Aveva Group (AVV) 4,089.00p 3.73%
Meggitt (MGGT) 319.20p 2.97%
Just Eat Takeaway.Com N.V. (CDI) (JET) 7,860.00p 2.42%
Spirax-Sarco Engineering (SPX) 10,010.00p 2.16%
GlaxoSmithKline (GSK) 1,665.00p 2.05%
Flutter Entertainment (FLTR) 10,760.00p 1.99%
Mondi (MNDI) 1,519.00p 1.91%
Unilever (ULVR) 4,507.00p 1.90%
FTSE 100 - Fallers
Carnival (CCL) 1,275.00p -5.90%
Legal & General Group (LGEN) 222.80p -4.38%
International Consolidated Airlines Group SA (CDI) (IAG) 270.50p -3.46%
Aviva (AV.) 278.30p -3.40%
Bunzl (BNZL) 2,088.00p -2.84%
Barclays (BARC) 119.38p -2.69%
Imperial Brands (IMB) 1,520.00p -1.81%
Lloyds Banking Group (LLOY) 32.62p -1.73%
Standard Life Aberdeen (SLA) 251.80p -1.68%
Compass Group (CPG) 1,121.00p -1.62%
FTSE 250 - Risers
Serco Group (SRP) 153.90p 15.71%
Airtel Africa (AAF) 64.80p 6.23%
Kingfisher (KGF) 215.90p 6.15%
Kainos Group (KNOS) 739.00p 4.23%
Ascential (ASCL) 301.80p 4.21%
Softcat (SCT) 1,130.00p 4.17%
Clarkson (CKN) 2,430.00p 3.85%
PureTech Health (PRTC) 269.00p 3.66%
G4S (GFS) 108.30p 3.59%
Sanne Group (SNN) 623.00p 3.31%
FTSE 250 - Fallers
Elementis (ELM) 68.05p -6.72%
Domino's Pizza Group (DOM) 319.20p -5.84%
William Hill (WMH) 131.25p -5.51%
Go-Ahead Group (GOG) 1,011.00p -4.62%
Stagecoach Group (SGC) 67.05p -4.58%
Bakkavor Group (BAKK) 75.10p -4.29%
Just Group (JUST) 58.15p -4.20%
Capita (CPI) 42.20p -3.98%
SSP Group (SSPG) 267.20p -3.61%
TBC Bank Group (TBCG) 909.00p -3.27%