FTSE 100 outperforms on lower-than-expected UK inflation

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Share prices in London were higher on Wednesday afternoon, benefiting from a better-than-expected UK inflation rate which supported housebuilder stocks.

The FTSE 100 index rose 62.09 points, or 0.8%, to 7,574.37 points. The FTSE 250 was up 137.78 points, or 0.7%, at 19,061.61, and the AIM All-Share was up 1.98 points, or 0.3%, at 749.22 .

The Cboe UK 100 was up 0.9% at 757.48, the Cboe UK 250 jumped 1.0% to 16,504.41, and the Cboe Small Companies was up 0.3% at 14,408.19.

In Paris, the CAC 40 was up 0.5%. In Frankfurt, the DAX 40 was up 0.2%.

In New York, the Dow Jones index is up 0.1%, the S&P 500 is up 0.3% and the Nasdaq Composite is up 0.5%.

It would be a recovery for Wall Street stocks, which struggled Tuesday following a higher-than-expected inflation rate in the United States.

“However, today it was the UK’s turn to highlight its more realistic path to the target, with a 0.6% fall in monthly CPI raising hopes that the gauge of headline inflation moving closer to target,” commented Joshua Mahony, analyst at Scope Markets.

“Those hoping for a change of course from the Bank of England should not wait too long, with markets increasingly betting that the bank will embark on a series of rate cuts starting in June. However, with the headline CPI currently on a trajectory that could see it fall well beyond the 2% target, there is a good chance that the bank will take action as early as May. “This is bad news, with today’s sharp declines serving to highlight the potential downward trajectory that could be in place when we see inflation falling back towards target in the coming months.”

The UK’s annual inflation rate remained stable last month, defying expectations of an acceleration, figures show.

According to the Office for National Statistics, the annual consumer price inflation rate remained unchanged at 4.0% in January, as in December.

An acceleration to 4.2% was expected, according to the consensus cited by FXStreet.

Consumer prices fell 0.6% in January compared to December. They were expected at a weaker monthly rate of 0.3%, according to FXStreet. Prices increased by 0.4% in December compared to November.

Eyes will be on BoE Governor Andrew Bailey, who will speak at 1500 GMT.

The pound struggled after the inflation data, buying $1.2549 early Wednesday afternoon, down from $1.2596 late Tuesday.

The pound fell but interest rate-sensitive stocks rose. Housebuilder Persimmon rose 4.0%, while DIY retailer Grafton climbed 3.0%.

The Bank of England’s next decision will take place on March 21. A day before this decision, the consumer price index will be subject to a new reading which Threadneedle Street will have to digest.

The euro settled at $1.0704 early Wednesday afternoon, down from $1.0716 on Tuesday. Against the yen, the dollar traded at 150.57 yen, down from 150.66 yen.

In London, shares of Coca-Cola HBC jumped 7.4% after reporting above-average annual organic growth.

The soft drinks bottling company, which operates in countries including Cyprus, Greece and Italy, said net sales increased by 11% in 2023 to €10.18 billion. euros, compared to 9.20 billion euros in 2022. Net sales remained below the consensus of 10.25 billion euros cited by Vuma.

Pre-tax profit rose 46% from €623.6 million to €910.3 million, but fell short of the consensus figure of €976.3 million.

Organic revenue in 2023 jumped 17%, which is higher than the consensus forecast for an increase of 16%.

Coca-Cola HBC proposed an ordinary dividend for 2023 of EUR 0.93 per share, up 19% from 2022. It launched a two-year, EUR 400 million share buyback program in November .

For 2024, it aims for organic revenue growth within its medium-term target range of 6% to 7%.

Dunelm Group shares fell 0.9%. The Leicester, England-based homewares retailer said turnover rose 4.5% to £872.5 million in the six months ending December 30, up from £835 million. .0 million pounds sterling in the previous year.

Dunelm achieved a gross margin of 53% during the period, up from 51% previously, and attributes this result to its “commercial rigor and disciplined approach to promotional activity”.

Due to its confidence in the business, Dunelm declared an interim dividend of 16p per share, higher than last year’s dividend of 15p.

In addition, the company declared a special dividend of 35p, down 13% from 40p the previous year.

Looking at the full financial year ending June 29, Dunelm said it remained on track to deliver a pre-tax profit in line with market expectations of £202 million.

Russell Pointon, analyst at Edison, commented: “The company’s commentary on continued market share gains due to new customer growth and increased visit frequency from existing customers is very encouraging.

Like most durable goods suppliers, Dunelm Group has of course been affected by a difficult macroeconomic environment and some inflationary pressures in the cost base, but these results show the first increase in gross margin since the H122 results, it that is to say two years ago. Market share gains, including strong online sales performance, have enabled the Dunelm Group to achieve good growth in a challenging consumer market.”

Shares in Bloomsbury Publishing rose 8.1%. The publisher expects the annual results to be “significantly above revised market expectations.”

The publisher noted that consensus for the year ending February 29 is £291.4m for revenue and £37.2m for pre-tax profit before “highlighted items”. This would represent a growth of 10% for turnover and 20% for profit.

“I am delighted to report an exceptionally strong period of activity, driven primarily by the growing demand for fantasy fiction,” said Nigel Newton, the company’s chief executive.

The barrel of Brent oil was quoted at 82.63 USD at midday on Wednesday, down from 82.93 USD recorded at the close of European stock markets on Tuesday.

Gold fell further below the $2,000 per ounce mark. Gold was quoted at $1,991.57 an ounce, down from $1,995.88.

This article is originally published on .zonebourse.com

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