- FTSE 100 closes ahead
- But US markets fall amid inflation fears
- UK GDP growth beats forecasts
5.03pm: FTSE closes ahead
FTSE 100 closed convincingly in the green on Wednesday but midcap FTSE 250 fared less well, while US stocks plunged amid the release of inflation numbers.
Britain’s blue chip index closed more than 56 points higher, or 0.82% up, at 7,004, with oil giants among the top winners as crude prices firmed.
FTSE 250, though, dropped 59 points, or 0.27%, at 22,107.
The US Consumer Price Index rise in April this year, at 4.2%, compared to a year earlier, was the sharpest since September, 2008. Economists had expected a jump of 3.6%.
On Wall Street, the Dow Jones shed over 371 points, or 1.08% to 33,898. The S&P 500 lost over 58 points at 4,094. The Nasdaq exchange fell 295 points at 13,094.
“The US CPI print has put the cat among the pigeons, as was to be expected, and opinions and market reaction is sharply divided,” noted Chris Beauchamp, chief market analyst at online trading group IG.
“There is enough for both sides of the debate in this update, a reflection of how sharply prices are increasing both year-on-year and month-on-month, and in the core and non-core versions.
“Clearly, one month’s print cannot be the transitory spike in prices that the Fed thinks will be the case, but nor is it obviously the beginning of a trend. We will only know with the benefit of hindsight, and the mixed and volatile reaction in stocks so far points towards this indecision.”
3.45pm: Crude price gains support UK market
The US inflation figures seem to have left the UK market remarkably unmoved, with investors taking more notice of the better than expected UK economic growth numbers.
Indeed the FTSE 100 is now 71.71 points or 1.03% higher at 7019.70, having hit a peak for the day of 7028.1.
A jump in oil prices – which ironically should raise the alarm for inflationary concerns – is providing some support.
With Brent crude up 1.85% at $69.82 a barrel after the International Energy Agency suggested demand would outstrip supply, BP PLC (LON:BP.) is the top riser in the blue chip index, 3.43% or 10.45p better at 315.05p.
US markets however are less forgiving of the inflation data.
The Dow Jones Industrial Average is down 0.73%, the S&P 500 has lost 0.92% and the Nasdaq Composite has dropped 1.56%.
Neil Wilson at Markets.com said: “We can expect a series of hot prints this summer; the Fed has made it clear it will look past these as it thinks inflation will be transitory.
“We shall only really know if that is the case in a few months’ time. Until then expect gyrations as data shows strong inflation and growth, even if it’s largely predicted.”
3.10pm: Proactive North America headlines:
Melkior Resources Inc (CVE:MKR) (OTCMKTS:MKRIF) (FRA:MEK1) reports renewed drill permit for Carscallen Gold project as it announces final drill results
Dalrada Corporation (OTCQB:DFCO) says Kyle McCollum has accepted the role as the company’s chief financial officer
Algernon Pharmaceuticals Inc (CSE:AGN) (FRA:AGW) (OTCQB:BTHCF) reports findings from Ifenprodil Phase 2b/3 coronavirus trial may be positive for idiopathic pulmonary fibrosis (IPF) study
VolitionRx Ltd (NYSEAMERICAN:VNRX) unveils robust balance sheet, progression of its Nu.Q products ahead of US launch in 1Q update unveils robust balance sheet, progression of its Nu.Q products ahead of US launch in 1Q update
2.40pm: Wall Street sinks as inflation data spooks markets
The main indices on Wall Street fell at the opening bell on Wednesday after higher than expected US inflation data rattled traders.
In the first minutes of trading, the Dow Jones Industrial Average was down 0.4% at 34,131 while the S&P 500 dropped 0.68% to 4,123 and the Nasdaq sank 1.19% to 13,230.
Back in London, the FTSE 100 was heading in the opposite direction in late afternoon, rising 66 points to 7,014.
1.58pm: Nasdaq expected to slide after inflation news
US 10 year Treasury yields have jumped to 1.643%, up from Tuesday’s close of 1.619%, in reaction to the higher than expected US inflation numbers.
