20th Oct 2021 08:44
(Alliance News) -Â It was a shaky start for stocks in London as investors digested the morning's UK inflation data, which put the Bank of England in a tough spot as November's meeting nears.
At the top of the FTSE 100 in early trade was Burberry as it hired a new chief executive, while shares in miner Antofagasta fell as it warned of a dip in copper output next year.
The FTSE 100 index was up just 0.44 of a point at 7,217.97 early Wednesday. The mid-cap FTSE 250 index was down 5.29 points at 23,048.80. The AIM All-Share index was down 0.9 of a point, or 0.1%, at 1,239.00.
The Cboe UK 100 index was down 0.1% at 715.94. The Cboe 250 was down 0.2% at 20,783.60, and the Cboe Small Companies down 0.2% at 15,584.39.
In mainland Europe, the CAC 40 in Paris was down 0.1% while the DAX 40 in Frankfurt was flat early Wednesday.
The pound softened early Wednesday after data showed the UK inflation rate eased a touch last month.
The consumer price index rose 3.1% year-on-year in September, slowing from August's 3.2% growth. Analysts had been expecting the September reading to remain stable at 3.2%, according to FXStreet.
"Annual inflation fell back a little in September due to the unwinding effect of last year's 'Eat Out to Help Out', which was a factor in pushing up the rate in August," said Mike Hardie, Head of Prices at the Office for National Statistics.
The data comes after recent comments from Bank of England Governor Andrew Bailey that the UK central bank will have to act to ease inflationary pressures - leading to warnings from economists that the BoE could raise rates as soon as next month.
"That's why we, at the Bank of England, have signalled, and this is another such signal, that we will have to act," Bailey said, according to the Financial Times. "But of course that action comes in our monetary policy meetings."
Sterling was quoted at USD1.3784 following the inflation data, soft on USD1.3800 at the London equities close on Tuesday.
Victoria Scholar, head of investment at Interactive Investor, said: "The Bank of England has a difficult balance to strike. On the one hand, the central bank is forecasting above-target 4% inflation in the current quarter, something higher interest rates could help to temper. Yet the economy is struggling with cost-push inflation partly on the back of surging commodity prices, which interest rates have less control over."
Also due on Wednesday is eurozone inflation, at 1000 BST. The flash reading of 1.9% year-on-year growth in consumer prices is expected to be confirmed.
The euro traded at USD1.1628 early Wednesday, soft against USD1.1640 late Tuesday.
Against the yen, the dollar rose to JPY114.45 from JPY114.23.
In Asia on Wednesday, the Japanese Nikkei 225 index closed up 0.1%. In China, the Shanghai Composite closed down 0.2%, while the Hang Seng index in Hong Kong shot up 1.1%. The S&P/ASX 200 in Sydney ended up 0.5%.
Gold was quoted at USD1,775.37 an ounce early Wednesday, slightly higher than USD1,772.17 on Tuesday. Brent oil was trading at USD84.47 a barrel, easing from USD84.64 late Tuesday.
At the top of the FTSE 100 in opening trade was Burberry, up 1.9% as investors cheered the appointment of a new chief executive. The British luxury fashion brand has found a replacement for Chief Executive Marco Gobbetti in the form of ex-Alexander McQueen boss Jonathan Akeroyd.
Akeroyd, currently CEO of Milan-based Gianni Versace, will join Burberry to take up the same role on April 1, 2022. In his time at Versace, he has "reorganised and accelerated growth at the iconic Italian fashion house", Burberry said.
He was previously CEO of British luxury brand Alexander McQueen.
Gobbetti will leave Burberry at the end of 2021, and Gerry Murphy will chair the executive committee from this date until Akeroyd arrives.
Antofagasta was at the bottom of the blue-chips, down 3.8% as the Chilean miner backed its 2021 copper production guidance, but moderated warned output is set to dip next year.
Copper output in the third quarter was 181,100 tonnes, 1.5% higher than in the previous quarter on higher production at Centinela, partly offset by lower throughput at Los Pelambres. Cash costs before by-product credits in the third quarter were USD1.79 per pound, being 2 cents higher than the second quarter as the energy crisis pushed up input prices.
For the full-year, guidance for copper production of 710,000 to 740,000 tonnes was unchanged. For 2022 however, Antofagasta now expects output of 660,000 to 690,000 tonnes.
"Since we last reported, there has been no material rainfall at our operations and as we head into the summer months, we do not expect any rain until the next rainy season, which begins in June next year," said Chief Executive Ivan Arriagada.
"The construction of the desalination plant at Los Pelambres is on track for completion in H2 2022 and we now anticipate group production in 2022 to be between 660,000 and 690,000 tonnes reflecting the previously advised production tonnes at risk at Los Pelambres due to the weather, and lower grades at Centinela concentrates."
Elsewhere in London, Deliveroo rose 1.9% as it raised its outlook following a "strong" third quarter performance despite the lifting of most remaining coronavirus restrictions in the UK during the period.
The food delivery firm reported annual growth in gross transaction value of 54% in the third quarter of 2021 at GBP1.59 billion, describing orders as "resilient" despite lockdown restrictions being eased in the UK. It did note a "modest" reduction in average order value, with this slipping 6% year-on-year to GBP21.4 from GBP22.8.
On the back of this, Deliveroo raised its full-year gross transaction value guidance to growth of 60% to 70%, versus prior guidance of 50% to 60%. Its margin outlook was unchanged, seen in a range of 7.50% to 7.75%.
"While we are mindful of current and potential macroeconomic disruptions and uncertainties, we expect further strong performance in the remainder of the year and we are increasing our full-year GTV growth guidance," said Founder & Chief Executive Will Shu.
By Lucy Heming;Â [email protected]
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