- FTSE 100 closed down 112 points at 7,446
- Inflation rises for first time since February
- ECB's Largarde see rate cuts in the summer
4:40pm: FTSE 100 closes sharply as hopes for early global rate cuts fade
The FTSE 100 ended a dismal day down sharply although above session lows as investors dialled back hopes of an early cut in interest rates.
At the close, London's blue-chip index was down 112.05 points, 1.5%, at 7,446.29 and the FTSE 250 was down 328.95 points, 1.7%, at 18,864.37.
A combination of the strong CPI data, weak figures from China and comments from central bank officials in Europe and the US provided a potent combination to send equities lower.
Chris Beauchamp at IG said: "The FTSE 100’s 2024 has gone from bad to worse following this morning’s inflation data."
"Hopes of an early Bank of England rate cut have receded dramatically, leaving the index high and dry."
"Today’s UK inflation news has hit the domestic stocks hard, but international firms like the mining sector have taken a knock from the stronger dollar driving commodity prices lower."
"This double-whammy spells trouble for the index, and a return to the October lows is a distinct possibility.”
4:00pm: Goldman nudges up UK inflation forecast
Goldman Sachs (NYSE:GS) has increased its year-end target for headline inflation after today’s figures which surprised consensus expectations to the upside.
It noted core inflation rebounded to 0.54% (after falling sharply to 0.08% last month), driven by a pickup in both core goods and services.
“That said, a large degree of the strength today was driven by seasonal components such as accommodation and airfares, which have the potential to revert going forward,” it said.
“As such, while today's print slows the disinflation process that had been underway in preceding months, we continue to expect inflationary pressures to recede going forward.”
Therefore, Goldman expects core and headline inflation to be 2.6% year-on-year (unchanged) and 2.0% year-on-year (vs 1.8% previously), respectively, in December 2024.
3:55pm: Wizz Air forced to pay customers over £1m in row over cancelled flight
Wizz Air has been forced by regulators to pay out more than £1.2m to passengers in a row over cancelled flights and delays.
The Civil Aviation Authority (CAA) took action against the Hungarian low-cost airline after serious concerns were raised over the high volumes of complaints and its failure to meet passenger rights obligations.
Passengers were left frustrated after suggesting the airline had not provided alternative flights to enable passengers to get to their destinations when their flight had been cancelled.
Passengers also felt Wizz Air was not providing appropriate care when flights were significantly delayed.
3:40pm: Glencore at risk from near-term headwinds
Glencore is one of the worst performing stocks with a “tactical” downgrade by Deutsche Bank adding to pressure on the share price, which is down 3.5%.
The German bank has moved the miner to ‘hold’ from ’buy’ amid several near-term earnings and strategy headwinds.
Deutsche noted updated multi-year guidance will be provided soon and for the first time since December 2022, Deutsche expects production to be lowered materially for metals, reflecting a combination of asset sales, mine closures and operational headwinds.
Deutsche also noted pricing headwinds continue, with falling nickel and cobalt prices adding to coal price weakness and shareholder returns in 2024 will likely be limited to the base dividend, a significant drop from recent years and below peers.
It also said it “may not be until H224 when further clarity on the CoalCo separation plan emerges.”
“In sum, we continue to see medium-term value, but there are better near-term options for shareholder returns and cyclical leverage,” the bank said.
3:22pm: Perfect storm sends equities tumbling
It's been a bit of a perfect storm for equities today, hence the hefty falls.
Hot inflation in the UK hasn't helped, but just as the hopes of early cuts to US interest rates boosted markets towards the end of 2023, so the gains have faded as these hopes have dwindled.
Fed officials have pushed back against the market's hopes, while today's UK CPI and comments from ECB President Christine Lagarde also point to later, rather than sooner, interest rate cuts.
Throw mixed data out of China today, and you can see why equities have fallen away.
It's not all bad news, part of the reason for the dwindling hopes in the US is the economy remains resilient in the face or rising rates as today's retail sales figures showed.
