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LONDON MARKET OPEN: FTSE 100 fades ahead of US inflation

14th Nov 2023 08:57

(Alliance News) - Stock prices in London opened mixed on Tuesday, as investors assessed some company updates and UK unemployment data, ahead of a key US inflation print.

The FTSE 100 index opened down 12.28 points, 0.2%, at 7,413.55. The FTSE 250 was up 9.99 points, 0.1%, at 17,923.64, and the AIM All-Share was down 0.16 of a point at 700.71.

The Cboe UK 100 was down 0.2% at 739.88, the Cboe UK 250 was up 0.1% at 15,490.28, and the Cboe Small Companies was up 0.2% at 12,985.71.

In European equities on Tuesday, the CAC 40 in Paris was up 0.1%, while the DAX 40 in Frankfurt was up 0.2%.

"Investors are on the edge of their seats, waiting for the latest scoop on US inflation data to take a fresh direction in both stock and bond markets," said Swissquote Bank's Ipek Ozkardeskaya.

The US annual consumer inflation rate is expected to have cooled to 3.3% in October, from 3.7% in September, according to consensus cited by FXStreet.

Consumer prices are forecast to rise by 0.1% in October month-on-month, which it noted would be a meaningful deceleration from the 0.4% print in September. However, core inflation is expected to be 0.3% month-on-month for a second consecutive month, and remain at 4.1% on an annual basis.

"A read above expectations should bring Fed hawks back to the market and increase the bets of a rate hike in December. But activity on Fed funds futures gives around 85% chance for a no rate hike in the Fed's December meeting, and the inflation numbers must look very bad to reverse that expectation," Ozkardeskaya added.

In local economic news, UK unemployment was steady last month, though bonuses drove up wages by more than expected, figures from the Office for National Statistics showed on Tuesday.

The unemployment rate for the period from July to September was 4.2%, unchanged from the June to August period.

In the three months to September, annual growth in average total pay, excluding bonuses, was 7.7%. This was in line with market consensus, as cited by FXStreet. Including bonuses, average pay growth was 7.9%, which overshot market expectations of 7.4%. It was 8.2% in the three months to August, upwardly revised from 8.1%.

"When adjusted for inflation it means people are finally feeling the benefit in their pay packets and with inflation expected to have cooled significantly last month it is an indication that the worst of the cost-of-living squeeze might be over," said AJ Bell's Danni Hewson.

"But there lies the rub. If households are feeling more confident and have a bit more room in the budget they are likely to spend that cash, which could prove inflationary," she added.

Sterling was quoted at USD1.2287 early Tuesday, higher than USD1.2264 at the London equities close on Monday. The euro traded at USD1.703, up from USD1.0696. Against the yen, the dollar was quoted at JPY151.66, up versus JPY151.59.

In the FTSE 100, miner and commodities firm Glencore rose 3.3%.

Glencore said it has entered a binding agreement with Teck Resources Ltd to buy a 77% stake in its steelmaking coal business, Elk Valley Resources, for USD6.93 billion. Glencore first approached the Canadian firm with a takeover proposal in the Spring. Teck had rebuffed the offer, dubbing it "unsolicited and opportunistic". Several unsuccessful proposals followed.

On Tuesday, Glencore also said it has agreed with Nippon Steel Corp that it will hold a 20% equity interest in EVR, with Posco to hold the remaining 3%. Glencore will also acquire USD250 to USD300 million in shareholder loan from Teck to EVR, to be repaid out of EVR's cashflows.

"These world-class assets and the experienced people that operate them are expected to meaningfully complement our existing thermal and steelmaking coal production located in Australia, Colombia and South Africa," said CEO Gary Nagle.

Informa was also making gains, with its shares up 4.7%.

The business-to-business events, publishing and intelligence company said it was upgrading its revenue and profit guidance for 2023. It now expects revenue of GBP3.15 billion, up from its prior estimate of GBP3.05 billion, and 2.26 billion in 2022. Group adjusted operating profit is expected to rise to GBP840 million, compared to prior guidance of GBP790 million.

It also said it would extend its share buyback programme to GBP1.15 billion, having bought back around GBP1 billion in shares since the divestment of its Intelligence portfolio last year.

In the FTSE 250, Vesuvius fell 5.8%.

The molten metal flow engineering and technology firm said it has seen a "gradual deterioration" in most Foundry end markets outside of India. The company also warned that steel markets outside of India are also softer, and it anticipates this will persist throughout the remainder of the fourth quarter. However, Vesuvius said it still expects to meet market conditions, despite the weaker market conditions.

In the US on Monday, Wall Street saw a muted close, with the Dow Jones Industrial Average up 0.2%, the S&P 500 down 0.1% and the Nasdaq Composite down 0.2%

In Asia on Tuesday, the Nikkei 225 index in Tokyo closed up 0.3%. In China, the Shanghai Composite closed up 0.3%, while the Hang Seng index in Hong Kong was down 0.1%. The S&P/ASX 200 in Sydney closed up 0.8%.

Gold was quoted at USD1,945.05 an ounce early Tuesday, little changed from USD1,945.38 on Monday.

Brent oil was trading at USD82.72 a barrel, edging higher than USD82.39.

By Elizabeth Winter, Alliance News senior markets reporter

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