12th Nov 2013 10:50
LONDON (Alliance News) - London's major stock indices are trading flat to slightly lower Tuesday, but the pound has been knocked in the aftermath of weaker-than-expected UK inflation data for October.
By mid-morning Tuesday the FTSE 100 is down 0.2% at 6,718.33, the FTSE 250 is down 0.2% at 15,387.63, while the AIM All-Share index is flat at 811.19.
UK inflation slowed more than expected in October to its lowest point since September 2012, official data showed Tuesday. The Office for National Statistics reported that consumer price inflation dipped to 2.2% from 2.7% in September, falling below the 2.5% consensus, according to FXStreet.com. Nonetheless, the figure hovers above the Bank of England's 2% target.
"Britain?s hard work is paying off and the country is on the path to prosperity. Thanks to the government?s long term economic plan, all parts of the economy are growing, the deficit is falling and jobs are being created," a spokesperson for HM Treasury said.
The release has weighed heavily on the pound. In the wake of the inflation report, the pound edged lower against it major rivals, currently trading at EUR1.1860 and CHF1.4616 and USD1.5868, having earlier slipped to USD1.5850, a low against the dollar since September 13.
However, Kathleen Brooks, research director at FOREX.com, believes that "any weakness could be short lived as on Wednesday we get the all-important inflation report from the Bank of England where we expect to see growth expectations revised higher, while expectations for the unemployment rate could be revised lower."
Echoing this sentiment, an indicator of the performance of the British economy just released rose sharply in September, indicating that the ongoing recovery will continue in the coming months, survey data published by the Conference Board has revealed. The leading economic index advanced 1.5% month-on-month to 107 in September, following a 1.2% gain in August and a 0.7% rise in July. Six of the seven components that constitute the leading index made positive contributions in September.
"The improvements in the Leading Economic Index for the UK point towards continued economic growth in the months ahead," Conference Board economist Bert Colijn said.
At the individual stock level, CRH, up 3.1% at 1,608.00 pence, is the leading riser in the FTSE 100. The company said third-quarter like-for-like sales had increased by 2%, rebounding from the 6% reduction reported in its half-year results due to bad weather conditions. Third-quarter EBITDA was up 3% on 2012 despite what CRH called "adverse currency translation effects." The company said it expects second half EBITDA to be in line with last year.
FTSE 250-listed Oxford Instruments, up 12% at 1,370.00p, is the index's biggest gainer. The company said it is in talks to acquire AIM-listed Andor Technology PLC for 500 pence a share in cash, or GBP160 million, as it also reported a marked improvement in trading conditions in the second quarter that it expects to lift second-half results.
At the other end of the spectrum, John Menzies, down 7.4% at 759.00p, is the biggest faller on the FTSE 250. The logistics group has lowered its expectations for its struggling magazine and newspaper distribution arm. Distribution trading has remained tough in the third quarter, says Mike Murphy, an analyst at Numis. "Although magazine and newspaper volumes were in line with the decline in the first half, the returns from ancillary revenues and sticker collections was much weaker than expected." Alongside this, weaker-than-expected seasonal sales within the marketing services business also weighed on the company, Murphy adds.
Still to come in the data calendar Tuesday, the Chicago Fed National Activity index is expected at 1330 GMT. Redbook index numbers are scheduled for 1355 GMT.
By James Kemp; [email protected]; @jamespkemp
Copyright 2013 Alliance News Limited. All Rights Reserved.
Related Shares:
Oxford InstrumentsCRHMNZS.L