16th Apr 2025 17:02
(Alliance News) - A late rally dragged the FTSE 100 into positive territory at the close on Wednesday as investors weighed cooling domestic inflation figures and the latest spat in the trade war between the US and China.
The FTSE 100 index rose 26.48 points, 0.3%, at 8,275.60. The FTSE 250 fell just 2.13 points to 19,265.81, and the AIM All-Share advanced 3.87 points, 0.6%, at 669.88.
The Cboe UK 100 rose 0.3% at 823.85, the Cboe UK 250 nudged 0.1% higher at 16,833.05, while the Cboe Small Companies declined 0.6% at 15,046.49.
In Paris, the CAC 40 was little changed, while Frankfurt's DAX 40 ended up 0.3%.
At the time of the London equity close, the Dow Jones Industrial Average traded 0.1% lower, the S&P 500 was down 0.7%, while the Nasdaq Composite declined 1.6%.
Nvidia fell 6.4% after it revealed new US controls on chip sales to China, later confirmed by the US administration.
The company said its H20 chip would now require a special licence to be sold to Chinese customers. Nvidia expects to take a USD5.5 billion earnings hit as a result.
On Tuesday, White House press secretary Karoline Leavitt urged China to cut a new trade deal with the US, saying, "the ball is in China’s court".
US data on Wednesday saw a rise in retail sales but a drop in industrial production.
Advance monthly retail and food services sales increased 1.4% in March to USD734.9 billion from USD724.7 billion in February, according to figures from the US Census Bureau. On an annual basis, sales climbed 4.6% from March 2024.
The result surpassed the FXStreet-cited market consensus, which had expected a 1.3% monthly rise.
ING suggested the jump was more due to tariffs, with consumers bringing forward purchases of 'big ticket' items to get ahead of feared tariffs.
"But with confidence plummeting on price, job and wealth concerns, the consumer will be less of a growth engine later in the year," it added.
Elsewhere, industrial production fell 0.3% in March, following a 0.8% increase in February. The decline came in below the FXStreet-cited consensus of a 0.2% drop.
In contrast, manufacturing production edged up 0.3%, supported by gains in durable goods such as motor vehicles and aerospace equipment.
Attention later in the US session will switch to comments from Federal Reserve Chair Jerome Powell who is set to address the Economic Club of Chicago around 1830 BST.
In Canada, the central bank left interest rates unchanged, but warned of slowing growth, as it assesses the impact of tariffs on the economy.
In a statement, the Bank of Canada maintained its target for the overnight rate at 2.75%, with the bank rate at 3% and the deposit rate at 2.70%. The move was broadly as expected, although some analysts had forecast a 25 basis points cut.
The BoC said the major shift in direction of US trade policy and the unpredictability of tariffs have increased uncertainty, diminished prospects for economic growth, and raised inflation expectations, making it "unusually challenging" to project GDP growth and inflation in Canada.
The BoC said many scenarios were possible, including a recession, given the magnitude and speed of the shift in US trade policy is "unprecedented".
The pound was little changed at USD1.3228 late on Wednesday in London, compared to USD1.3229 at the equities close on Tuesday. Against the yen, the dollar was trading lower at JPY142.75 compared to JPY143.01.
The euro stood higher at USD1.1363 against USD1.1303.
In the UK, there was welcome easing in inflation in March.
Figures from the Office for National Statistics showed the UK consumer price index rose 2.6% in the 12 months to March, slowing from 2.8% in February and below the 2.7% FXStreet-cited consensus.
On a monthly basis, prices increased 0.3% in March from February, slowing from a 0.4% rise in February from January.
Core CPI, which strips out energy, food, alcohol, and tobacco, edged down to 3.4% from 3.5% in February, in line with expectations.
Closely watched CPI services inflation slowed to 4.7% from 5.0%, and below the 4.8% market consensus.
Kallum Pickering at Peel Hunt said the positive surprise in the inflation print is welcome news for markets and leaves the door "wide open" for a May interest rate cut.
"Money market expectations for three 25 basis point BoE cuts this year, to 3.75% by year-end have firmed up on the print - which is in line with our own call," he noted.
Rob Wood at Pantheon Macroeconomics said the soft inflation print makes a May interest rate cut a "racing certainty". He expects the Monetary Policy Committee to cut again in June too.
On the FTSE 100, Bunzl plunged 26% after it lowered guidance and paused its share buyback programme amid weaker than expected trading.
RBC Capital Markets said the unscheduled update is likely to be "very poorly received" by the market with potential high single digit earnings downgrades at constant currency.
The London-based distribution and outsourcing company said revenue grew 2.6% at constant currency exchange rates in the first quarter, against a more "challenging" economic backdrop, with underlying revenue declining by 0.9%. At actual exchange rates, group revenue increased by 0.8%.
RBC said this is below its forecasts for 5.7% revenue growth at constant currency and a flat underlying performance.
Adjusted operating profit was down significantly year-on-year in the first quarter, reflecting an operating margin decline driven by performance in North America and Continental Europe, Bunzl said.
Leading the blue-chip gainers, Endeavour Mining and Fresnillo rose 6.4% and 2.4% as the gold price hit a new high. On the FTSE 250, Hochschild Mining pushed 5.5% higher.
The yellow metal climbed above USD3,300 for the first time, trading at USD3,324.19 on Wednesday an ounce against USD3,223.88.
The latest global fund manager survey from Bank of America showed 42% of investors surveyed expect gold to be the best performing asset in 2025, up from 23% in March.
Also on the FTSE 250, Mitie rose 7.4% after it upgraded its full-year profit guidance, secured a new government contract, and launched a share buyback programme as fourth-quarter trading lifted revenue and earnings for financial 2025.
The Glasgow-based engineering, security, cleaning and hygiene services provider now expects operating profit before other items for the year ended March 31 to be around GBP230 million, up from GBP210 million in financial 2024.
Hollywood Bowl firmed 2.3% after positive broker comments from Peel Hunt.
Peel Hunt upgraded the Hemel Hempstead-based ten-pin bowling operator to 'buy' from 'add' ahead of an expected trading statement next Wednesday.
Hollywood Bowl's value proposition is "compelling", the broker said.
Brent oil was quoted higher late in London on Wednesday, at USD65.73 a barrel from USD64.39 late Tuesday.
Thursday's global economic calendar has the ECB interest rate announcement, US weekly jobless claims data and the Philadelphia Fed manufacturing index.
The local corporate calendar on Thursday has annual results from grocer J Sainsbury and a trading statement from pest control firm Rentokil.
By Jeremy Cutler, Alliance News reporter
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