20th Nov 2024 16:58
(Alliance News) - European stocks closed lower on Thursday as geopolitcal concerns weighed alongside stronger-than-expected domestic inflation data.
The FTSE 100 index ended down 13.95 points, 0.2%, at 8,085.07. The FTSE 250 tumbled 182.86 points, 0.9%, at 20,244.76, and the AIM All-Share faded 1.89 points, 0.3%, at 722.34.
The Cboe UK 100 ended down 0.2% at 812.76, the Cboe UK 250 fell 1.0% to 17,742.44, and the Cboe Small Companies ended down 0.6% at 15,641.62.
In Europe, the CAC 40 in Paris fell 0.4% while the DAX 40 in Frankfurt lost 0.3%.
Ukraine has fired UK-made Storm Shadow missiles into Russia for the first time since the beginning of the conflict, the Guardian reported, citing multiple sources.
The decision to approve the strikes was made in response to the deployment of more than 10,000 North Korean troops on Russia’s border with Ukraine in what UK and US officials have warned was a major escalation of the nearly three-year-old conflict.
The strike came one day after Ukraine used US-supplied missiles to strike targets in the Bryansk region.
The gloomy news followed an upturn in UK consumer inflation which economists think rules out an interest rate cut in December.
According to the Office for National Statistics, the rate of annual consumer price inflation picked up to 2.3% in October, back above the Bank of England's target, from 1.7% in September.
The latest reading topped the FXStreet cited consensus of 2.2%.
Excluding food and energy, the annual core inflation rate accelerated slightly to 3.3% last month from 3.2% in September.
The services inflation rate, one closely-watched by BoE policymakers for signs of domestic price pressure, edged up to 5.0% in October from 4.9% in September.
Analysts at ING commented: "We, like the BoE, expect services inflation to bounce around 5% for the next four months or so before turning more noticeably lower in the second quarter."
"At the same time, headline inflation could get pretty close to 3% in January, albeit mainly because of energy. All of that means the [BoE] will most likely continue its 'gradual' rate-cutting path for now, which is widely taken to mean one cut per quarter. We expect a pause at next month's meeting."
The news weighed on rate-sensitive housebuilders. Vistry fell 6.0%, Persimmon dipped 3.2%, Berkeley Group slid 2.6% and Barratt Redrow declined 2.0%.
Against the yen, the dollar was trading at JPY155.36 late on Wednesday afternoon, up compared to JPY154.21 at the same time on Tuesday.
The pound was quoted at USD1.2634, lower compared to USD1.2676 at the equities close on Tuesday. The euro stood at USD1.0515, down against USD1.0590.
In New York stocks were weaker. The Dow Jones Industrial Average was down 0.3%, the S&P 500 shed 0.7% and the Nasdaq Composite lost 0.8%.
Nvidia reports third quarter earnings after the closing bell in New York.
Kathleen Brooks, at XTB said: "It is rare that a single stock dominates the global financial space, however, tonight’s earnings report from Nvidia seems like a pivotal moment for global financial markets."
"A stunning earnings report could reenergize the AI trade and the entire US stock market rally, however, a disappointing report could trigger risk off sentiment. Nvidia stock tends to experience huge moves around earnings releases. The implied 1-day move after an earnings report, based on the past 8 quarters, is 7.75% in both directions, which is the equivalent of USD300 billion in market cap. After the last Nvidia earnings report in August, the stock price fell 15% over a few days."
For the three months to the end of October, it is expected to report revenue of USD32.95 billion, non-GAAP EPS of USD0.74 and a non-GAAP gross margin of 74.9%.
Nvidia bull Dan Ives at Wedbush Securities expects a "drop the mic performance".
He described Nvidia's GPUs as the "new oil and gold in this world" and predicts a USD2 billion beat and USD2 billion bump to guidance.
In London, the star performer came in the less glamorous world of accountancy software as Sage reported better-than-expected results which helped to counter fears of further revenue deceleration.
The Newcastle-upon-Tyne, England-based accounting software firm said pretax profit in the year to September 30 climbed 51% to GBP426 million from GBP282 million.
Underlying operating profit rose 21% to GBP529 million from GBP438 million. The operating profit margin improved to 22.7% from 20.5%.
In addition, Sage announced a buyback of up to GBP400 million. The programme kicks off Wednesday and will end by June 3.
Citi said it was a "solid" update with revenue growth broadly in-line and operating profit 3% ahead of expectations.
"We expect consensus operating profit view for 2025 to move up by low to mid single digit percentage. Investor positioning in Sage has seen some improvement over the last month (after staying muted since May) but there has been persistent fear of further growth deceleration, and we see the steady growth dynamics and solid operating execution to be seen favourably," the broker commented.
Shares in Sage closed 18% to the good.
Elsewhere, Severn Trent rose 1.4% as the water utility said half-year profit doubled. It also announced a chunkier dividend and pledged a record year for capital investment.
Shares in United Utilities rose 1.7% in a positive read across. Deutsche Bank upgraded the stock to 'buy' from 'hold' providing additional support.
Elsewhere in London, model train maker Hornby declined 15%. Half-year revenue increased but its loss stretched ahead of the key Christmas trading period.
Its pretax loss in the six months to September 30 widened to GBP5.1 million from GBP4.9 million a year prior, despite revenue rises 10% on-year to GBP25.0 million from GBP22.7 million.
"For now, our order book is looking strong as we approach peak trading, and we have a whole host of new initiatives and activities in place for the run up to Black Friday and through the all-important festive period," Hornby said.
Brent oil was quoted higher at USD73.20 a barrel late on Wednesday afternoon in London, firming from USD72.93 late Tuesday. Gold rose to USD2,648.58 an ounce against USD2,628.26 late Tuesday.
The global economic calendar on Thursday sees eurozone consumer confidence figures, UK public sector borrowing data and US weekly jobless claims numbers.
The local corporate calendar sees a trading statement from sports retailer JD Sports Fashion and half-year results from safety equipment manufacturer Halma.
By Jeremy Cutler, Alliance News reporter
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