James Knightley at ING explained the jobs market is tight and consumer spending is holding up.
He favours May as the start point for interest rate cuts rather than March as the market currently favours.
The FTSE 100 is for now down 131 at 7,427.
2:48pm: FTSE 100 slips further as US heads south
Stocks in New York fell further on Wednesday as strong retail figures added to concerns that interest rate cuts may come, later, rather than, sooner.
Shortly after the opening bell, the Dow Jones Industrial Average was down 116.78 points, 0.3%, at 37,244.34, the S&P 500 was down 33.85 points, 0.7%, at 4,732.32 and the Nasdaq Composite was down 173.76 points, 1.2%, at 14,770.59.
Kieran Clancy at Panthen Macroeconomics said the report is "much stronger than we expected."
"These data don't change our call that the Fed will start to ease in March, because they will be responding to much lower inflation rather than weaker growth, but more reports like this would increase the risk of a delay until May," he added.
Back in London, and the FTSE 100 is showing no signs of life, now down 144 points.
2:21pm: US retail sales stronger-than-expected
US retail sales rose at a faster rate than expected, according to new data on Thursday, showing the US economy remains resilient in the face of interest rate rises.
According to the Census Bureau, US retail sales rose by 0.6% in December from November, stronger than the 0.4% increase that was forecast.
Ex automobiles, sales rose by 0.4% on-month in December, compared to a 0.2% in November from October, and the 0.2% predicted by economists.
2:10pm: Manchester United cuts outlook after Champions League exit
It's listed in the US, but it's fortunes are closely watched in the UK - Manchester United has slashed earnings guidance after its exit from elite European competition.
The Red Devils finished bottom of its Uefa Champions League group, and is having another turbulent season.
United said on Wednesday that it now expects revenue to range from £635 million to £665 million in the year to June 30, a drop from previous expectations of £650 million to £680 million.
Guidance for adjusted Ebitda dropped from a range of £140 million to £165 million, to a range of £125 million to £150 million.
They’ve been in focus as the attempt to sell the club dragged on for more than a year, with UK billionaire Jim Ratcliffe eventually securing a 25% stake on the stroke of Christmas.
1:30pm: Here are some of today's big risers
The Mission Group emerged as an outlier in the struggling advertising sector on Wednesday after updating on significantly improved trading late on in the year.
Shares climbed 10% to 25.85p on news plans to reduce debt as companies slash advertising spending had delivered early benefits.
Shares in Frontier Developments PLC (AIM:FDEV) fell then rose 12% to 132.6p after the video games developer posted interim results that showed a swing to losses, in line with updated guidance from November.
Revenue for the six months to 30 November was down 16% to £47.7 million, with adjusted EBITDA losses increasing to £4.9 million from £0.6 million.
Shares of Hornby PLC (LSE:HRN) were up 3.3% in early trading after the model train Scalextric maker said it had negotiated the key Christmas period without incident.
Sales for the quarter ending 31 December were up 5%, against a broader market decline of 1.5%.
And finally, Shares in Gulf Marine Services PLC (AIM:GMS) climbed 7% after the company firmed up earnings guidance at the top end of the projected range.
It expects underlying profit to be US$86 million for 2023 and reiterated its forecast for 2024 of US$87-US$95 million, saying demand for its oilfield vessels and mobile drilling platforms remained strong.
1:07pm: Olive oil wins the gold medal for biggest price rise
Ahead of the US open and the FTSE 100 remains close to session lows, the pound is up and bond yields have spiked as investors increasingly take the view that interest rate cuts may not come as early as some in the market had hoped.
Back to the inflation numbers, and a look at which prices are doing what.
Olive oil has seen the biggest increase in pricing with inflation running at 45.8%, although that is still down from nearly 54% in November.
Car insurance inflation is another big mover, currently at 43.8%.
Better news was that food inflation ticked down to 8% in December although there were wide differences for different products.
