11th Dec 2024 17:12
(Alliance News) - The FTSE 100 closed higher on Wednesday after in line US inflation figures backed hopes for a rate cut across the pond next week.
A jump in the gold price boosted Endeavour Mining and Fresnillo, while Lloyds Banking Group climbed as the Supreme Court agreed to an appeal brought by motor finance companies regarding car loans.
The FTSE 100 index closed up 21.26 points, 0.3%, at 8,301.62. The FTSE 250 ended down 0.49 of a point at 20,973.45, and the AIM All-Share fell 0.03 of a point at 737.54.
The Cboe UK 100 ended up 0.3% at 832.63, the Cboe UK 250 closed up 0.3% at 18,508.87, and the Cboe Small Companies ended 0.2% lower at 16,253.43.
In European equities on Wednesday, the CAC 40 in Paris ended up 0.4%, while the DAX 40 in Frankfurt closed 0.3% higher.
In New York, stocks were higher at the time of the London close. The DJIA was 0.1% to the good, the S&P 500 index was 0.8% higher, and the Nasdaq Composite was up 1.6%, hitting an all-time high.
According to the US Bureau of Labor Statistics, the US consumer price index rose 0.3% in November, after rising 0.2% in each of the previous four months. This took the annual rate of growth to 2.7%, up from 2.6% in October.
Both figures were in line with FXStreet consensus.
The index for shelter rose 0.3% in November, accounting for nearly 40% of the monthly all items increase. The food index also increased over the month, rising 0.4%. The energy index rose 0.2% over the month, after being unchanged in October.
Excluding more volatile food and energy items, CPI rose 0.3% in November, the same rate of growth as in October. This took the annual rate of growth to 3.3%, unchanged from October.
Both figures were in line with FXStreet consensus.
Michael Brown at Pepperstone said while the figures showed disinflationary progress further "stalling" last month, they shouldn't "deter" the Fed from a 25bp cut next Wednesday.
Wells Fargo agreed.
"Today's inflation data probably do not represent a sea change in the outlook for the Federal Reserve. Over the course of 2024, inflation has continued to slow, albeit more gradually than many had hoped it would at the start of the year."
"We believe the FOMC will continue to reduce the federal funds rate next year in an effort to move monetary policy to a less restrictive position. We look for 100 bps of rate cuts from the FOMC over the next 12 months, with 25 bps rate cuts at next week's FOMC meeting and the March, June and September meetings next year."
Bank of America explained the details of the report suggest core PCE inflation - the Federal Reserve's preferred inflation measure - is likely to print at around 0.2% on-month in November.
That would still be above the level consistent with 2% inflation, BofA noted, but a "moderation" relative to the last two months.
"We still expect the Fed to cut rates by 25bp next week. Though the firming of inflation in recent months does make a cut in January unlikely in our view," BofA added.
Meanwhile, in Canada the central bank cut rates by 50 basis points for the second meeting in a row.
The latest cut by the Bank of Canada took the overnight rate to 3.25% from 3.75%. The decision was in line with expectations.
Going forward, the BoC said it "will be evaluating the need for further reductions in the policy rate one decision at a time."
ING explained last week's surprise jump in unemployment to 6.8% from 6.5% helped "cement the call, but inflation is also already at target, justifying a swifter move towards neutral rates than in other countries."
The pound was quoted at USD1.2746 at the London equities close on Wednesday, compared to USD1.2748 at the close on Tuesday. The euro stood at USD1.0490, down against USD1.0507 at the same time on Tuesday.
Against the yen, the dollar was trading higher at JPY152.49 compared to JPY152.02 late Tuesday.
Shining bright, the price of gold was quoted at USD2,716.47 an ounce at the London equities close on Wednesday, up against USD2,690.00 at the close on Tuesday.
The latest rise in the price of the yellow metal boosted FTSE 100 stocks Endeavour Mining, up 6.4%, and Fresnillo, up 2.0%. On the FTSE 250, Hochschild Mining jumped 5.3%.
In addition, Endeavour Mining said a pre-feasibility study at an Ivory Coast project confirms its potential to become a tier one asset for the company.
Close Brothers jumped 5.0% as it reported it has received permission to appeal a Court of Appeal verdict in a motor finance commissions case.
"Close Brothers Group will not be commenting further on an ongoing appeals process, and any further announcements will be made as and when appropriate," the London-based bank, broker and asset manager added.
The update follows the Court of Appeal judgment in October in the Hopcraft versus Close Brothers Ltd, Johnson versus FirstRand Bank Ltd, and Wrench versus FirstRand Bank Ltd cases. The court decided it is unlawful for car dealers to receive a commission from lenders providing motor finance without first telling the customer about the commission and getting their informed consent to the payment.
The UK's biggest car finance provider, Lloyds Banking Group, rallied 4.2%.
Reckitt Benckiser rose 2.8%.
The Slough, Berkshire-based consumer goods and hygiene products maker said it had completed the second tranche of a GBP1 billion share buyback programme.
In addition, HSBC upgraded the stock to 'buy' from 'hold'.
After a "difficult" 2024, Reckitt "offers good scope for re-rating as the group executes on its plans," the broker commented.
British Airways parent IAG added 2.1% after Deutsche Bank raised it to 'buy' from 'hold'.
Key to a promising outlook for IAG, Deutsche believes, is "constrained capacity" in transatlantic travel to and from the UK - a key offering for flag carrier British Airways.
The capacity developments, the analysts explained, "should help IAG to further progress pricing in 2025".
On the FTSE 250, Kainos added 4.5%. The IT firm re-appointed Brendan Mooney as its chief executive officer, just over a year after he stepped down from the position. Mooney replaces Russell Sloan in the post, who leaves the Workday partner with "immediate effect".
Mooney has worked for Kainos since 1989 and was CEO for more than two decades before he left the position in September of last year.
SSP climbed 2.5% after announcing the initial public offering in India of its joint-venture Travel Food Services Ltd.
SSP Group is an operator of food outlets at travel locations including Upper Crust. It owns a 49% interest in TFS, which it operates as a joint venture alongside K Hospitality Corp.
Brent oil was quoted at USD73.05 a barrel at the London equities close Wednesday, up from USD72.65 late Tuesday.
Thursday's UK corporate calendar sees a trading statement from miner Anglo American and half-year results from electricals retailer Currys.
The economic calendar sees interest rate decisions by the European Central Bank and the Swiss National Bank. US weekly jobless claims figures are due at 1330 GMT.
By Jeremy Cutler, Alliance News reporter
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