- FTSE 100 closes up 46 points at 7,487
- Inflation hits two-year low, falling to 4.6%
- Pound dips as markets price in earlier rate cuts
4:40pm: FTSE pushes higher after cooling inflation
The FTSE 100 closed in positive territory but off early highs boosted by a bigger fall in inflation than expected.
At the close, London's blue-chip index was up 46.44 points, 0.6%, at 7,486.91 and the FTSE 250 was up 138.24 points, 0.8%, at 18,674.37.
The cooling inflation figures in the UK today, and US on Tuesday, have boosted hopes that interest rates have peaked with speculation turning to when the first rate cuts might occur.
Chris Beauchamp at IG said: "Investors continue to rejoice in the hope of no more Fed rate hikes, with UK traders cheered by this morning’s CPI drop too. Overall the skies have cleared dramatically for markets, and hopes of a soft landing and improved earnings have driven flows back into stocks.”
Experian (LSE:EXPN) led the risers, up 7.2%, after well received results, while Ocado jumped late in the day after launching a move into the world of healthcare with a deal in Canada.
4:28pm: Ocado ventures into healthcare with Canadia deal
Ocado Group is to provide robot fulfilment sorters at a distribution site for McKesson Canada, the country’s largest pharmaceutical distributor.
It is the UK group’s first move outside of grocery and retail with Ocado to provide AI-powered software to operate the automated product pickers.
Tim Steiner, Ocado chief executive, said it was a new and exciting milestone for the group.
“Our technology is ideally suited to supply chains that require dense storage, highly accurate inventory management and secure stock control. We are very pleased to be expanding in Canada."
Shares jumped 6.4% to 600.51p.
3:52pm: House prices post first annual fall since 2012
The official measure of UK house prices declined year on year for the first time in more than a decade, while rental costs rose at a record pace as high borrowing costs hit the property market.
Average UK house prices decreased by 0.1% in September compared with the same month last year, down from a 0.8% expansion in the previous month and the first annual drop since April 2012, data published by the Office for National Statistics showed.
The ONS also reported that private rental prices paid by tenants in the UK rose by 6.1% year on year in October, more than the 5.7% recorded in September and the fastest rate since the UK data series began in January 2016.
3:12pm: Fuel retailers face fines if pricing not transparent
Fuel retailers face fines if they fail to be more transparent on pricing, UK Energy Secretary Claire Coutinho has announced.
The Department for Energy Security & Net Zero said it will grant new powers to the Competition & Markets Authority to monitor pump prices and report "any sign of malpractice to the government".
The move is aimed at improving competition in the market.
Fuel retailers will be required to "come clean on how much they are charging customers on their forecourts versus their profits", the DESNZ said.
Those that fail to comply could face a fixed fine from the CMA of up to 1% of their worldwide turnover, or an ongoing fine of up to 5% of daily turnover.
A CMA investigation found that some supermarket fuel retailers failed to pass on reductions in wholesale costs last year, charging drivers 6p more per litre for fuel.
2:44pm: US stocks climb after weak PPI figures
US stocks opened higher as investors digested another favourable inflation reading and better-than-expected retail sales.
Shortly after the opening bell, the Dow Jones Industrial Average was up 99.42 points, 0.3%, at 34,927.12, the S&P 500 was up 17.39 points, 0.4%, at 4,513.09 and the Nasdaq Composite was up 63.42 points, 0.5%, at 14,157.80.
In company news, Target jumped 12% after earnings beat expectations although the retailer did see a drop in third quarter sales.
2:15pm: US retail sales fall but by less than feared
Ahead of the US open, we have had retail sales figures which fell 0.1% in October from the prior month, according to the Commerce Department..
The fall was better than the 0.3% decline which economists expected, though.
Ex-autos, sales rose 0.1% in October from September, after advancing 0.8% in September from August.
And September’s retail sales figures have been revised up to show a 0.9% rise, not the 0.7% first reported.
Elsewhere, annual US producer price growth was weaker than expected, reinforcing the disinflation narrative.
Producer prices rose 1.3% on-year last month, cooling from a 2.2% increase registered in September, and well short of forecasts for a fall tp 1.9%.
On a monthly basis, producer prices fell 0.5% in October from September, again short of the 0.1% rise expected.