Sugar saw a big fall in the rate of price increases, down to 21% in December from 40% in November, while chocolate is also seeing high levels of inflation, still at 22%.
Sauces, spices and condiments stayed sticky at over 18% and pastries ticked up to 15% but there was better news for fans of seafood with fish inflation decelerating to just over 2%.
Even better, frozen seafood prices are now falling 1.5%.
12:48pm: Six reasons to buy Deliveroo - Barclays upgrades
Another rare riser, is Deliveroo which has jumped 3.6% after Barclays upgraded to ‘overweight; and set out six reasons to own the stock
It reckons growth should improve in 2024; sees mid-term margin upside; sees an M&A upside post founder share expiry; possible cash returns; valuation support on FCF basis; and FTSE inclusion.
While accepting there are risks, it views Deliveroo as a story with catalysts, EPS momentum and M&A optionality for 2024.
It has a set a price target of 155p, up from 145p.
It sees potential catalysts as a trading update on January 19, and annual results in March.
12:18pm: BofA sees more challenging 2024 for clothing retailers; cuts Next and Dr Martens
Bank of America has taken a more cautious view of European clothing stocks, and now has 9 of the 12 companies it covers on 'underperform' or 'neutral/'
After an exceptional year in 2023, when record price increases fuelled sector revenue growth, and the combined market cap of the 12 companies in its European apparel coverage rose by >50%, BofA thinks the 2024 outlook looks more challenging.
"We expect revenue growth to slow across the whole sector as volumes fail to offset the price declines," it said.
Gross margins should rise, but ongoing operating cost inflation - especially labour - will likely cap EBIT margin uplift, it reckons.
BofA said its forecasts were around 3-4% below consensus for financial 2024 and 2025.
"We downgrade Zalando, Dr. Martens and Next to Neutral from Buy, and H&M, SMCP to Underperform from Neutra," it said.
BofA prefers Inditex and M&S - both buy-rated.
In London, shares in Next are down1.8% and Dr Martens is down 1.6%.
12:02pm: US stocks set for further falls
Stocks in New York look set to open lower on fading hopes for a March interest rate ut and ahead of retail sales figures before the market open.
In pre-market trading, futures for the Dow Jones Industrial Average were down 0.4%, while those for the S&P 500 were down 0.4% and contracts for the Nasdaq 100 futures also fell 0.4%.
On Tuesday, stocks fell after Federal Reserve Governor Christopher Waller said the central bank should not rush to cut its benchmark interest rate until it is clear lower inflation will be sustained.
In a speech, Waller said regardless of when rate cuts begin, the US central bank should proceed "methodically and carefully."
“I see no reason to move as quickly or cut as rapidly as in the past," he said.
Retail sales are forecast to have risen by 0.4% in December, after a 0.3% increase in November, as the economy remains resilient in the face of higher interest rates.
Later in the session, the US Federal Reserve will release its latest “Beige Book”, an anecdotal assessment of economic conditions gathered by each central bank branch.
While, there will be more Fedspeak as Fed governor Michelle Bowman joins in a fireside chat at a US Chamber of Commerce’s event.
On the earnings front, look out for numbers from Charles Scxhwab.
11:46am: House prices slid in November, ONS
The average UK house price was £6,000 lower in November last year than 12 months earlier, according to the Office for National Statistics.
Property values fell by 2.1% over the 12 months to November 2023 to reach £285,000 on average.
Average house prices over the year to November decreased in England to £302,000 (a 2.9% fall) and dropped in Wales to £213,000 (down 2.4%), but increased in Scotland to £194,000 (a 2.2% rise) and in Northern Ireland to £180,000 (up 2.1%).
Private rental prices paid by tenants in the UK rose by 6.2% in the 12 months to December, the joint-largest increase since records began in 2016.
Aimee North, head of Housing market indices at the ONS, said: “The annual fall in house prices continues to accelerate, with the average cost of a home falling at its fastest rate for over 12 years.”