On Wall Street, the Dow Jones Industrial Average is showing a fairly muted response so far, with futures indicating a 0.43% decline, pretty much as before.
But the S&P 500 is now expected to fall 0.74% and the tech heavy Nasdaq Composite is suffering the biggest decline, down 1.4%.
If and when the Federal Reserve does tighten policy in response to inflationary pressures, such as raising interest rates, big tech shares are likely to be hit hardest.
CPI MoM: Contributions to Percent Change pic.twitter.com/Ft1qtFVaNp
— Michael McDonough (@M_McDonough) May 12, 2021
Meanwhile the FTSE 100 is fairly unconcerned and has in fact come within sight of 7000 again, up 51.6 points or 0.74% at 6999.59.
1.33pm: US inflation higher than expected
The spectre of inflation which has spooked the markets this week is back with a vengeance after higher than expected US figures.
The consumer price index rose 4.2% year on year in April, up from 2.6% in March and much higher than the forecast of 3.6%.
It is the largest comparable increase since September 2008.
US CPI (Y/Y) Apr: 4.2% (est 3.6%; prev 2.6%)
US CPI Ex Food, Energy (Y/Y) Apr: 3.0% (est 2.3%; prev 1.6%)
— LiveSquawk (@LiveSquawk) May 12, 2021
Used cars and trucks were a big part of the CPI increase, according to the Bureau of Labor Statistics.
The index for that sector rose 10% in April, the largest one month increase since the index began in 1953, and this accounted for over a third of the seasonally adjusted jump.
12.40pm: US markets set for further falls
Wall Street is expected to get off to another downbeat start after the recent setbacks.
The Dow Jones Industrial Average futures are showing a 0.40% or 132 point decline to 34,137, while the S&P 500 is forecast to open 0.44% lower and the Nasdaq Composite 0.64%.
Much will depend on the latest US inflation figures, due at 1.30pm BST.
Analysts expect the latest consumer price index to show a rise of 3.6% year on year in April, up from 2.6% in March. That would mark the highest figure since September 2011.
Sophie Griffiths, market analyst at Oanda, said: “US futures are trading lower for a third straight session as investors await today’s US CPI data. The equity market just can’t shake off these inflation jitters, which sent stocks to close firmly in the red again on Tuesday…
“A higher-than-forecast read could prompt bets that the Fed will move sooner to tighten policy pulling stocks, particularly tech stocks, sharply lower.”
Back in the UK, the FTSE 100 has edged back toward the 7000 mark, up 40.35 points or 0.58% to 6988.34.
12.05pm: Coca-Cola shares fizz
It is not just alcoholic drinks doing well.
Diageo PLC (LON;DGE), whose brands include Johnnie Walker, Smirnoff and Captain Morgan, is the leading riser in the blue chip index after its latest update, adding 4.19% or 133.5p to 3323.5p.
But Coca-Cola HBC AG (LON:CCH), a business and bottling partner of the US soft drinks giant, is also heading higher.
Its shares are up 2.09% or 52p to 2535p as it reported a 2.7% rise in first quarter revenues, helped by good performances from its sparkling and energy drinks, especially in emerging markets, offset by weaker trading in water and juice.
Chief executive Zoran Bogdanovic said: “We have had a good start to the year despite the continued impact of the pandemic.
“The speed and shape of recovery from the pandemic remains uncertain, but the first quarter puts us on track to achieve our 2021 guidance for a strong recovery in foreign exchange-neutral revenues, along with a small increase in EBIT margin.”
Meanwhile, having earlier touched a high for the day of 7008, the FTSE 100 has slipped back a little and is now up 21.72 points at 6969.71.
10.56am: Demand for oil expected to outstrip supply
Crude prices are edging higher, with Brent up 0.53% to $68.91 a barrel after the International Energy Agency predicted demand for oil will outstrip supply as economies emerge from the pandemic.
It said: “The anticipated supply growth through the rest of this year comes nowhere close to matching our forecast for significantly stronger demand beyond the second quarter.”