1.33pm: Here’s a recap of the top risers and fallers on the market today
Fuller Smith & Turner PLC (AIM:FSTA) was up 7% after a London boom translated into bumper half-year results at pub and hotel group.
Travis Perkins (LSE:TPK) shares rose by more than 2.68% this morning after the building supplier confirmed it has refinanced its debt.
Shares in Watkin Jones PLC (AIM:WJG) jumped after the company said it appointed Alex Pease as its new chief executive officer. Its share price increased by more than 8%.
Genuit Group PLC (LSE:GEN) shares jumped 10% after the plumbing, heating and ventilation products maker said full-year adjusted operating profit is now expected to be "marginally above" current forecasts.
Shares in Renold PLC (AIM:RNO) rose by 8% after the company’s adjusted operating profits surged by 56% in the six months to 30 September 2023.
Shares in the autonomous vehicles group Aurrigo International fell 31% after it unveiled plans to raise £3.5 million by selling stock at a significant discount to Tuesday's closing price.
1:13pm: Manchester United CEO to leave ahead of Ratcliffe arrival
The chief executive of Manchester United Football Club is to leave after just two years in the job as its owners finalise the sale of a minority stake to the petrochemicals billionaire Sir Jim Ratcliffe, according to reports.
Sky News has learnt that the Old Trafford club will announce to the New York Stock Exchange later on Wednesday that Richard Arnold is to step down by the end of the year.
Exclusive: The announcement of Richard Arnold's departure as @ManUtd chief executive - which should come in the next couple of hours - will offer the clearest sign so far that the arrival of Sir Jim Ratcliffe as the club's new investor is imminent. https://t.co/qL2cjzDPcW
— Mark Kleinman (@MarkKleinmanSky) November 15, 2023
He will hand over operational control of the club immediately and will be replaced as interim CEO by Patrick Stewart, who will also retain his role as general counsel.
The shake-up in United's leadership will come just days before the club is expected to confirm that Sir Jim's Ineos Sports is acquiring a 25% stake.
12:32pm: Glencore's Teck deal highlights value in Anglo American
Anglo American is up 5.6% and JPMorgan has highlighted its attractions in light of Glencore’s deal with Teck Resources.
While it likely removes Glencore as a potentially interested party in Anglo American’s Met Coal assets, it underscores the bank's belief that further met coal M&A is likely if the steel sector views coking coal supply security as a critical long-term concern.
It also highlights a potential opportunity for Anglo to crystallise value through further reducing its coal exposure, JPM said.
The bank estimates Anglo’s sum-of-the-parts discount of around 24% widens to 34% if it values its Met Coal segment at 5.5x EV/Ebitda.
“Thus, we still see Anglo as offering an inexpensive valuation vs peers with self-help potential & a better near-term turnaround opportunity,” JPM said.
It rates the stock overweight.
12:01pm: Further gains forecast on Wall Street
US stocks are expected to open higher, extending yesterday’s strong gains which followed a bigger than expected fall in inflation.
In pre-market trading, futures for the Dow Jones Industrial Average were up 0.3%, while those for the S&P 500 were 0.5% higher, and contracts for the Nasdaq 100 futures were up 0.6%.
Joshua Mahoney at Scope Markets said: “US markets look set for another bumper day, with falling inflation in both the US and UK helping to drive home expectations that the next move from the FOMC and BoE will be to cut rates rather than raise them. “
“The repricing of market expectations for a Fed hike in December or January has seen the 15% chance fall to a mere 1%, essentially ruling out any additional tightening.”
“With markets typically forward looking, investors and traders will invariably look at this as a prime time to be preparing their portfolios for the 2024 monetary easing that looks increasingly likely,” he said.
Today’s economic news sees retail sales figures which are expected to show a decline of 0.3% in October, following a 0.7% gain in September.
The US producer price index is forecast to have increased 1.9% from a year ago in October, a slower pace than the 2.2% September increase.
11:01am: Experian (LSE:EXPN) (Experian (LSE:EXPN)) proves resilient and offers upside potential
Experian (LSE:EXPN) remains top of the FTSE 100 risers list after results today.
“Once again Experian (LSE:EXPN) proved the resiliency of its business model and strong growth from new and scaling products despite tighter lending criteria and lower origination volumes, especially in North America,” analysts at Bank of America said.
The bank noted that contrary to its US peers that have cut guidance for the next quarter (TransUnion is now targeting +2%/+3% organic in Q4), Experian (LSE:EXPN) expects continuation of first half trends for the rest of the full-year.
