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Stock prices in London were largely higher at Wednesday’s open on doveish words from US central bank officials, though investors remained somewhat wary in anticipation of a US inflation print on Thursday.
The FTSE 100 index opened up 10.29 points, or 0.1%, at 7,638.50. The FTSE 250 was down 17.23 points, or 0.1%, at 17,950.44. The AIM All-Share was up 1.54 points, or 0.2%, at 699.63.
The Cboe UK 100 was up 0.1% at 762.70, the Cboe UK 250 was flat at 15,641.48, and the Cboe Small Companies was flat at 13,264.70.
The recent strength in equities was underpinned by a further softening of rhetoric from the Federal Reserve. However, with a looming US inflation print, a little more caution has returned on Wednesday morning.
The latest US consumer price inflation print will be published at 1330 BST on Thursday.
According to FXStreet-cited consensus, markets are expecting consumer price inflation to cool to 3.6% on an annual basis in September, from 3.7% in August. Core inflation - which includes items such as energy and food - is expected to pull back to 4.1% from 4.3%.
On Tuesday, a senior official on the US central bank’s rate-setting committee said the Fed is on track to tackle inflation without pushing the country into a damaging recession.
‘We feel like we’re on track for a soft landing,’ Minneapolis Fed President Neel Kashkari told a conference in North Dakota, using a popular term to describe tackling inflation while avoiding a recession.
‘Inflation has come down quite a bit, the labor market has remained strong, maybe we can get inflation all the way back down and avoiding (sic) a deep recession,’ he said.
His words added to a doveish chorus from Fed officials in recent days.
On Monday, two senior Fed officials said that the US central bank should be careful when deciding whether or not to hike interest rates further to bring down inflation.
Fed Vice Chair Philip Jefferson said the central bank needed to ‘proceed carefully’ with forthcoming interest rate decisions, while Dallas Fed President Lorie Logan said she would ‘carefully’ evaluate economic and financial developments when deciding whether to back another rate hike.
Their doveish rhetoric has lifted hope that interest rates in the world’s largest economy may finally be hitting their peak. However, a higher than expected inflation print could throw cold water on these expectations.
In London, GSK was one of the top blue-chip performers in early morning trade, up 1.2% after it announced it has reached a confidential settlement in the Cantlay/Harper case filed in California state court.
The litigation related to its heartburn medication Zantac, also known as ranitidine. Zantac is the subject of numerous lawsuits, which allegedly link the drug with cancer.
The case, which was set to begin trial on November 13, will now be dismissed.
The company added it has also settled the three remaining breast cancer bellwether cases in California.
The pharmaceutical company said the settlements reflect its desire to ‘avoid the distraction related to protracted litigation’ and does not admit any liability in the settlements.
In the FTSE 250, Travis Perkins was the worst performing stock, down 10% after the builders merchant warned that falling prices of commodity products have hurt gross profit and narrowed its profit margins, leading it to cut earnings guidance.
Travis guided for 2023 adjusted operating profit of £175 million to £195 million. This is down from its previous guidance of £240 million, provided in August at the time of its interim results. It also will be down at least 34% from £295 million in 2022.
PageGroup also suffered on Wednesday morning, tumbling 3.6% after it warned of short-term uncertainty in the recruitment sector.
‘Candidate shortages remain acute and are supportive of continued high fee rates. Salary levels remain elevated, albeit the salary increases offered to candidates reduced compared to [the third quarter of 2023]. These lower offers, combined with lower candidate confidence, led to a further increase in the number of offers rejected by candidates, either through employer buybacks or unwillingness to risk the move for the size of incentive on offer,’ the recruitment firm said.
As a result, PageGroup said it expects to deliver operating profit between £125 million and £130 million in 2023. In 2022, it delivered an operating profit of £196.1 million.
Elsewhere in London, Forettra dropped 5.9% as it lamented that the signs of market improvement seen in May and June did not continue into the second half of the year.
In July, the company guided for full-year earnings before interest, tax, depreciation and amortization with a more balanced split between the first and second half. However, Forterra said it now expecting demand demand to remain at the level it has experienced over the past quarter and, consequently, now expect full-year Ebitda to be below its previous expectations.
In European equities on Wednesday, the CAC 40 in Paris was down 0.8%, while the DAX 40 in Frankfurt was down 0.2%.
In Tokyo on Wednesday, the Nikkei 225 index closed up 0.6%. The S&P/ASX 200 in Sydney closed up 0.7%. In China, the Shanghai Composite closed up 0.1%, while the Hang Seng index in Hong Kong was up 1.4%.
Wall Street ended higher on Tuesday, with the Dow Jones Industrial Average up 0.4%, the S&P 500 up 0.5% and the Nasdaq Composite up 0.6%.
The pound was quoted at $1.2281 at early on Wednesday in London, up from $1.2270 at the London equities close on Tuesday. The euro stood at $1.0607, virtually unchanged against $1.0606. Against the yen, the dollar was trading at JP¥148.84, higher compared to JP¥148.74.
Brent oil was quoted at $87.91 a barrel early Wednesday in London, up from $87.50 at the London equities close on Tuesday. Gold was quoted at $1,864.94 an ounce, higher against $1,859.73.
Still to come on Wednesday’s economic calendar, a US producer price index reading will be released at 1330 BST. The US Federal Reserve’s September meeting minutes will be published at 1900 BST.
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