London midday: Stocks rise despite slowdown in UK inflation

The Office for National Statistics said the consumer price index rose 0.3% in the year to April, down from 0.5% in March. Analysts had expected 0.4% year-on-year growth.

The slowdown was driven by declines in air fares and prices for clothing, vehicles and social housing rent.

Between April and March inflation also eased to 0.1% from the previous 0.4% month-on-month gain, missing forecasts of 0.3%.

The Bank of England, which is targeting 2%, has said that it is reacting more cautiously to UK news and data ahead of the European Union referendum on 23 June.

“On the assumption that the UK votes to stay in the EU, we expect the Bank of England’s eventual next move will be to raise interest rates from 0.50% to 0.75% – but not until May 2017,” said Howard Archer, chief UK and European economist at IHS Global Insight.

Separately, the ONS revealed UK house price growth accelerated to 9.0% in March compared to the previous year, mostly due to the surge in demand for second homes ahead of an increase in buy-to-let stamp duty. It marked a 12-month high and a pick-up in growth from the previous 7.60%.

Data from the Council of Mortgage Lenders British showed UK house purchase lending spiked 60% higher in March on a monthly and annual basis as investors rushed to beat the buy-to-let stamp duty increase in April.

Home buyers borrowed £13.8bn in March, the largest amount taken out in a monthly period for house purchase since June 2014 and the most borrowed for house purchase since August 2007. The 69,800 loans marked a 45% increase on the previous month and 38% on the same month last year.

Still to come, US inflation is due at 1330 BST. In contrast to the UK, CPI is expected to pick-up to 0.3% month-on-month growth in April from 0.1% in March. On a year-on-year basis CPI is forecast to rise 1.1% in April following a 0.9% increase a month earlier. The Federal Reserve is targeting 2% inflation and will be taking the data into consideration ahead of its next decision on interest rates in June.

Meanwhile, oil prices were mixed with Brent crude down 0.39% to $48.78 per barrel and West Texas Intermediate up 0.02% to $47.73 per barrel. Crude rallied on Monday after Goldman Sachs said the market had finished almost two years of oversupply and moved to a deficit following global production disruptions.

Among corporate stocks, Taylor Wimpey led the FTSE 100 higher after the housebuilder announced enhancements to its dividend policy and raised its guidance on operating profit margins between 2016 and 2018.

Vodafone shares gained after the company’s organic sales returned to growth and beat expectations in the full year after a strong performance in the fourth quarter, hiking the final dividend 2%.

Land Securities advanced after it posted what it described as “strong” preliminary results on Tuesday, with asset values, revenue and earnings all increasing in the 12 months to 31 March.

Healthcare company BTG jumped as it more than doubled full year pre-tax profits to £57.5m on the back of a 22% jump in revenues to £447.5m.

Halma’s shares slumped after UBS downgraded the stock to ‘sell’ from ‘neutral’.

Market Movers

FTSE 100 (UKX) 6,192.98 0.68%
FTSE 250 (MCX) 16,840.97 0.85%
techMARK (TASX) 3,081.89 0.96%

FTSE 100 - Risers

Taylor Wimpey (TW.) 194.10p 4.98%
Inmarsat (ISAT) 785.50p 4.94%
Ashtead Group (AHT) 915.50p 4.45%
DCC (DCC) 6,415.00p 4.31%
Land Securities Group (LAND) 1,175.00p 3.16%
Berkeley Group Holdings (The) (BKG) 3,064.00p 2.65%
Dixons Carphone (DC.) 425.30p 2.61%
Vodafone Group (VOD) 229.00p 2.39%
Barratt Developments (BDEV) 550.50p 2.32%
British Land Company (BLND) 731.50p 2.31%

FTSE 100 - Fallers

TUI AG Reg Shs (DI) (TUI) 1,042.00p -1.04%
Associated British Foods (ABF) 3,035.00p -0.52%
Fresnillo (FRES) 1,144.00p -0.44%
Diageo (DGE) 1,882.00p -0.37%
Unilever (ULVR) 3,153.00p -0.32%
Mediclinic International (MDC) 827.00p -0.30%
easyJet (EZJ) 1,437.00p -0.28%
Compass Group (CPG) 1,277.00p -0.23%
Mondi (MNDI) 1,345.00p -0.22%
GKN (GKN) 278.80p -0.21%

FTSE 250 - Risers

Aggreko (AGK) 1,093.00p 6.01%
Lookers (LOOK) 139.30p 5.77%
BTG (BTG) 609.50p 3.92%
AO World (AO.) 169.20p 3.80%
Weir Group (WEIR) 1,184.00p 3.32%
Euromoney Institutional Investor (ERM) 985.00p 3.20%
International Personal Finance (IPF) 253.40p 3.18%
Bellway (BWY) 2,613.00p 3.04%
NCC Group (NCC) 287.60p 3.01%
Restaurant Group (RTN) 311.80p 2.60%

FTSE 250 - Fallers

Halma (HLMA) 892.50p -2.83%
Ophir Energy (OPHR) 67.00p -2.26%
ICAP (IAP) 443.80p -2.20%
Ibstock (IBST) 208.00p -1.89%
TalkTalk Telecom Group (TALK) 252.30p -1.83%
Ocado Group (OCDO) 265.00p -1.34%
Interserve (IRV) 310.30p -1.30%
Hikma Pharmaceuticals (HIK) 2,271.00p -1.26%
Wood Group (John) (WG.) 624.00p -1.19%
Investec (INVP) 474.50p -0.73%