10th Oct 2024 16:59
(Alliance News) - Stocks in London ended Thursday lower in a fluctuating session, as investors weighed mixed data in the US.
Figures showed that progress in cutting core inflation stalled in September while jobless claims jumped to the highest level in over a year, pushing equities across the pond narrowly into the red.
The FTSE 100 index closed down 6.01 points, 0.1%, at 8,237.73. The FTSE 250 ended 114.01 points lower, 0.6%, at 20,708.37, and the AIM All-Share fell 2.13 points, 0.3%, to 734.53.
The Cboe UK 100 ebbed 0.1% to 824.98, the Cboe UK 250 closed down 0.5% at 18,182.16, but the Cboe Small Companies climbed 0.7% to 16,724.35.
In Europe, both the CAC 40 in Paris and the DAX 40 in Frankfurt ended 0.2% lower.
In New York, markets were lower at the time of London's close. The Dow Jones Industrial Average was down 0.3%, the S&P 500 eased 0.2% and the Nasdaq Composite declined 0.1%.
The US consumer price index increased 0.2% on a seasonally adjusted basis in September, the same increase as in August and July, figures showed on Thursday.
This took the annual rate of growth to 2.4%, down from 2.5% in August, according to the US Bureau of Labor Statistics.
However, this was above the 2.3% Bloomberg-cited consensus. The monthly increase was also above the 0.1% rise expected.
Core inflation, which strips out volatile food and energy prices, rose 3.3% per cent in the year to September, compared with the 3.2% in the 12 months to August. It had been expected to remain unchanged.
The monthly increase in core CPI of 0.3% was also hotter than the 0.2% forecast.
Pooja Sriram at Barclays the upside surprise to core CPI was led primarily by stronger-than-expected core goods prices, while core services inflation slowed modestly.
However, she sticks to her call that the Fed will cut rates by 25bp in November.
"Although core CPI surprised to the upside for the second month running, it appeared to be driven by some volatile components, while the sticky shelter category registered material disinflation," she noted.
Elsewhere, figures showed new applications for US unemployment aid, a proxy for job cuts, rose more than expected last week, in a sign of a cooling labour market.
Initial state unemployment claims totalled 258,000 in the week ending October 5, on a seasonally adjusted basis, the US labour department said. That was the highest level since August 2023 and was above market expectations of 230,000.
Analysts at ING said the mixed data would keep the Federal Reserve guessing.
"The battle between the US jobs numbers and the inflation data with regards to the outlook for Fed policy remains unresolved. As such policymakers will need to tread carefully, but our base case remains 25bp rate cuts in November and December."
Ryan Sweet at Oxford Economics agreed a 25bp rate cut was likely in November.
"The larger-than-anticipated gain in the September consumer price index doesn't signal a reacceleration in inflation, nor will it deter the Federal Reserve from cutting interest rates by 25bps at its November meeting," he remarked.
While a "little disappointing", it doesn’t knock inflation off its course of reaching the Federal Reserve’s target over time, he added.
ING felt the spike in jobless claims could reflect distortions to the "terrible" weather several states have encountered and suggested this could be a theme that generates "significant volatility" over the next few weeks.
The dollar firmed after the data. The pound was quoted at USD1.3052 late on Thursday afternoon in London, down from USD1.3084 at the equities close on Wednesday.
Kathleen Brooks at XTB noted the market is expecting a 25bp rate cut from the Fed next month.
"There is now an 89% probability of a 25bp cut next month, this is up from an 85% chance earlier on Thursday. The market has marginally scaled back their expectations of no rate cut from the Fed at next month’s meeting," she added.
Meanwhile, the euro eased to USD1.0929, down against USD1.0948. Against the yen, the dollar was trading at JPY148.47, down compared to JPY149.23.
On London's FTSE 100, GSK rose 3.2%, well below early highs, after it said it has agreed to pay USD2.2 billion to settle a large chunk of legal claims linked to heartburn medicine Zantac.
Late Wednesday, the London-based pharmaceuticals firm said that it had reached agreements with 10 plaintiff firms representing around 80,000 people who had brought product liability cases against it in state courts, 93% of all claimants. GSK did not accept any liability.
GSK also confirmed that it has reached an agreement in principle to pay a total of USD70 million to resolve the Zantac qui tam complaint previously filed by Valisure.
UBS called the news "a clear positive, removing a major overhang and uncertainty for investors".
"The settlement timing is ahead of market expectations", and the total settlement value is at the "lower end of our expectations", the broker said.
Tritax EuroBox added 3.0% after it backed a new takeover bid, this time from private equity firm Brookfield. It withdrew its recommendation for an offer from Segro. Segro shares rose 0.3%.
Toronto-based Brookfield will pay 69.0 pence in cash for Tritax Eurobox, a 6% premium to the implied 65.1p value of the Segro offer, based on the latter's closing price on Wednesday, according to Brookfield and Tritax.
The Brookfield bid values the equity of London-based Tritax EuroBox at GBP557 million on a fully-diluted basis. The enterprise value, including debt, is GBP1.10 billion.
Under the Segro offer, investors in distribution centre investor Tritax EuroBox would have received 0.0765 of a new Segro for every one held in Tritax EuroBox.
However, the Brookfield bid is a cash offer. Tritax EuroBox noted "the scope for the implied value of the Segro offer to increase or decrease between now and completion, as compared to a fixed cash amount from Brookfield".
Elsewhere, Indivior slumped 19% after a profit warning.
The Richmond, Virginia-based specialty pharmaceuticals company warned a competitor product was eating away at the firm's revenue.
As a result, it lowered financial 2024 and 2025 guidance.
Chief Executive Mark Crossley said: "We are seeing faster than expected initial adoption of the competitive product to Sublocade. This dynamic, together with greater variability in the timing of funding among criminal justice system customers, as well as incremental trade stocking pressure, has resulted in net revenue below our expectations set out in July."
Sublocade is a treatment of moderate to severe opioid use disorder.
Indivior now expects third quarter Sublocade net revenue between USD187 to USD192 million. For the financial year, it predicts net revenue of USD725 million to USD745 million.
In July, the firm had predicted Sublocade full-year revenue of between USD765 to USD805 million.
Elsewhere, CAB Payments jumped 7.0% after saying it had received a bid approach from StoneX worth 145 pence per share.
The firm said it was "evaluating" the possible offer.
Brent oil was quoted at USD78.23 a barrel in London on Thursday, up from USD76.54 late Wednesday.
Gold was quoted at USD2,620.84 an ounce late Thursday, higher against USD2,613.66 on Wednesday.
Friday's economic calendar sees a trading statement from recruitment firm, Hays.
The global economic calendar has UK gross domestic product and industrial production data at 0700 BST, US PPI figures at 1330 BST and the Michigan consumer sentiment index at 1500 BST.
By Jeremy Cutler, Alliance News reporter
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