15th Jan 2025 16:53
(Alliance News) - European equities ended higher on Wednesday, with stocks either side of the Atlantic surging in the wake of favourable inflation readings in the US and UK.
The FTSE 100 index ended up 99.59 points, 1.2%, at 8,301.13. The FTSE 250 jumped 567.35 points, 2.9%, at 20,333.62. It is now down 1.4% for 2025, trimming its year-to-date loss from 4.2%.
The AIM All-Share ended up 6.72 points, 1.0%, at 714.53 on Wednesday.
The Cboe UK 100 shot up 1.2% at 832.51, the Cboe UK 250 jumped 3.1% to 17,687.59, and the Cboe Small Companies added 0.5% to 15,349.41.
In European equities on Wednesday, the CAC 40 in Paris rose 0.7%, while the DAX 40 in Frankfurt surged 1.5%.
The pound was quoted higher at USD1.2243 at late on Wednesday afternoon in London, from USD1.2202 at the equities close on Tuesday. The euro stood flat at USD1.0293, against USD1.0295. Against the yen, the dollar was trading lower at JPY156.51 compared to JPY157.95.
In focus in London on Wednesday were a pair of consumer price index readings either side of the Atlantic.
US inflation data was a mixed bag on Wednesday. According to the Department of Labor, annual US consumer price inflation picked up to 2.9% in December, from 2.7% in November. The reading was in line with FXStreet cited consensus.
Topping consensus, prices rose 0.4% monthly in December, picking up speed from a 0.3% climb in October from September. Another rise of 0.3% was expected, according to FXStreet.
But falling short of consensus, consumer prices rose 3.2% on-year when stripping out food and energy, easing from a 3.3% climb in November. Another rise of 3.3% was predicted, according to FXStreet.
Pepperstone analyst Michael Brown commented: "Taking a step back, the CPI figures don't add particularly much to the broader discourse, instead, serving to re-affirm that underlying price pressures remain relatively stubborn, and that the path back towards the 2% inflation target will be a relatively turbulent one.
"Consequently, the FOMC remain on course to 'skip' the January meeting, particularly in light of the resilient nature of the labour market, and amid increased upside inflation risks stemming from the likely trade policies of President-elect Trump's administration."
In the UK, consumer price inflation slowed by more than expected in December, data published by the Office for National Statistics showed.
The consumer price index rose 2.5% in December from a year before, slowing from a 2.6% annual increase in November. The FXStreet-cited market consensus had expected inflation to pick up to 2.7%.
Interest rate sensitive stocks in London surged, with housebuilders Persimmon and Taylor Wimpey adding 4.4% and 4.8%, while property firm British Land rose 4.0%.
Analysts at Lloyds Bank commented: "Interest rate markets have increased their rate cut expectations. They are now attaching a [roughly] 85% probability to a 25bp cut at the next meeting on 6 February with two quarter-point reductions in bank rate across the whole of 2025 now fully priced in.
In New York, the Dow Jones Industrial Average was up 1.5%, the S&P 500 added 1.6% and the Nasdaq Composite surged 2.2%. Equities in New York got a boost from the US data, as well as well-received banking earnings.
XTB analyst Kathleen Brooks commented: "Stronger than expected bank earnings is also having a positive effect on markets. JPM, Goldman Sachs and Citi all reported strong earnings on Wednesday. As expected, their investment banking and trading units saw profits surge due to the boom in trading activity around the US election. GS and JPM reported stellar earnings. GS profits doubled compared to a year ago, and JPM benefitted from what it called an 'animal spirits moment'. Both banks also gave strong outlooks."
Back in London, Currys jumped 11%.
The electricals retailer expects adjusted pretax profit between GBP145 million and GBP155 million for financial 2025, ahead of a company-compiled market consensus of GBP140 million. Also, it continues to expect growth in free cash flow for the year.
Reflecting the strong cash flow performance and continued business momentum, Currys intends to resume dividend payments, with a final dividend of around 1.3 pence per share expected to be announced alongside full-year results in July.
Brooks Macdonald shares spiked 4.8%. The wealth manager reported a slight rise in funds under management and plotted a move away from London's AIM market.
Total funds under management at its December 31 half-year ended amounted to GBP17.93 billion, picking up slightly from GBP17.91 billion at the end of September.
"This is Brooks Macdonald's strongest quarter of gross inflows for 18 months, driven by the quality of our service, the scope of products tailored to meet clients' needs, and our strong investment performance," CEO Andrea Montague said.
"While outflows remained elevated in the quarter, we are taking actions to improve asset retention as well as driving new business growth."
The firm added: "The group anticipates its full year performance will be in line with its expectations and expects a return to positive net flows later in the year."
Brooks Macdonald said it plans to move to the Main Market, from AIM currently.
"Since being founded in 1991 and listing on AIM in 2005, the group has demonstrated a strong commercial and financial track record, scaled shareholder returns and built a broad and supportive shareholder base. The board considers that admission would further enhance the group's corporate profile, as well as extending the opportunity to own its ordinary shares to a broader group of investors," it added.
Brent oil rose to USD81.46 a barrel at the time of the London equities close on Wednesday, from USD79.84 late Tuesday. Gold was quoted higher at USD2,683.65 an ounce against USD2,673.07.
Thursday's economic calendar has a UK GDP reading at 0700 GMT before US retail sales data at 1330.
The local corporate calendar has a trading statement from miner Rio Tinto set for release this evening. Thursday's calendar features updates from housebuilder Taylor Wimpey, hotel firm Whitbread and miner Antofagasta.
By Eric Cunha, Alliance News news editor
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