11:12am: Smith & Nephew's Ortho unit undervalued - BofA
Smith & Nephew PLC (LSE:SN) is another rare riser with its share price up 1.3%.
Bank of America has lifted its price target to 1,300p from 1,110p and reiterated a 'buy' rating and sees value despite a 20% share price recovery since October's 10-year low.
"While the Orthopaedics challenges have been a big overhang for the equity story, we are now seeing some light at the end of the tunnel," BofA said.
The supply chain has improved and as "we start to see normalisation, we look at several opportunities for Ortho."
BofA thinks CORI robot, cementless mix shift and the AETOS shoulder could all contribute materially to group sales and profits.
The broker said its reverse sum-of-the-parts analysis suggests no value for the Ortho business in S&N's current market value, "which is unfair in our view."
10:38am: New BP boss needs to restore investor confidence
Derren Nathan, head of equity research at Hargreaves Lansdown notes BP’s new CEO Murray Auchinloss has a job to do to restore investor confidence, and close the valuation gap with arch rival Shell, and an even wider gulf with its US peers.
“Continuity of the existing strategy is no bad thing but the shape of returns from the growing focus on energy transition technologies still needs to be proved,” he said.
In the short-term BP’s strong cash flows remain a key area of focus, enabling investment in future proofing the company whilst making supporting a yield of over 5%, Nathan said.
“Despite cooling energy prices that position does not look under threat,” he suggested.
Assuming an oil price of $60 per barrel, some way below the current price, BP should have room to continue growing the dividend, and purchase around $4 billion of shares each year, he reckons.
UBS said the news lifts an overhang on the shares with the strategy not changing given Auchincloss was a key part of having set it under the old management team.
"bp is our most preferred stock with 33% expected upside to our 600p/sh price target," the broker said.
10:14am: UBS sees risk to Shell earnings, slowdown of buybacks
Also weighing on the FTSE 100 is a downgrade to Shell PLC (LSE:SHEL, NYSE:SHEL) by UBS.
The Swiss bank has moved to 'neutral' from 'buy' and cut its price target to 2,600p from 3,000p.
UBS accepted "the arrival of a new CEO and increased discipline within the financial frame have led to better share price performance at Shell, with the stock now trading at an EV/DACF premium to peers."
"However, the scale of the business means any changes made now will take many years to have an impact."
In the interim, UBS sees increasing risks related to a cut to consensus estimates, a slowdown of the share buyback and a gradual rebalancing of the liquid natural gas markets.
10:03am: US Fed Reserve official sees no rush to cut rates
Markets are also reacting to comments by Federal Reserve Governor Christopher Waller on Tuesday, after the London close.
Waller said the US is "within striking distance" of the Fed's 2% inflation goal, but the central bank should not rush to cut its benchmark interest rate until it is clear lower inflation will be sustained.
In a speech, Waller said regardless of when rate cuts begin, the US central bank should proceed "methodically and carefully." Waller pointed out that in many previous cycles, which began after shocks to the economy either threatened or caused a recession, the Federal Open Market Committee cut rates reactively and did so quickly and often by large amounts.
"This cycle, however, with economic activity and labour markets in good shape and inflation coming down gradually to 2%, I see no reason to move as quickly or cut as rapidly as in the past," he said.
9:48am: Profit forecasts to rise at Mitchells & Butler after robust trading
Shore Capital expects to increase forecasts for Mitchells & Butler PLC after today’s “robust” trading update.
As we reported earlier, the full year outturn is now expected to be towards the top end of current market expectations.
Shore Capital said it current pretax profit estimate of £155 million is predicated on like-for-like revenue growth of c3-4%.
“Given the strength of trading to date we would expect to nudge up our estimates with each 1ppt on LFL worth c£15 million (EPS: 2p) to operating profit,” it said.
“Ahead of speaking to the company, we would anticipate adding to 1-2ppt to LFL sales, or c.£20 million to the bottom line.”
