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UK inflation charged to a 30-year high in March, data showed on Wednesday, heaping further pressure on consumers as the country's cost of living crisis bites.
The UK consumer price index rose by 7.0% in the 12 months to March 2022, advancing from February's 6.2% rise, data from the Office for National Statistics showed.
Wednesday's print is the highest 12-month inflation rate in the National Statistics series, which began in January 1997. It is also the highest rate in the historic modelled series since March 1992, when it stood at 7.1%.
The market consensus - according to FXStreet - had tipped a 6.7% rise.
Core inflation, which strips out energy, food and alcohol, accelerated to 5.7% from 5.2%, hitting a 30-year high. On a monthly basis, CPI rose by 1.1% in March, rising from the 0.8% rise seen in February.
‘Broad-based price rises saw annual inflation increase sharply again in March. Amongst the largest increases were petrol costs, with prices mostly collected before the recent cut in fuel duty, and furniture,’ said Grant Fitzner, ONS chief economist.
‘Restaurants and hotel prices also rose steeply in March while, after falling a year ago, there were rises across a number of different types of food.’
The latest inflation figures come just a day after a UK labour market update which showed wage growth is failing to keep up with the soaring cost of living.
‘Last month's Spring Statement did little to quell the fears of those already feeling the squeeze financially, and the introduction of the new energy price cap and the national insurance increase has further increased the pressure. With wages failing to keep up and pensions not rising by a similar amount, things are going to get tough for a lot of consumers,’ said Paul Craig, portfolio manager at Quilter Investors.
‘Alongside the Bank of England's most recent interest rate hike came the prediction that inflation would hit 8% later this spring. The Bank has underestimated the extent of inflation in previous forecasts and given this month's increase, there could be even worse to come than previously feared.’
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.2% at 7,562.33
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Hang Seng: up 0.3% at 21,377.47
Nikkei 225: closed up 1.9% at 26,843.49
S&P/ASX 200: closed up 0.3% at 7,479.00
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DJIA: closed down 87.72 points, 0.3%, at 34,220.36
S&P 500: closed down 0.3% at 4,397.45
Nasdaq Composite: closed down 0.3% at 13,371.57
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EUR: down at $1.0815 ($1.0863)
GBP: down at $1.2974 ($1.3037)
USD: up at JP¥126.23 (JP¥125.14)
Gold: down at $1,966.74 per ounce ($1,973.44)
Oil (Brent): soft at $104.63 a barrel ($104.70)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's key economic events still to come
09:30 BST UK house price index
08:30 EDT US PPI
10:30 EDT US EIA weekly petroleum status
07:00 EDT US MBA weekly mortgage applications survey
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US President Joe Biden has for the first time accused Vladimir Putin's forces of committing genocide in Ukraine, where Russia is intensifying its campaign to take the strategic port city of Mariupol. Biden's accusation comes as Moscow already accused by the West of widespread atrocities against civilians is feared to be readying a massive onslaught across Ukraine's east that Washington warned might involve chemical weapons. ‘Yes, I called it genocide,’ Biden told reporters on Tuesday, hours after employing the term during a speech in Iowa its first use by a member of his administration. ‘We'll let the lawyers decide internationally whether or not it qualifies, but it sure seems that way to me,’ Biden said. ‘It's become clearer and clearer that Putin is just trying to wipe out the idea of even being able to be a Ukrainian.’ President Volodymyr Zelensky who has repeatedly accused Moscow of attempted ‘genocide’ swiftly responded by tweeting at Biden: ‘True words of a true leader.’
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UK Prime Minister Boris Johnson looked set to avoid an initial fallout from becoming the first prime minister to be hit with criminal sanctions while in office over a birthday bash held for him in Downing Street against Covid rules. The prime minister, his wife and the chancellor all apologised on Tuesday and confirmed they had paid fines imposed by the Metropolitan Police over a party held on June 19 2020 to mark Johnson's 56th birthday. Johnson said it ‘did not occur’ to him that the gathering might be breaching Covid rules, while Rishi Sunak said he understood that ‘for figures in public office, the rules must be applied stringently in order to maintain public confidence’. But although both politicians said they now accepted the rules had been broken, neither appeared to be considering their positions. However, Johnson did not rule out the prospect he could be fined again for further events. He is reported to have attended six of the 12 under investigation.
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BROKER RATING CHANGES
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JPMORGAN CUTS LAND SECURITIES TO 'NEUTRAL' (OVERWEIGHT) - PRICE TARGET 900 PENCE
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JPMORGAN RAISES GREAT PORTLAND TO 'OVERWEIGHT' (NEUTRAL) - PRICE TARGET 900 (780) PENCE
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JPMORGAN CUTS HAMMERSON TO 'UNDERWEIGHT' (NEUTRAL) - PRICE TARGET 29 (40) PENCE
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COMPANIES - FTSE 100
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Blue-chip grocer Tesco saw annual profit rise following a ‘strong performance’ during the period, leading to the launch of a new £750 million share buyback. In the year to February 26, pretax profit ballooned to £2.03 billion from £636 million the year prior. Revenue rose 6% to £61.34 billion from £57.89 billion, as group sales increased 2.5% to £54.77 billion from £53.45 billion. Like-for-like sales in the UK & RoI were up 2.2%, with group retail sales advancing 2.3%. Tesco declared an annual dividend of 10.90 pence, rising from the 9.15p distributed the year before. Alongside this, the firm will buyback £750 million worth of shares over the next twelve months. For financial 2023, Tesco is guiding for retail adjusted operating profit between £2.4 billion and £2.6 billion - which is below the £2.65 billion registered in financial 2022. It gave the guidance ‘in the form of a wider than usual range’ to reflect the uncertainties facing the business, such as inflation and normalising customer behaviour.
