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LONDON MARKET OPEN: Stocks up despite geopolitical woe as Sage jumps

20th Nov 2024 08:53

(Alliance News) - London's FTSE 100 traded higher early Wednesday, recovering some of Tuesday's lost ground, despite geopolitical tensions and UK inflation worries remaining in focus.

The FTSE 100 index climbed 23.61 points, 0.3%, at 8,122.63. The FTSE 250 edged up 22.23 points, 0.1%, at 20,449.85, and the AIM All-Share was up 2.56 points, 0.4%, at 726.79.

The Cboe UK 100 was up 0.3% at 816.79, the Cboe UK 250 was up 0.2% at 17,954.89, and the Cboe Small Companies was up 0.1% at 15,746.99.

The pound rose to USD1.2687 early Wednesday in London, from USD1.2676 at the time of the London equities close on Tuesday.

UK consumer price inflation accelerated at a faster pace than expected last month, spurred on by electricity and gas prices, numbers on Wednesday showed.

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%.

The ONS said the largest contributor to the inflation rate stemmed from "housing and household services, mainly because of electricity and gas prices".

Consumer prices rose 0.6% in October from September, beating expectations of a 0.5% rise. In September, prices were flat from August.

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, edged up to 5.0% in October from 4.9% in September.

"This suggests at least some of the news at the core level is attributable to volatile items which we know the BoE strips out in some cases, especially if they are services. Nevertheless, the already remote prospect of a December rate cut seems even less likely in the absence of shock downside inflation news today," analyst at Lloyds Bank commented.

In European equities on Wednesday, the CAC 40 in Paris was 0.5% higher, while the DAX 40 in Frankfurt added 0.6%.

European markets recovered some ground after losing out on Tuesday due to geopolitical worries.

Russia's "irresponsible rhetoric" on nuclear weapons will not deter UK support for Ukraine, Prime Minister Keir Starmer has said.

Vladimir Putin has lowered the threshold for nuclear weapons, a day after the US gave the war-torn nation permission to use its long-range weaponry to fire into Russia.

Speaking at the G20 summit in Brazil, the prime minister also noted Putin's absence and described him as the "author of his own exile" from the gathering.

Asked at a press conference in Rio de Janeiro whether Britons should prepare for nuclear war, the prime minister said: "This is irresponsible rhetoric coming from Russia and that is not going to deter our support for Ukraine."

Versus the dollar, the euro fell to USD1.0573 early Wednesday, from USD1.0590 late Tuesday afternoon. Against the yen, the dollar rose to JPY155.61 from JPY154.21.

Brent rose to USD73.19 a barrel from USD72.93. Gold traded at USD2,623.21 an ounce, down from USD2,628.26.

Geopolitical fears lent support to the yen, but that boost has since been unwound, Dutch bank ING said.

"The escalation in the Russia-Ukraine conflict had only a short-lived impact on FX, and safe-haven demand has rapidly faded. The balance of risks is shifting more to the upside for the dollar, also considering some positioning re-adjustment may have happened," ING analysts added.

In China on Wednesday, the Shanghai Composite added 0.7%. The Hang Seng Index in Hong Kong rose 0.2%. In Tokyo, the Nikkei 225 lost 0.2% and Sydney's S&P/ASX 200 fell 0.6%.

In New York, the Dow Jones Industrial Average closed down 0.3% on Tuesday. The S&P 500 added 0.4%, however, and the Nasdaq Composite surged 1.0%.

The assembly of Donald Trump's administration remains in focus, with eyes on the key Treasury secretary position.

SPI Asset Management analyst Stephen Innes commented: "All eyes are on President-elect Donald Trump as traders eagerly anticipate his crucial cabinet picks for Treasury Secretary and Trade Representative. These decisions could serve as pivotal signals for the dollar's near-term trajectory, particularly as upcoming macroeconomic data remain clouded by the hurricane effect and strike distortions."

On the corporate front, chipmaker Nvidia, at the heart of an AI boom in markets, reports earnings after the closing bell in New York.

Innes added: "This week is Nvidia's stage. The AI chip titan has been unstoppable, its stock skyrocketing more than ninefold since the end of 2022, earning it a seat in the prestigious Dow Jones Industrial Average and the title of the world's most valuable public company. With Wednesday's quarterly earnings report, Nvidia has the chance to solidify its dominance further or spark a market reappraisal that could ripple across the tech sector and beyond.

"Nvidia isn't just a stock; it's a bellwether for the AI revolution. Its influence extends beyond Silicon Valley, reshaping expectations and rewriting records across the global markets. As investors hold their breath for Wednesday's report, Nvidia's performance will set the tone for tech's trajectory and market sentiment heading into 2025. Whatever happens, one thing is clear: the stakes couldn't be higher."

In London, Sage shares jumped 19% as the enterprise software firm announced improved annual earnings and a GBP400 million share buyback.

Severn Trent rose 2.6% 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 1.8% in a positive read across.

Eyes are now on the final announcement of a UK regulatory framework for the sector

Severn Trent added: "As we head into the final few months of the AMP7 regulatory period, the business is stronger than ever and we are looking forward to a successful AMP8. The draft determination we received in July provided significant clarity to AMP8, confirming at least 28% real RCV growth, base costs broadly in line with our business plan, and new protection mechanisms on energy costs and business rates."

The final determination is due to be received on December 19.

Elsewhere in London, SSP Group fell 3.9%, as the Upper Crust owner was cut by JPMorgan to 'neutral' from 'overweight'.

Fuel cells and fuel cell electric hybrid systems developer Proton Motor Power plunged 52% on AIM. It now believes the best course of action is a wind down of the business, as the funding it needs to continue beyond the end of this year is unlikely to materialise.

"The company had been in advanced discussions with a German based potential industrial partner regarding a possible funding solution which would have enabled the company to continue to trade beyond the end of 2024. Regrettably, these discussions have now terminated," Proton explained.

It intends to cancel its AIM listing.

"As at 30 June 2024, the company had unaudited total liabilities of approximately of GBP143.1 million and net liabilities of approximately GBP116 million. There can therefore be no guarantee that the company will be capable of a solvent winding up, nor of the possible returns to shareholders, if any, in that circumstance," it cautioned.

By Eric Cunha, Alliance News news editor

Comments and questions to [email protected]

Copyright 2024 Alliance News Ltd. All Rights Reserved.

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