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LONDON MARKET CLOSE: Cooling US inflation, housebuilders lift FTSE 100

12th Jan 2023 17:03

(Alliance News) - Stock prices in London closed higher on Thursday, boosted by a strong performance from UK housebuilders and positive news for inflation in the US.

"It's been another bumper day of trading announcements from a raft of UK companies, and by and large they haven't been as bad as perhaps they could have been," said CMC Market's Michael Hewson.

The FTSE 100 index closed up 69.06 points, or 0.9%, at 7,794.04. The FTSE 250 ended up 319.43 points, or 1.6%, at 19,841.13, and the AIM All-Share closed up 7.85 points, or 0.9%, at 859.47.

The Cboe UK 100 ended up 1.0% at 781.21, the Cboe UK 250 closed up 1.9% at 17,338.45, and the Cboe Small Companies ended up 1.1% at 13,700.84.

In London, Persimmon jumped 8.8% to become the best blue-chip performer on Thursday, despite reporting its sales rate has weakened as the UK housing sector grapples with interest rate rises, higher mortgage rates, and tumbling consumer confidence.

Persimmon said its forward sales position stood at GBP1.0 billion at the end of last year, down 36% from GBP1.6 billion at the end of 2021. However, it reported 14,868 house completions in 2022, slightly up from 14,558 in 2021.

Housebuilding peer Barratt Developments finished 6.9% higher.

On Wednesday, Barratt reported it performed strongly in the first half of its financial year, although it warned that the UK housing market has suffered a slowdown.

Whitbread closed up 5.1% as it reported strong sales growth in its financial third quarter, both in its core Premier Inn business in the UK and in its target growth market of Germany.

Total sales rose 23% in the 13 weeks to December 1 compared to the same period in 2021 and were up 29% compared to three years ago, before the Covid-19 pandemic.

Accommodation sales were up 28% on a year before and 45% on pre-pandemic, but food and beverage sales were up just 9.7% and remained down 1.3% compared to three years ago.

Thursday's trading update was the last by Alison Brittain. She hands over the CEO post to Dominic Paul next week but remains a director until March 2.

Centrica finished up 4.5% after the British Gas owner raised its outlook on a "strong operational performance".

Centrica now expects to report 2022 adjusted earnings per share of above 30 pence. In November, it predicted an adjusted EPS at the top end of a 15.1p to 26.0p sell-side analyst range.

In the FTSE 250, ASOS surged 22% higher.

The online fashion retailer said revenue for the four month period it labels 'P1' was GBP1.34 billion, down 4.1% from GBP1.39 billion a year ago.

The company said the drop in revenue was in line with expectations, "reflecting challenging trading conditions and prioritisation of structural profitability improvements and cash generation through a more disciplined approach to capital deployment."

Hilton Food soared 13%. The food packaging business hailed a "pleasing" festive period performance.

For the year ended January 1, Hilton Food said there has been continued revenue growth compared to the same period in 2021. For financial 2021, Hilton had reported a revenue of GBP3.3 billion, up 22% from the year before on a constant currency basis.

Looking ahead, the company said it remains confident in the outlook for 2023, despite the wider macro-economic challenges. It expects results in line with the board expectations.

Elsewhere in London, Trustpilot rocketed 25% as it reported rising revenue on its "path to profitability".

The online consumer reviews platform expects to report USD149 million in revenue for 2022, up 13% on USD131.4 million in 2021 and up 23% at constant currency.

It expects adjusted earnings before interest, tax, depreciation and amortisation for 2022 to be ahead of the range of expectations, which it didn't provide.

Halfords plunged 19% after the motoring and cycling products retailer reduced underlying pretax profit guidance to a range of GBP50 million to GBP60 million for financial 2024, from the lower end of its GBP65 million to GBP75 million range previously.

The firm explained its third-quarter revenue grew but progress was stifled by subdued market conditions in its cycling and tyre-focused units.

Stocks in New York were mixed at the London equities close as Wall Street digested the latest print for inflation in the US.

The DJIA was up 0.5%, the S&P 500 index up 0.1%, while the Nasdaq Composite was down 0.1%.

US consumer prices fell in December when compared to November thanks to lower energy prices, data from the Bureau of Labor Statistics showed.

On a month-on-month basis, prices decreased by 0.1% in December, compared to a rise of 0.1% in November. FXStreet-cited market consensus had estimated no monthly change at all in December.

Annually, the consumer price index rose 6.5% in December, in line with FXStreet-cited consensus, and slowing from the 7.1% annual rise recorded in November.

On an annual basis, core inflation - excluding food and energy - was 5.7%, slowing from 6.0% in November and in line with expectations.

For deVere Chief Executive Nigel Green, the inflation data means there's a higher chance the Fed will pursue "less aggressive" interest rate hikes moving forward.

In the wake of the CPI print, markets overwhelmingly expect a 25 basis point hike from the US central bank at its next meeting in February. According to the CME FedWatch Tool, there is only a 6% change the Fed will raise rates by half a percent.

The dollar softened following the inflation print.

The pound was quoted at USD1.2171 at the London equities close on Thursday, up compared to USD1.2125 at the close on Wednesday. The euro stood at USD1.0814, higher against USD1.0758. Against the yen, the dollar was trading at JPY129.68, sharply lower compared to JPY132.57.

In European equities on Thursday, the CAC 40 in Paris and DAX 40 in Frankfurt both ended 0.7% higher.

Brent oil was quoted at USD84.03 a barrel at the London equities close on Thursday, up from USD81.43 late Wednesday. Gold was quoted at USD1,891.07 an ounce, sharply higher against USD1,872.57.

The economic calendar for Friday has UK GDP data at 0700 GMT before the German annual GDP print at 0900 GMT.

In the UK corporate calendar, there are trading statements from housebuilders Taylor Wimpey and MJ Gleeson as well as soft furnishing retailer DFS Furniture.

By Heather Rydings, Alliance News senior economics reporter

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