Shore Capital has a ‘hold’ rating on the pub operator with its key concern being cash conversion.
“A better profit outturn would be expected to see cash flow improve demonstrably and getting closer to covering repayments out of cash generation, freeing up cash flow for shareholders,” it said.
“Reaching such a milestone could see us turn more positive on the investment case.”
Shares are down 1.8% with the wider market now down 125 points.
9:25am: ECB's Lagarde sees summer interest rate cut
The European Central Bank is likely to cut interest rates in the summer, its president Christine Lagarde said on Wednesday, adding that policymakers should have enough wage data by “late spring” to decide if eurozone inflation will keep falling.
The comments may disappoint a market that, as in the UK and the US, was pencilling in an earlier easing to monetary policy.
Asked if she agreed with fellow ECB governing council members who have signalled a rate cut is expected this summer, she said: “I would say it is likely too, but I have to be reserved.”
She was speaking to Bloomberg TV at the World Economic Forum in Davos.
9:20am: 888 forecasts slashed but "step change in urgency" sensed
Today’s trading statement from William Hill owner, 888 Holdings PLC (LSE:888), has unsurprisingly sent the shares down more than 10%.
Analysts have been bust slashing forecasts once more but some think the share price offers value from here.
Jefferies has cut financial 2023 and 2024 Ebitda forecasts by 3% and 13% respectively but “continue to see material upside from the successful execution of the William Hill integration.”
“With a suite of new management and £30 million additional cost savings announced today, we sense a step change in urgency,” the bank said.
It has a buy rating and a 300p price target.
Peel Hunt has cut its financial 2024 Ebitda forecast from £394 million to £342 million - “to low from high in the range.”
But it expects revenue to grow, and that the new team will set out a credible plan for margin growth in March.
“We believe that this kitchen-sinking of numbers was anticipated in the share price but the growth potential is not,” the broker said.
It reiterated a ‘buy’ recommendation and 175p target price.
9:01am: IMI a rare riser, as Goldman upgrades to 'buy'
On a miserable day for stocks, let’s take a closer look at the FTSDE 100’s leading riser, IMI PLC (LSE:IMI), upgraded by Goldman Sachs (NYSE:GS) today.
The stock is up nearly 4% to 1,611p, but that still leaves plenty of upside to Goldman’s 12 month target price of 2,020p, up from 1,780p.
The investment bank sees the stock as a beneficiary of both a sustained capex super-cycle as well as a potential recovery in short-cycle industrial production, where recent ISM manufacturing PMIs suggest inventories may be approaching a trough.
The bank said its more “optimistic view on demand across Critical and Hydronic Engineering supports FY25e sales/EPS forecasts that are c.2%/5% above consensus.”
“Moreover, IMI’s shares have historically outperformed during the trough-to-peak phase of the manufacturing PMI cycle, and we see scope for the shares to outperform over the next 12m,” it added.
8:51am: Housebuilders hit but IMI outperforms on Goldman upgrade
Looking at the FTSE 100 and there are just six risers as I write.
The stand-out performer is IMI PLC (LSE:IMI), up 3.4%, after Goldman Sachs (NYSE:GS) upgraded to ‘buy from ‘neutral’.
The US investment bank has also raised IAG, the owner of British Airways, to ‘buy’ from ‘neutral’ and lifted its price target to 238p from 219p.
Shares in IAG are up 0.2%.
Heading downwards, are housebuilders, knocked by fading expectations of an early cut in interest rates.
Persimmon, back in the lead index after the takeover of Dechra, is down 3.8%, Barratt Developments is down 2.9% and Taylor Wimpey is down 2.6%.
Property stocks are also lower, with Segro down 2.9% and Land Securities down 2.8%.
Mining stocks are weak on the back of the mixed data from China with Glencore, down 3.1%, also the subject of a downgrade by Deutsche Bank from ‘buy’ to ‘neutral’.