BofA continues to see significant upside potential in Experian (LSE:EXPN) (38%) as its organic growth troughs in 2024 and returns to high-single digit from 2025 onwards.
It reiterated a buy rating and 3,700p price target.
10:30am: SSE in a very good position after robust results
SSE is up 1.8% after its results which John Moore, senior investment manager at RBC Brewin Dolphin, described as "yet another robust set of results."
"Its earnings per share are ahead of expectations and the renewables group has reaffirmed its guidance for the rest of the year," he noted.
SSE is in a sweet spot in terms of the UK’s transition to net zero, with plenty of investment opportunities in front of it – but the company has been discerning about where to allocate capital when it needs to be, he explained.
"With an attractive rebased dividend – set to increase by between 5% and 10% annually – good prospects ahead, and debt under control, SSE is in a very good position, with the kicker from investments made starting to come through in 2025’s numbers," Moore said.
9:57am: Experian (LSE:EXPN) reassures after peers disappointed
Experian (LSE:EXPN) is the top riser in the FTSE 100 after its results and reaffirmed guidance - shares are up 4.9%.
Russ Mould at AJ Bell said the numbers are "particularly pleasing when you consider the disappointment served up by its sector peer TransUnion last month."
“It demonstrates the benefits of Experian (LSE:EXPN)’s more diversified model – the ability to translate a 5% increase in revenue to a near 50% increase in pre-tax profit is impressive and testament to just what an efficient and profitable operation this is," he said.
“Ultimately data plays an increasingly critical role in the global economy and that is not something which is likely to change in the short, medium or long term."
"As long as Experian (LSE:EXPN) can continue to execute properly its prospects look pretty strong," he thinks.
9:32am: Sterling drops as inflation cools
The pound has eased against the dollar after the inflation figures which has added to conviction that the Bank of England has finished its interest rate rising cycle.
The pound fell 0.21% to $1.2458 after the data which shoed inflation at a two-year low.
Meanwhile, the FTSE 100 has eased a touch but remains firmly in the gree, up 72 points.
9:23am: Hunt claims battle against inflation beginning to be won
Chancellor Jeremy Hunt has declared “we are beginning to win the battle against inflation”.
Hunt told broadcasters this morning that the goverment’s “very difficult decisions” on borrowing had helped hit the goal of halving inflation this year.
Beating back inflation has been this Government’s number one priority.
It’s now half what it was - down from 10.7% to 4.6%.
That’s thanks to deliberate action we’ve taken - being disciplined on spending, helping people into work, and resisting calls for additional borrowing https://t.co/Pet8tAjWEQ
— Jeremy Hunt (@Jeremy_Hunt) November 15, 2023
But the chancellor also cautioned that “there’s lots more work to do” to get inflation down to the actual UK inflation target of 2%.
Hunt said: “ we are beginning to win the battle against inflation, we can move to the next part of our economic plan, which is the long-term growth of the British economy.”
The chancellor will deliver his autumn statement next week.
9:02am: Government could save £2 billion from inflation drop
With the Government toasting the fall in inflation, a report suggested it could also save them money.
Ahead of the figures, Bloomberg reported the Government was considering using October’s inflation number for next year’s rise in working-age benefits, citing two people familiar with official thinking.
The report said Ministers were waiting to see the data before deciding how much to lift support for the roughly nine million households on working-age benefits from April.
The convention is that the September data is used but the government has refused to make that commitment.
Using October’s inflation rate would save roughly £2 billion a year.
8:47am: Builders, retailers and property firms advance
Housebuilders, retailers and property firms are all on the rise following the inflation numbers.
The drop in inflation was the biggest since 1992.
Only precedent I can see for the fall from month to month in annual measure was April 1992 when CPI fell from 7.1% to 4.7% (during Sir John Major’s successful GE campaign by the way)… although that was before CPI was a headline release…
— Faisal Islam (@faisalislam) November 15, 2023
Barratt Developments rose 2.5%, Persimmon PLC (LSE:PSN) climbed 2.5% and Taylor Wimpey advanced 2.2%.
The housing market has been battered by rising mortgage rates and the cost of living crisis so talk of an earlier than expected cut in interest rates are welcome.
Property firms are also in the green, with Land Securities up 1.4%, and Segro up 2.1%.