But it warned that given the crisis in India, market volatility was likely to continue until the pandemic was brought completely under control.
Joshua Mahony, senior market analyst at IG, said: “With Europe and the US expected to gradually loosen restrictions on domestic and international travel, demand for crude products will likely surge to the benefit of prices. Nonetheless, with crude prices currently back at pre-pandemic levels, there are fears that perhaps much of that supply-demand realignment has already been priced in.”
This has helped support the FTSE 100, although it is currently off its best levels of the day, up 38.37 points or 0.55% at 6986.36 having briefly flirted with 7000.
Helping sentiment is the better than expected UK growth figures.
Rupert Thompson, chief investment officer at wealth management firm Kingswood said: “The UK economy held up better than expected during lockdown in the first quarter. GDP posted a 1.5% drop over the quarter as a whole but encouragingly grew a larger than expected 2.1% in March as the economy started to reopen.
“These numbers will bolster hopes that the economy will achieve the 7.25% growth forecast by the Bank of England – the fastest growth in seventy years.”
9.59am: Leading shares hold on to gains
It’s not all positive news.
Investors will be keen to hear what it says about the prospects for the takeaway market now that lockdowns are beginning to ease (in the UK at least).
It is considering whether to list a small stake in FanDuel in the US, but said King’s departure would affect the timing of any move.
But overall the FTSE 100 is holding on to most of its gains, up 41.31 points or 0.59% to 6989.3.
AJ Bell investment director Russ Mould said: “The next move for the markets could be determined by US inflation figures out this afternoon. If these come in ahead of expectations then investors may need to prepare themselves for more pain but a lower than forecast reading could help calm tensions over rising prices.”
9.14am: Miners help support market
Leading shares are continuing to recover as investors take the positives from the UK growth figures rather than worrying about inflationary pressures.
The FTSE 100 is within a whisker of 7000 again, up 51.15 points or 0.74% at 6999.14.
The 1.5% decline in GDP in the first quarter was less than economists had been expecting, while the 2.1% growth in March was the best performance since August even though the country was mostly still in lockdown.
Danni Hewson, AJ Bell financial analyst, said: “Despite the reopening of schools, the lockdown for many sectors was still very much in place and yet the economy was blossoming. Buoyed by the vaccine rollout houses were being built, cars and motorcycles repaired, and goods being produced in COVID-19-secure facilities…This growth has particular significance because it shows how the economy can function if future lockdowns arise.
“There is still a lot of ground to be made up, but March’s figures suggest a quick recovery is within reach.”
Rising commodity prices are of course one of the reasons the market had a spate of inflationary jitters this week, but they also provide support for mining companies, and so it is proving now.
Also heading higher is Spirax-Sarco Engineering PLC (LON:SPX), up 2.12% or 245p to 11,800p after it said in its annual meeting statement that it had seen a positive performance in the four months to April.
It said: “Watson-Marlow continued to experience exceptional COVID-19 vaccine related demand from its customers in the Pharmaceutical and Biotechnology sector. In the first four months of the year, organic growth of Watson-Marlow’s sales [to the sector] outperformed our anticipated growth of 35% for 2021. Across the group’s other revenue streams in Steam Specialties, Electric Thermal Solutions and Watson-Marlow’s Process Industries sectors, organic sales growth was ahead of [global industrial production] over the same period.”
It hiked its outlook for the year ahead as it is fairly upbeat about the immediate outlook but warned there was still uncertainty given the difficulties still being caused by the pandemic around the world.
Analysts at Shore Capital said they expected to upgrade their profit forecast for 2021 by around 10% and by 6% for 2022.
They said: “We expect the initial global rollout of COVID-19 vaccine programmes to continue into 2022. Beyond then, we think there is a possibility of vaccine-related sales continuing if booster jabs are necessary. Oxford Economics currently forecasts 4% industrial production growth for 2022. Spirax has historically grown at double the rate of global IP…
“We believe strong margin progression and a positive outlook for industrial production provide short-term positivity…
“However, we think the risks the company faces may be greater than the market perceives with only around half of its revenue driven by defensive markets…its growth is still largely dependent on increased industrial production and whilst near-term forecasts indicate positivity, there is still a degree of uncertainty. Additionally, the group’s average order book is seven weeks, so there is very limited visibility.”