Admiral PLC is down 2.7% after UBS downgraded to ‘neutral’ from ‘buy’.
8:33am: Mixed Chinese data adds to FTSE's woes
It’s a sea of red across trading screens after the strong inflation print and weak data in China.
Figures showed the world’s second largest economy grew by 5.2% in 2023, but the property sector, which has been mired in a debt crisis for three years, continued to suffer in 2023.
Investment in property development fell 9.6% last year compared with a year earlier, while new home prices in December declined 0.4% on the previous month, the sharpest fall since February 2015.
China’s population fell to 1.4 billion in 2023.
8:23am: August cut in rates seen more likely after inflation spike
James Smith, developed markets economist, at ING Economics thinks financial markets may be a little “premature” pricing a rate cut in May.
“We don’t rule it out, but we think it requires a) more tangible progress on both services inflation and wage growth in 1Q than we currently expect, and b) a relatively muted fiscal package from the Chancellor at the March budget.”
“For now, we’re pencilling in an August cut with 100bp of easing to follow this year, though we’ll keep that under review as the data and fiscal news comes in over the next couple of months,” Smith said.
Simon French at Panmure Gordon agrees.
He commented on X: “Pretty comfortable with my call for August for the first cut in UK bank rate. CPI was never likely to slow in a straight line - & April indexation event still to navigate. Market pricing for an early Spring cut will drift on this data.”
Despite the modest tick up in UK inflation in December, the spread to the G20 average narrowed further (global inflation picked up by more last month). The spread at just +40bp is way down on the +440bp in March 2023 - and the lowest since January 2022. #recouplingtrend https://t.co/PTU4wIYY8G pic.twitter.com/rocwfoV67Q
— Simon French (@shjfrench) January 17, 2024
Smith noted the surprise rise in inflation seems to be largely down to unexpected stubbornness in services inflation.
However, he pointed out that even with this latest surprise, services inflation is still some 0.5 percentage points below the Bank of England’s most recent projections.
“The lesson here is not to react to one month’s worth of data on services inflation, which has bounced around a bit over recent months,” Smith said.
“But it is a reminder that the decline in services CPI will be gradual in the near term, and we don’t expect this to dip below 6% until at least March.”
Smith believes the wider inflation story is looking brighter.
“Despite this latest setback, we continue to expect headline CPI to dip slightly below 2% in April and down to the 1.5% area in May/June,” he said.
“We expect this downtrend to be relatively broad-based, with further improvements highly likely in food and energy.”
8:08am: Stocks sink as surprise rise in inflation dents rate cut hopes
The FTSE 100 fell sharply when trading started on Wednesday as stronger-than-expected inflation figures dashed hopes for an early cut in interest rates.
At 8:08am, London’s blue-chip index was down 98.52 points, 1.3%, at 7,459.82 while the pound rose 0.2% to $1.2658.
Susannah Streeter, head of money and markets, Hargreaves Lansdown said “frustration is in the air as UK inflation continues to prove stubborn."
“With inflation still double the Bank of England’s target, policymakers are still likely to stay ultra cautious about the prospects for interest rate cuts this year.”
“Worries are still swirling about the effect on prices of delays to goods arriving from Asia, given that attacks in the Red Sea are disrupting around 20% of global shipping,” she noted
In response, traders pared dialled back rate cut expectations and are no longer fully pricing five cuts by the Bank of England this year, pulling back to around 119 basis points.
For May, the bets have slipped to 15 basis points, so still a better-than 50% change of a cut.
Samuel Tombs at Pantheon Macroeconomics said a relatively large increase in air fares in December, which are volatile, as well as a hefty increase in tobacco duties, explain the increase.
But he noted these components will not remain a source of upward pressure on overall prices over the coming months.
Looking ahead, Tombs expects the headline rate of CPI inflation will pick up in January “on the anniversary of a quirky fall in prices but then fall quickly over the following months, edging below 2% in April and to a low of about 1.5% mid-way through the year.”
