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LONDON MARKET MIDDAY: European stocks get boost ahead of US inflation

10th Apr 2024 11:56

(Alliance News) - Stock prices in London were higher at midday on Wednesday, despite some nerves centred around the latest US inflation rate reading, out this afternoon.

Amongst individual stocks, Tesco led the charge, after unveiling a GBP1 billion share buyback programme. Other retailers also got a boost on the back of the results.

The FTSE 100 index was up 47.65 points, 0.6%, at 7,982.44. The FTSE 250 was up 171.65 points, 0.9%, at 19,935.00, and the AIM All-Share was up 4.39 points, 0.6%, at 755.37.

The Cboe UK 100 was up 0.6% at 797.79, the Cboe UK 250 was up 0.9% at 17,358.36, and the Cboe Small Companies was down 0.2% at 14,725.27.

In European equities on Wednesday, the CAC 40 in Paris was up 0.5%, while the DAX 40 in Frankfurt was up 0.7%.

All eyes are on a key US inflation reading, which is out at 1330 BST.

Stocks in New York were called to open mixed, with investors mostly shaking off nerves ahead of the inflation reading. The Dow Jones Industrial Average was called up 0.1% and the S&P 500 index up slightly, whilst the Nasdaq Composite was called down marginally.

Wednesday's US inflation data is expected to show the rate of year-on-year consumer price growth picked up to 3.4% last month, from 3.2% in February, according to FXStreet cited consensus.

If the rate of consumer price inflation picks up by more than expected, it could mean the Federal Reserve will re-think its interest rate outlook. In its last set of economic projections, the dot-plot showed three rate cuts were still the best bet for 2023.

"The inflation figures could still knock markets off course, particularly if they come in higher than expected. Market forecasts already predict further gains in the annual rate of inflation, although the core inflation figure which excludes food and energy prices is expected to slip back slightly," said AJ Bell's Russ Mould.

The pound was quoted at USD1.2701 at midday on Wednesday in London, up compared to USD1.2672 at the equities close on Tuesday. The euro stood at USD1.0864, higher against USD1.0856. Against the yen, the dollar was trading at JPY151.82, higher compared to JPY151.65.

In the FTSE 100 index, Tesco was the top performer, rising 3.5%.

The Hertfordshire-based supermarket chain said pretax profit surged to GBP2.29 billion in the financial year ended February 24, from GBP882 million a year prior. Revenue climbed 4.4% to GBP68.19 billion from GBP65.32 billion.

The company announced a final dividend of 8.25 pence per share, bringing the total to 12.10p, up 11% from 10.90p paid for financial 2023.

On the back of the results, Tesco announced a new GBP1.0 billion share buyback programme to be conducted over the next 12 months, including GBP250 million funded by the special dividend paid to the group by Tesco Bank in August 2023.

Other retailers got a boost on Wednesday. Ocado, Sainsbury, and B&M were up 1.6%, 1.5% and 1.3%, respectively.

WPP jumped 2.5%, after it announced a partnership deal with Alphabet.

WPP, the London-based advertising firm, called the partnership "groundbreaking," explaining the pact will combine Google's expertise in data analytics, generative AI technology and cyber security with WPP's end-to-end marketing capabilities.

WPP Chief Technology Officer Stephan Pretorius said the deal "marks a pivotal moment in marketing innovation."

In the FTSE 250, AO World rose 3.2%. Shore Capital Markets lifted AO World's rating to 'buy'.

Rathsbones jumped 3.0%, after Numis raised its broker rating to 'add'.

On London's AIM, Harvest Minerals shares more than doubled.

The South America-focused fertiliser producer said it has identified potential for rare earth elements at its wholly owned Arapua fertiliser project in Brazil.

Chair Brian McMaster said: "It is encouraging to observe the presence of critical rare earth elements at the Arapua project. We acknowledge the significance of the total rare earth oxides grades observed in the rock samples in our database, particularly depending on whether the mineralization is associated with ionic clays, which we are currently investigating. We have initiated a work programme specifically focused on REE to validate both existing and historical data, and we will report the results in due course".

On the other hand, Chamberlin shares fell 21%.

The specialist castings and engineering group based in Walsall, West Midlands issued a trading update on the three month period ended February 29. The company's financial year runs to May 31.

Underlying demand across Chamberlin during its financial third quarter was below management's expectations, hurting profitability.

"Schedules over the period were lower than previously forecast by our customers and were further impacted by delays with the startup of certain new programs," the company said.

Oil prices tempered slightly on Tuesday, amid diplomacy efforts in the Middle East, with eyes on ceasefire negotiations. Brent oil was quoted at USD89.61 a barrel at midday in London on Wednesday, down from USD89.82 late Tuesday.

"We witnessed talk of progress in the ceasefire negotiations with increasing pressure from the international community, led by the United States, which is currently witnessing the electoral season, after a series of bloody events last week that fueled fears about the conflict being completely out of control," said Samer Hasn at XS.com.

Gold was quoted at USD2,348.80 an ounce, up against USD2,347.44.

By Sophie Rose, Alliance News senior reporter

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