Retailers also benefited from the news with Frasers up 2.2%, JD Sports Fashion up 2.2%, Marks & Spencer up 2.0% and Kingfisher up 1.9%.
Mining stocks are also rising following better-than-expected data out of China today.
Retail sales grew 7.6% year-on-year last month, compared to forecasts of 7%, and industrial production rose 4.6%, above expectations of a 4.4%.
Anglo American rose 2.7% and Fresnillo rose 2.6%.
8:28am: Rate cuts not hikes on the agenda
The FTSE 100 has extended its gains, now up 70 points, after the inflation figures with markets pricing in interest rate cuts of 80 basis points in 2024.
It's a sharp reversal from what markets were expecting as recently as the summer when interest rates were seen rising well above 6%.
Samuel Tombs at Pantheon Macroeconomics thinks October’s consumer prices report should entrench expectations that the MPC will be able to start to reduce Bank Rate in about six months’ time.
He calculated that the zero month-to-month change in the all-items CPI equates to a seasonally-adjusted annualised increase of just 0.9%.
Martin Beck at the EY ITEM Club agreed.
“With the big move in energy bills now reflected in the annual inflation measure, the scale of October’s fall in inflation is unlikely to be repeated.”
“Nonetheless, inflation should head down further in the coming months and, in the EY ITEM Club’s view, the decline should continue to outpace the Bank of England’s forecast.”
He felt the data should “assuage earlier concerns about the stubbornness of UK inflation,” reinforcing his view that the Bank of England “will start cutting interest rates from late next spring, sooner than markets currently expect.”
HSBC's Elizabeth Martins was a little more cautious telling Bloomberg that talk of 80 basis rate cuts next years was "excessive."
She likended the battle to tame inflation to a diet, with the first few pounds the easy bit, before hitting a plateau, and highlighted the hawkish tone of the Bank of England's last meeting.
Nonetheless, she described the fall as "wonderful news."
8:10am: FTSE 100 jumps after sharp fall in inflation
The FTSE 100 jumped after weaker-than-expected inflation figures cemented expectations that interest rates have peaked with the next move likely to be down.
At 8:15am, London’s blue chip index was up 67.03 points, 0.9%, at 7,507.50 while the FTSE 250 climbed 86.07 points, 0.5%, at 18,622.20.
Susannah Streeter at Hargreaves Lansdown said: “Investors have a spring in their step, as hopes rise that the fight against inflation is gaining ground.”
The consumer price index dropped to 4.6% in October, down from 6.7% in September, and below City expectations for a fall to 4.7%.
James Smith at ING Economics said the fall reflected the impact of lower gas prices while food price inflation slowed dramatically too.
He said the good news for the Bank of England was that services inflation fell further than expected, which “all but rules out any more tightening this year.”
“We expect services inflation to fall back to the 3.5-4% area next summer and that would be a catalyst for rate cuts to begin”, he said.
Experian (LSE:EXPN) rose 3.1% after reiterating guidance alongside solid growth in first half revenues.
Analysts at Shore Capital said that post the recent warning from peer TransUnion, “this will come as a relief to many, but Experian (LSE:EXPN)’s performance reflects its broader services portfolio.”
SSE advanced 2.1% after it also reiterated guidance after reporting first half EPS ahead of guidance.
John Moore at RBC Brewin Dolphin, said: “SSE has delivered yet another robust set of results.”
“Its earnings per share are ahead of expectations and the renewables group has reaffirmed its guidance for the rest of the year.“
Jet2 PLC (AIM:JET2) rose 0.8% as Liberum started coverage with a buy rating and 1,500p price target.
7:45am: Experian (LSE:EXPN) sees solid first half growth
Experian (LSE:EXPN) PLC reported solid growth in the first half led by Latin America and a “good” performance in North America.
Brian Cassin, chief executive officer, said: “We delivered good growth in H1. We grew in every region and across both B2B and Consumer Services.”
The credit scoring company said in the six months ended 30 September, benchmark revenue in ongoing activities rose 6% to $3.41 billion from $3.22 billion while EPS climbed 8% to 70.4 cents from 65.4 cents.
Statutory pre-tax profit increased 48% to $763 million due to revenue growth and reduced non-benchmark costs.
The firm said organic revenue growth was 5% in the second quarter, unchanged from the first quarter.