This “should give the MPC confidence to cut Bank Rate for the first time in May - or failing that June - though the five 25bp cuts priced-in by investors for this year continue to look a stretch,” he thinks.
7:53am: Mitchells & Butler sees top-end outturn, Pearson in line with raised guidance
Other trading updates of note this morning include a positive looking statement from Pearson PLC (LSE:PSON).
The FTSE 100-listed firm said strong execution delivered a financial performance in line with upgraded guidance leaving it well positioned for 2024 and beyond.
Underlying sales for the year was 5%, with adjusted operating profit of c.£570-575 million, up more than 30% on an underlying basis compared to 2022, resulting in a margin of c.15.5%.
Pearson said the strong performance was driven by Assessment & Qualifications and English Language Learning.
Meanwhile, Mitchells & Butlers PLC (LSE:MAB) reported a strong trading performance over the festive season has resulted in increased like-for-like sales growth in the year to date of 7.7%, with total sales growth of 9.7%.
The pub operator, which owns All Bar One, said cost pressures are now abating and now believes that the full year outturn will be towards the top end of current consensus expectations.
7:42am: 888 warns higher investment will mean low-end earnings
888 Holdings PLC (LSE:888) on Wednesday cautioned that extra investment would mean 2024 adjusted EBITDA would be at the low end of consensus range of £340-397 million.
But new chief executive Per Widerström said he was confident delivering strong shareholder returns in the coming years.
Widerström intends to provide details on 888’s evolved strategic and value creation plans, including new medium-term financial and strategic targets, at its full year results, which are expected to be released on March 26.
The betting group, which owns William Hill, reported fourth quarter revenue of £424 million, 5% higher than the previous quarter, but 7% lower year-over-year.
7:27am: BP names Murray Auchincloss permanent CEO
Back to company news for a moment and bp PLC has confirmed the news that broke on Tuesday evening that interim chief executive Murray Auchincloss has been given the job on a permanent basis with immediate effect.
Auchincloss has been interim CEO since September 2023 after the shock departure of Bernard Looney.
BP said the appointment followed a robust and competitive search process and included a range of candidates, including external to bp.
For his part, Auchincloss said: "It's an honour to lead bp - this is a great company with great people.”
He said its strategy “from international oil company to integrated energy company, or IOC to IEC - does not change. I'm convinced about the significant value we can create.”
7:12am FTSE 100 seen sharply lower after hot inflation print
The FTSE 100 is expected to open sharply lower after stronger-than-expected UK inflation figures and disappointing data from China.
Spread betting companies are calling London’s blue-chip index down by around 98 points after closing down 36.57 points, 0.5%, at 7,558.34 on Tuesday.
In London, the Consumer Prices Index rose by 4.0% in the 12 months to December, up from 3.9% in November, and the first time the rate has increased since February, according to figures from the Office for National Statistics.
In the year to December 2023:
▪️ Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 4.2%, the same rate as November.
▪️ Consumer Prices Index (CPI) rose by 4.0%, up from 3.9% in November.
— Office for National Statistics (ONS) (@ONS) January 17, 2024
On a monthly basis, CPI rose by 0.4% in December,, the same rate as in December 2022.
City analysts had expected the annual rate to fall to 3.8%.
Core CPI (excluding energy, food, alcohol and tobacco) rose by 5.1% in the 12 months to December, the same rate as in November while the CPI services annual rate increased from 6.3% to 6.4%.
The core reading was expected to drop to 4.9% with the services reading predicted at 6.1%.
The ONS said the largest upward contribution to the figures came from alcohol and tobacco while the largest downward contribution came from food and non-alcoholic beverages.
Elsewhere, Chinese equities on the mainland and in Hong Kong opened down following the release of official housing data for December, highlighting weak sentiment due to an ongoing property downturn.
This followed falls in the US on Tuesday after a leading Federal Reserve official said interest rates cuts, when they come, need to be done carefully, and there was no need to rush.