Digital Look WebFG News | 12 Sep, 2017 17:36 - Updated: 19:30 | | |
London stocks closed in the red on Tuesday as data showing inflation spiking to a six-year high in August sent the pound higher against both the dollar and the euro.
The FTSE 100 was down 0.17% to 7,400.69 as the pound surged 0.87% against the dollar to 1.3278 - its best level since September 2016 - and up 0.77% versus the euro to 1.1098 after consumer price inflation came in ahead of forecasts.
A stronger pound tends to dent the index as around 70% of its constituents derive their earnings from overseas.
The consumer price index picked up 0.6% month-on-month in August, the Office for National Statistics announced, after the 0.1% decline in July, even more than the 0.5% rise economists had predicted.
This lifted CPI 2.9% year-on-year to its highest level since 2011, jumping from the 2.6% in the previous two months and ahead of the 2.8% the market consensus and the 2.7% the Bank of England was expecting.
Core CPI inflation, which excludes more volatile prices such as those for food and fuel, was up 2.7% from 2.4% a month earlier versus the consensus estimate of 2.5%.
Neil Wilson, senior market analyst at ETX Capital, said the data builds a stronger case for the Bank of England to look at hiking rates but it is not yet strong enough for the monetary policy committee to act this week.
"Andy Haldane may now choose to vote for a hike, suggesting a 6-3 split on the MPC is now more likely than before with confirmed hawks Ian McCafferty and Michael Saunders likely to vote for a hike.
"The MPC has stressed that rates may need to be tightened by a somewhat greater extent than financial markets are suggesting, while governor Mark Carney has said that one hike over the next three years would not be enough to tame inflation. The data today supports the Bank’s view that the market may be overestimating the Bank’s tolerance of above-target inflation. The CPI report suggests that Mr Carney and the MPC will lean more heavily on this kind of hawkish rhetoric," said Wilson.
Market participants were also digesting news that MPs backed the EU Withdrawal Bill - often referred to as the Repeal Bill - by 326 votes to 290 overnight, though the bill now passes to the committee stage, where amendments can be made.
The bill's aim of transposing relevant EU law onto the UK statute book when the UK eventually leaves the block in 2019 was called a "power grab" by some ministers, with Labour calling it an "affront to parliamentary democracy". There are concerns over the so-called Henry VIII powers in the bill, which grant ministers power to amend the law without normal parliamentary scrutiny.
In corporate news, the AA rallied as it confirmed that it held "preliminary talks" with insurer Hastings over a potential merger of the motor association's insurance business.
Banks, led by Barclays, Lloyds and Royal Bank of Scotland, were all on the front foot as the spike in CPI raised interest rate hopes, and following a rally for peers on Wall Street overnight.
JD Sports Fashion surged after it reported "another record result" for its half year, with sales up 41% to £1.4bn and pre-tax profit up 33% to £102.7m, while construction equipment specialist Ashtead racked up healthy gains as it reported strong growth in rental revenue and profits in the first quarter of its financial year.
Wood Group and Amec Foster Wheeler were in focus after the Competition and Markets Authority approved their merger plans.
Housebuilders were in the red, with Taylor Wimpey, Persimmon, Barratt Developments, Berkeley and Bellway all lower. But it was Redrow dragging the sector down, after The Steve Morgan Foundation - a charitable trust founded by the housebuilder's chairman - and Morgan's investment vehicle, Bridgemere Securities, sold 25.9m existing ordinary shares at 590p each, representing around 7% of the issued share capital.
Traders also pointed to news that Cairn Homes founders Michael Stanley, Kevin Stanley and Alan McIntosh have sold a 2.1% stake in the housebuilder, saying the placings could suggest a market top for housebuilders.
Costa and Premier Inn owner Whitbread was under the cosh after Citi downgraded its stance on the stock to 'sell' from 'buy', with SSP Group downgraded too.