Consumer Services organic revenue rose 6%, now serving 178 million free members, up 21 million year-on-year.
B2B organic revenue growth was 4% with new product performance and successful new business development driving growth.
Experian (LSE:EXPN) said all regions contribute positively with double-digit growth in Latin America, a good performance in North America, improvement in EMEA and Asia Pacific, and resilient growth in UK and Ireland.
The dividend was increased 6% to 18.0 cents per share.
7:33am: SSE backs guidance, profits edge higher
Back to the inflation numbers shortly, but first some company news.
SSE PLC (LSE:SSE) reported a modest rise in profits in the first half of the year as a strong performance in the renewables and thermal units offsetting a fall in the distribution business.
The FTSE 100-listed firm said in the six months to September 30, pre-tax profit rose 1% to £565.2 million from £559.4 million while adjusted earnings per share of 37.0p, although ahead of pre-close guidance, were down 11% from 41.8p
Greater investment led to increasing profitability in SSEN Transmission, offset by the 25% non-controlling interest divested in November 2022, whilst the timing of cost inflation recovery in SSEN Distribution principally led to lower profitability, down 31%, SSE said.
Profitability in Renewables jumped 479% reflecting higher hedged prices combined with lower hedge buybacks required, while a strong financial performance was reported in SSE Thermal, with profits 212%.
SSE declared a dividend of 20.0p, down from 29.0p, a year ago, and expects to make a full-year payout of 60p.
It reiterated a commitment to target annual dividend increases of between 5-10% to 2026/27.
The firm reaffirmed guidance for full year 2023/24 of more than 150p adjusted earnings per share and upgraded capital investment expectations to £20.5 billion for the five-year programme reflecting increasing visibility over regulated networks spend and associated supply chain costs.
7:11am: Inflation falls more than expected, hitting two-year low
UK inflation has fallen to a two-year low, as the cost of living squeeze eases, figures from the Office for National Statistics showed.
The consumer price index dropped to 4.6% in October, down from 6.7% in September, and below City expectations for a fall to 4.7%.
On a monthly basis, CPI did not change in October, compared with a rise of 2.0% last year.
Core CPI (excluding energy, food, alcohol and tobacco) rose by 5.7% in the 12 months to October, down from 6.1% in September; the CPI goods annual rate fell from 6.2% to 2.9%, while the CPI services annual rate fell from 6.9% to 6.6%.
The figure was also below City expectations for a fall to 5.8%.
In the year to October 2023:
▪️ Consumer Prices Index including owner occupiers’ housing costs rose by 4.7%, down from 6.3% in September
▪️ Consumer Prices Index (CPI) rose by 4.6%, down from 6.7% in September
— Office for National Statistics (ONS) (@ONS) November 15, 2023
The largest downward contribution to UK inflation came from “housing and household services”, where the annual rate for CPI was the lowest since records began in January 1950, the ONS said.
That’s due to the drop in energy bills last month, after Britain’s energy price cap was lowered.
The ONS said: “Gas costs fell by 31.0% in the year to October 2023, compared with a rise of 1.7% in September. This is the lowest annual rate since records began in January 1989.”
“Electricity costs fell by 15.6% in the year to October 2023, compared with a rise of 6.7% in September. This is the lowest annual rate since records began in January 1989.”
Recreation and culture provided the only large positive contribution, the ONS said.
7:00am: Stocks seen higher with inflation print to come
UK inflation figures will set the tone on Wednesday with expectations that the headline figure will drop below 5%.
Spread betting companies are calling London’s lead index up by around 28 points.
On Tuesday, cooler than expected US inflation figures sent US markets soaring on expectations that interest rates have peaked.
Andrew Hunter at Capital Economics said the softer data "kills off any remaining chance of a December rate hike from the Fed, and we continue to expect a further decline in inflation over the coming months, which will bring interest rate cuts onto the agenda before long."
Bank of America, which up to this report, had expected one interest rate increase altered its call.
"We have changed our Fed call. We now think that the hiking cycle is over," the bank said.
"The Fed will probably try to leave the door open for more hikes next year at its December meeting, but there are diminishing returns to hawkish rhetoric when its policy choices lean dovish. We think that it would take meaningful re-acceleration in inflation for the Fed to hike next year. That is not our base case.
Back in London, and alongside inflation data, updates from SSE and Experian (LSE:EXPN) will provide the early headlines.