8.38am: Diageo boosted by buyback plans
After Tuesday’s sell-off, the FTSE 100 made a positive start to proceedings.
Inflation fears saw traders flick the panic switch amid worries that the ultra-accommodative monetary policy underpinning stock buying activity would be reversed to tamp down prices.
Early Wednesday it looked like a reality check had been taken – or least the price setters in London had stopped drinking the Kool-Aid.
The economic facts of life were outlined in the latest gross domestic product (GDP) data.
They revealed a nation some distance from over-heating into an inflationary mess as the UK economy shrank by 1.5% in three months ended March 31, leaving it 8.7% smaller than it was before the pandemic.
The latest stats from the Office for National Statistics showed Britain is emerging from the lengthy winter lockdown with the economy growing by a better than expected 2.1% in March.
“The strong recovery seen in March, led by retail and the return of schools, was not enough to prevent the UK economy contracting over the first quarter as a whole, with the lockdown affecting much of the services sector,” said Darren Morgan, ONS director of economic statistics.
On the market, Diageo (LON:DGE) led the Footsie with a 3% rise after the drinks maker unveiled plans to return up to £4.5bn by 2024.
Perhaps reflecting fears that business may be dented as diners return to restaurants post-lockdown (rather than scoffing takeaways), JustEat Takeaway (LON:JET) was an early casualty as it fell 3%.
Proactive news headlines
Primary Health Properties PLC (LON:PHP) said its rental collection has remained robust so far in 2021 as the healthcare facilities firm updated investors of its performance for the first quarter, while rental income from its existing portfolio continued to grow.
Great Western Mining Corporation PLC (LON:GWMO) said an initial six-hole drilling programme at the Trafalgar Hill prospect, part of the Olympic Gold project, has been completed “significantly ahead of schedule and under budget”.
Mode Global PLC (LON:MODE) has appointed Ryan Moore as its chief executive. Moore is an early investor in the fintech business and “has been closely involved in key strategic business decisions since inception”.
Powerhouse Energy Group PLC (LON:PHE) said it has signed a loan agreement to provide up to £3.8mln to Protos Plastics to progress the development of the Protos plant, the first proposed commercial application of the company’s DMG waste plastic-to-hydrogen technology.
Greatland Gold PLC (LON:GGP) announced the start of the underground decline at its Havieron gold-copper joint venture project in Western Australia. “This is a momentous step in the development of Havieron as a world-class gold-copper mine,” said Greatland chief executive Shaun Day.
Mosman Oil and Gas Ltd (LON:MSMN) has been informed that its request to extend the deadline for the work commitments for the EP145 exploration acreage has been approved by the Northern Territory Government.
RM Secured Direct Lending PLC (LON:RMDL) notified investors of its name change to RM Social & Environmental Infrastructure Income PLC, to better reflect the trust’s recent investing activity.
Woodbois Ltd (LON:WBI) increased the size of an equity fundraising to receive £6mln, up from a proposed £5mln, amid strong demand.
Silence Therapeutics PLC (LON:SLN)(NASDAQ:SLN) announced that it will participate in a fireside chat at the virtual RBC Capital Markets Global Healthcare Conference on Wednesday, May 19th at 8:35am US Eastern Time/1:35pm BST. An archived replay of the webcast will be available on the company’s website following the conference.
Zaim Credit Systems PLC (LON:ZAIM) said it has posted annual results and proxy voting forms ahead of its annual general meeting that will be held on 7 June in London. As the meeting will be closed, shareholders are strongly advised to appoint the chairman of the meeting as their proxy.
Xpediator PLC (LON:XPD) has posted its accounts ahead of its AGM on 8 June, which will be hosted via the Investor Meet Company platform on 8 June, allowing shareholders to register if they wish to join the AGM remotely and participate in the Q&A session.