FTSE 100 - Risers
Ashtead Group (AHT) 1,759.00p 4.45%
Barclays (BARC) 191.35p 2.52%
Royal Bank of Scotland Group (RBS) 249.70p 2.42%
Smurfit Kappa Group (SKG) 2,386.00p 2.36%
Ferguson (FERG) 4,650.00p 2.06%
Lloyds Banking Group (LLOY) 64.84p 1.90%
Johnson Matthey (JMAT) 2,908.00p 1.54%
Mondi (MNDI) 2,080.00p 1.46%
Next (NXT) 4,400.00p 1.34%
BHP Billiton (BLT) 1,438.00p 1.30%
FTSE 100 - Fallers
Randgold Resources Ltd. (RRS) 7,765.00p -2.94%
Fresnillo (FRES) 1,570.00p -2.30%
Persimmon (PSN) 2,503.00p -2.04%
British American Tobacco (BATS) 4,798.50p -2.02%
Unilever (ULVR) 4,441.00p -1.88%
Antofagasta (ANTO) 1,008.00p -1.75%
Barratt Developments (BDEV) 596.00p -1.65%
Sky (SKY) 937.50p -1.63%
United Utilities Group (UU.) 904.50p -1.58%
Convatec Group (CTEC) 267.60p -1.55%
FTSE 250 - Risers
JD Sports Fashion (JD.) 373.40p 8.99%
Carillion (CLLN) 44.76p 4.15%
Ferrexpo (FXPO) 323.20p 3.79%
AA (AA.) 168.40p 3.44%
Restaurant Group (RTN) 312.00p 3.14%
Vectura Group (VEC) 100.30p 3.03%
Evraz (EVR) 315.80p 2.87%
Virgin Money Holdings (UK) (VM.) 270.20p 2.85%
Howden Joinery Group (HWDN) 415.60p 2.85%
Sophos Group (SOPH) 565.00p 2.82%
FTSE 250 - Fallers
Redrow (RDW) 580.00p -8.30%
Clarkson (CKN) 2,726.00p -3.94%
Daejan Holdings (DJAN) 5,855.00p -2.99%
Ascential (ASCL) 364.00p -2.64%
Melrose Industries (MRO) 207.00p -2.27%
Assura (AGR) 64.55p -2.20%
Unite Group (UTG) 674.00p -2.03%
Homeserve (HSV) 776.50p -2.02%
Great Portland Estates (GPOR) 608.00p -2.01%
Thomas Cook Group (TCG) 120.00p -1.96%
Stocks reversed early gains as investors opted to play it safe going into the weekend and the euro edged a tad higher on the back of the political gyrations on Capitol Hill.
Stocks have started the morning trading slightly higher, tracking overnight gains on Wall Street but analysts are worried about buying into Thursday's bounce.
London's top flight index slipped on Friday, but managed to finish well-off its lows of the session despite renewed Brexit angst as the pound gave back early gains.
DIY retailer Kingfisher has more "reasons to be cheerful" thanks to an improving French outlook, analysts at RBC Capital Markets said on Friday, while clothes seller Supergroup remains "compelling" but its shares have gained a lot in recent weeks.
Real estate investment group Alpha Real Trust saw its net asset value (NAV) rise in its first half of trading as it moved to make further investments in build-to-rent projects.
Industrial and logistics-focussed real estate investment trust Pacific Industrial & Logistics has completed the sale of an asset located at Hammond Road, Bedford, for a total consideration of £5.8m, it announced on Friday.
DP Poland, which holds the exclusive master franchise for the Domino’s Pizza brand in Poland, celebrated the opening of its 50th location in the country on Friday.
National investment group Mercia Technologies has made a new direct investment into Aston EyeTech - a spinout from Aston University, Birmingham - which has developed a range of proprietary hardware and software products in ocular care, it announced on Friday.
Modelling, simulation and training solutions provider SimiGon has now received final regulatory approval for a $2m purchase order received from the Israeli Air Force, initially announced on 20 June 2016, it confirmed on Friday.
Agricultural investment group Agriterra saw losses widen in the first half of its trading year as subdued demand for its maize flour products slashed revenues by more than a third.