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GlaxoSmithKline said it has agreed to acquire late-stage biopharmaceutical company Sierra Oncology for $1.9 billion. The cash deal is still awaiting approval from regulators in the US and Europe, which GSK expects to close in the third quarter of 2022. The pharma giant expects the deal to be accretive to adjusted earnings per share in 2024. Luke Miels, chief commercial officer at GSK, said: ‘Sierra Oncology complements our commercial and medical expertise in haematology. Momelotinib offers a differentiated treatment option that could address the significant unmet medical needs of myelofibrosis patients with anaemia, the major reason patients discontinue treatment. With this proposed acquisition, we have the opportunity to potentially bring meaningful new benefits to patients and further strengthen our portfolio of specialty medicines.’
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COMPANIES - FTSE 250
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Oxford Instruments said it expects its annual revenue and adjusted operating profit to be ‘marginally’ ahead of internal expectations. Oxford Instruments, which makes scientific tools for research and industry, said the strong performance for the year ending March 31 comes despite supply chain disruption and cost inflation. ‘This full year performance reflects good progress in the second half of the financial year, with continued strong order growth, supported by resilient end-markets, leaving the group with a healthy order book as it enters the current financial year,’ the company added. Oxford Instruments was recently the subject of a takeover bid by fellow FTSE 250 constituent Spectris. But the deal has since been called off, with Spetris backing off due to ‘significant uncertainty in global economic conditions’.
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PZ Cussons boasted its new strategy is paying off, with third quarter like-for-like revenue rising 8.5% to £146.3 million. Versus the third quarter two years ago, the FTSE 250-listed personal care and beauty products firm said like-for-like sales were up 14%. ‘It is just over a year since we set out our new strategy, to return PZ Cussons to sustainable, profitable revenue growth. We are focusing on building our Must Win Brands, driving executional excellence, dramatically reducing complexity and transforming our functional capabilities,’ Chief Executive Jonathan Myers said. Year to date, like for like revenue grew by 1.3%, but PZ noted it has declined by 5.5% on a reported basis.
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COMPANIES - SMALL CAP
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Ted Baker confirmed that Sycamore Partners Management will participate in its formal sale process, but cautioned that there is no certainty any offer will be made. As such, Sycamore is no longer required to stick to Friday's deadline to either make a firm offer for Ted Baker or walk away.
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COMPANIES - GLOBAL
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LVMH Moet Hennessey Louis Vuitton said on Tuesday it made a good start to the year against a backdrop of continued disruption from the Covid-19 pandemic and the conflict in Ukraine. The Paris-based luxury goods company said first quarter revenue rose 29% to €18.0 billion from €13.96 billion the previous year. It added that all business groups achieved double-digit revenue growth, except for Wines & Spirits which continued to see supply constraints in the quarter. Wine & Spirits grew 8% year-on-year. Fashion & Leather Goods was the company's best performer with 35% revenue growth. The US and Europe also achieved double-digit revenue growth, and LVMH explained that Asia had continued to grow over the quarter despite the impact of a tightening of health restrictions in China in March.
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Tesla Chief Executive Officer Elon Musk is facing a lawsuit after he bought more than 9% of social media platform Twitter's stock. The purchase makes him the largest outside shareholder of the company's stock and saw the share price rise more than 27% after the announcement. However, Musk now faces a class-action lawsuit brought on behalf of investors that allege Musk's late disclosure of his stake in the platform cost shareholders money and saved Musk about $143 million. Legal paperwork filed in New York alleges that Musk was required to alert the Securities and Exchange Commission within 10 days, or March 24, of purchasing 5% of more of Twitter's stock. However, the lawsuit claims Musk did not alert the commission until April 4, by which point he had amassed more than 9% of stock. As a result, the lawsuit alleges Musk had been able to continue buying Twitter shares cheaply until the announcement. Investors who sold during this period were disadvantaged, the legal papers claims.
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Key iPhone maker Pegatron has halted operations at two subsidiaries in the Chinese cities of Shanghai and Kunshan, as global supply chains feel the pinch of Beijing's strict zero-Covid measures. The business hub of Shanghai has become the heart of China's biggest Covid-19 outbreak since the virus surfaced more than two years ago. Pegatron's suspensions mark the latest blow to Apple, which has seen disruptions at other suppliers' assembly lines in recent months as Chinese cities struggle to curb virus outbreaks. ‘We have temporarily suspended work,’ said Pegatron in a filing to the Taiwan Stock Exchange on Tuesday. The Taiwanese firm said it ‘actively cooperates with local authorities’ and would try to resume operations as soon as possible. The suspensions apply to two of its subsidiaries, in Shanghai and nearby Kunshan city.
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Wednesday's shareholder meetings
AssetCo PLC - GM re River & Mercantile reverse takeover
DP Eurasia NV - EGM re takeover protection
Smith & Nephew PLC - AGM
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By Lucy Heming; lucyheming@alliancenews.com
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