IronRidge Resources Ltd (LON:IRR) said chairman Neil Herbert acquired 150,000 shares at a price of 20p each as a result of an off-market transfer for a total consideration of £30,000, with managing director Vincent Mascolo also acquiring the same number of shares himself at the same price.
6.50 am: Back foot start predicted
The FTSE 100 is expected to open on the back foot on Wednesday ahead of the latest UK GDP reading and inflation data from the US.
Spread-betters IG expect the blue-chip index to open around 14 points lower after ending Tuesday’s session down 176 points at 6,948.
The predictions of continued weakness followed a bleak performance on Wall Street overnight, which saw the Dow Jones Industrial Average close down 1.36% at 34,269 while the S&P 500 dropped 0.87% to 4,152 and the Nasdaq fell 0.09% to 13,389.
The pullback has been attributed to broad profit-taking activity following last week’s record run for equities, while sentiment has also been knocked by worries over inflation as the global economy recovers from the COVID-19 pandemic.
The declines have continued in parts of Asia this morning, with Japan’s Nikkei 225 down 1.97% while Hong Kong’s Hang Seng was up 0.08%
On currency markets, the pound was down 0.16% against the dollar at US$1.412, although the UK GDP data could provide some catalyst for movement later today alongside US inflation numbers.
Around the markets:
Sterling: US$1.412, down 0.16%
Brent crude: US$68.65 a barrel, up 0.15%
Gold: US$1,830 an ounce, down 0.25%
Bitcoin: US$57,428, up 3.8%
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were mostly lower on Wednesday as investors remained cautious over growing inflation worries and rising COVID-19 cases.
The Taiwan Stock Exchange fell 4.3% after the territory experienced an unusual outbreak of six new cases with no clear infection source.
Taiwan had kept the pandemic well under control before this cluster.
In Japan, the Nikkei 225 declined 1.45% and South Korea’s Kospi dipped 1.32%.
The Hang Seng index in Hong Kong gained 0.25% while the Shanghai Composite in China rose 0.10%.
Shares in Australia fell, with the S&P/ASX 200 trading 0.78% lower.
Proactive Australia news:
Walkabout Resources Ltd (ASX:WKT) (FRA:N6D) has raised A$6.4 million in tranche one of a staged placement that will enable it to advance construction of the flagship Lindi Jumbo Graphite Mine in Tanzania.
Emyria Ltd (ASX:EMD) has achieved class IIa ‘Software as a Medical Device’ registration in Australia for its unique smartphone-based, medical-grade, heart rate, heart rate variability and atrial fibrillation monitoring application using only a smartphone camera.
Noxopharm Ltd (ASX:NOX) has fully enrolled Part 2 of the NOXCOVID study looking into the potential of Veyonda® to block the cytokine release syndrome (CRS) or ‘cytokine storm’ and improve the outcomes in patients hospitalised with COVID-19.
Firefinch Ltd (ASX:FFX) (FRA:N9F) (OTCMKTS:EEYMF) is higher after discovering a new, very high-grade zone 250 metres south of K3 prospect within its 100%-owned Finkola permit – part of the Massigui Project which adjoins the Morila Gold Mine tenure in Mali.
Matador Mining Ltd (ASX:MZZ) (OTCMKTS:MZZMF) (FRA:MA3) has had early success in its 2021 power-auger drilling program at the 100%-owned Cape Ray Gold Project in Newfoundland, Canada, with sulphide-bearing quartz veins observed.
Blaze International Limited (ASX:BLZ) is acquiring Hammerhead Exploration Pty Ltd and Iconic Minerals Pty Ltd who collectively own six tenement applications in the Earaheedy Basin of Western Australia.
Alicanto Minerals Ltd (ASX:AQI) has intersected semi-massive sulphide skarn mineralisation with visual chalcopyrite in the second hole drilled at Stone Lake target within the Greater Falun Copper-Gold Project in Sweden.