(Alliance News) – Stock prices in London opened higher on Wednesday, following UK inflation data which showed consumer prices rose more slowly than expected.
The consumer price index rose 2.5% in December from a year earlier, slowing 2.6% in November as market consensus cited by FXStreet had forecast inflation accelerating at 2.7%.
Separately, the Office for National Statistics reported that the fall in producer prices slowed to 1.5% in December from 2.1% in November, when consensus had expected a greater slowdown in 1.3% in December.
“After the headwinds that have buffeted UK financial markets over the past two weeks, today’s inflation figures will undoubtedly provide some welcome respite,” commented Danni Hewson. “While at 2.5% inflation remains stubbornly above the Bank of England’s target, the fact that headline CPI is below expectations and has even fallen slightly is reason to celebrate. Markets immediately seized on these figures, which will be the last snapshot of inflation that members of the monetary policy committee will have before deciding on a possible interest rate cut in February.
However, she added that “it is important not to get too complacent and to remember the possibility of a new spike in inflation if businesses pass on these additional costs in April… It is also possible that “Global trade frictions resulting from U.S. tariffs maintain volatility for the foreseeable future.” And while rate cuts would be welcome, one reason they are likely to be considered is the weakness that appears to be entrenched in the UK economy.
“The Chancellor may have breathed a sigh of relief this morning, but she is not out of the woods yet and will need to keep her promise to properly outline her growth plans if she is to convince the markets.”
The FTSE 100 index opened up 55.99 points, or 0.7 per cent, at 8,257.53 points. The FTSE 250 was up 313.22 points, or 1.6%, at 20,079.49, and the AIM All-Share was up 3.10 points, or 0.4%, at 710.91 .
The Cboe UK 100 was up 0.7% at 827.91, the Cboe UK 250 was up 1.8% at 17,461.07, and the Cboe Small Companies was down 0.1% at 15 264.17.
On the FTSE 100, Diploma was up 2.9%.
The distribution company announced a “good start to the year”, with results for the first quarter ended December 31 being “in line with expectations”.
Full-year guidance remains unchanged with organic revenue growth of around 6% and an operating margin of around 21%.
On the FTSE 250, Vistry rose 5.8%.
The housebuilder said it expected adjusted pre-tax profit of around £250m for 2024, down from £419.1m in 2023 but in line with revised consensus that ‘he announced last month.
However, it expects adjusted turnover to have increased to £4.4bn, from £4.0bn, and said total completions increased by around 7%, from 16,118 to around 17,200.
Additionally, Vistry said it has a “robust pipeline of attractive new land and development opportunities” for the future.
Among small caps, Fiinu saw its price increase sevenfold.
The fintech company has announced a non-binding agreement for the first white label contract for its flagship product Plugin Overdraft with “an independent UK bank”.
The parties have agreed to a 12-month exclusivity period for the UK from the go-live date, Fiinu said, with the product launch expected during the fourth quarter and Fiinu has promised royalties .
In Europe, the CAC 40 in Paris was up 0.1%, while the DAX 40 in Frankfurt was up 0.2%.
The pound remained stable at $1.2208 on Wednesday in London, compared to $1.2202 at the close of stock markets on Tuesday. The euro settled at USD 1.0299, stable from USD 1.0295. Against the yen, the dollar is trading down at 157.07 yen from 157.95 yen.
In Asia on Wednesday, the Nikkei 225 index in Tokyo was down 0.1%. In China, the Shanghai Composite Index was down 0.4%, while the Hang Seng Index in Hong Kong was up 0.3%. The S&P/ASX 200 index in Sydney closed 0.2% lower.
In the United States, Wall Street finished mixed, with the Dow Jones Industrial Average up 0.5%, the S&P 500 up 0.1% and the Nasdaq Composite down. by 0.2%.
Brent oil was trading lower at USD 79.58 a barrel early in London on Wednesday, compared to USD 79.84 late in the day on Tuesday.
“One piece of good news is that Israel and Hamas are apparently close to a ceasefire agreement before Trump’s inauguration next week,” noted Swissquote’s Ipek Ozkardeskaya before the London Stock Exchange opened. . “The latter helped to cool the rise in US crude prices to the USD 80 bp level, while Brent fell below the USD 80 bp mark.
“But note that some experts warn that Israel could ease pressure on Gaza to strengthen ties with the United States in order to increase pressure on Iran which is a major oil exporter with around 1.6 mbd exported in October of last year Thus, geopolitical tensions remain high on both the Russian and Middle East fronts.
Gold was quoted higher at USD 2,683.15 per ounce from USD 2,673.07.
Wednesday’s economic calendar sees Ireland’s trade balance and Germany’s GDP released this morning; US consumer price inflation will follow in the afternoon.
By Emma Curzon, journalist at Alliance News
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