London close: Stocks mixed as US inflation ticks higher

(Sharecast News) - London's financial markets ended Wednesday with mixed results as investors weighed an increase in consumer inflation in the US, and its potential impact on monetary policy. The FTSE 100 index rose 0.26% to close at 8,301.62 points, while the more domestically-focussed FTSE 250 was virtually flat, dipping a marginal 0.002% to 20,973.45 points.

In currency markets, sterling was last down 0.05% on the dollar to trade at $1.2764, while it gained 0.12% against the euro, changing hands at €1.2147.

"Risk sentiment had been kept in check ahead of the inflation print today, but the news has unleashed fresh buying," said IG chief market analyst Chris Beauchamp.

"Technically the 'Santa Rally' doesn't usually start for a few more days, but the Nasdaq 100 has got its gains in early, surging to a new record high.

"Interestingly, we have seen the dollar push higher too even though today's figures are unlikely to mean the Fed will swerve from a rate cut next week."

Beauchamp noted that "looser rates" should mean stronger economic growth, reinforcing the desire of investors to keep investing in the US.

"The euro is dropping against the dollar and sterling ahead of the ECB's decision tomorrow.

"It will be the second bank to do so in 24 hours, following Canada's lead this afternoon.

"While both the ECB and the Fed are in easing mode, they are conducting this policy for very different reasons - for the ECB, it's a question of doing what it can to prop up an ailing economy whereas the Fed can enjoy gently easing policy to support more solid growth."

Consumer inflation ticks up in the US in November

There was a dearth of economic news on this side of the Atlantic on Wednesday, but across the pond, the cost of living in the United States increased modestly in November, driven by higher food and vehicle prices, while shelter cost growth showed signs of easing.

The consumer price index (CPI) rose 0.3% month-on-month on both a headline and core basis, according to data from the Department of Labor, with figures aligning with economists' forecasts.

Annually, headline inflation ticked up to 3.3% from 3.2% in October, while core inflation, which excludes food and energy prices, remained steady at 2.7%.

Food prices rose 0.4% from the prior month, accelerating from October's 0.2% increase.

New vehicle prices climbed 0.6% after being flat the previous month, and used vehicle prices surged 2.0%.

Meanwhile, the monthly rate of shelter price growth slowed to 0.3% from 0.4%, continuing its recent downward trend.

"The 0.31% month-on-month increase in core CPI in November, which left the annual core inflation rate unchanged at 3.3% for a fourth month in a row and pushed the three-month annualised rate up to an eight-month high of 3.7%, is a little disconcerting," said Paul Ashworth, chief North America economist at Capital Economics.

"Although OER has a smaller weight in the Fed's preferred PCE inflation measure, it still helps to explain why, at least before the PPI data is released tomorrow, we estimate that the core PCE deflator will increase by a target-consistent 0.17% month-on-month in November.

"As a result, for now at least, we remain comfortable forecasting another 25 basis point rate cut by the Fed next week."

In the housing market, US mortgage applications rose 5.4% in the week ended 6 December, marking a fifth consecutive week of growth, according to the Mortgage Bankers Association.

Refinancing applications surged 30% week-on-week, while applications for new home purchases fell 4%.

The increase coincided with a slight decline in mortgage rates, fueled by expectations of further inflation moderation and potential interest rate cuts from the Federal Reserve.

Close Brothers jumps on court ruling, Ashtead continues slide

On London's equity markets, Close Brothers Group surged 4.96% after the Supreme Court granted the company permission to appeal a pivotal ruling on motor finance commissions.

Lloyds Banking Group, which also operates in motor finance, followed with a 2.95% rise.

British Airways owner International Airlines Group (IAG) climbed 2.13% after Deutsche Bank upgraded the stock to 'buy' from 'hold', significantly raising the price target to 400p from 215p.

Analysts highlighted favorable valuation multiples, with additional support likely stemming from record-setting November traffic at Heathrow and projections for a busy December.

Reckitt Benckiser Group gained 2.81% after HSBC upgraded the consumer goods giant to 'buy' from 'hold', citing its valuation as a "material discount to peers".

The bank raised its price target to 5,500p from 4,800p.

Nicotine giant British American Tobacco rose 0.94% after reaffirming its full-year guidance for 2024, bolstered by improved performance in its US commercial operations and innovation in its 'New Categories' portfolio.

IT firm Kainos Group jumped 4.49% after announcing the return of Brendan Mooney as its chief executive officer.

Mooney's re-appointment followed the departure of Russell Sloan, who stepped down immediately.

Endeavour Mining soared 6.33% after announcing plans for a definitive feasibility study on its Assafou-Dibibango gold project in Côte d'Ivoire.

The project, described as a potential tier-one asset, was projected to produce 330,000 ounces annually over its first decade, placing it in the lowest cost quartile globally.

On the downside, Ashtead Group fell 0.96%, continuing its decline after announcing plans to shift its primary listing to the US on Tuesday.

The announcement coincided with a profit warning, compounding investor concerns.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,301.62 0.26% FTSE 250 (MCX) 20,973.45 0.00% techMARK (TASX) 4,660.36 -0.08%

FTSE 100 - Risers

Pearson (PSON) 1,279.00p 3.35% Reckitt Benckiser Group (RKT) 4,835.00p 2.81% Fresnillo (FRES) 699.00p 2.64% Lloyds Banking Group (LLOY) 54.22p 2.42% International Consolidated Airlines Group SA (CDI) (IAG) 288.00p 2.13% Rentokil Initial (RTO) 414.20p 2.04% Rolls-Royce Holdings (RR.) 577.00p 1.98% Diageo (DGE) 2,489.50p 1.80% Anglo American (AAL) 2,550.00p 1.80% InterContinental Hotels Group (IHG) 9,918.00p 1.64%

FTSE 100 - Fallers

GSK (GSK) 1,340.50p -2.40% British Land Company (BLND) 364.40p -2.10% SEGRO (SGRO) 720.00p -2.01% Severn Trent (SVT) 2,549.00p -1.89% DCC (CDI) (DCC) 5,450.00p -1.80% Ashtead Group (AHT) 5,300.00p -1.71% Land Securities Group (LAND) 577.00p -1.70% Smith (DS) (SMDS) 539.00p -1.46% BT Group (BT.A) 152.00p -1.33% National Grid (NG.) 939.60p -1.26%

FTSE 250 - Risers

Raspberry PI Holdings (RPI) 452.40p 7.61% Endeavour Mining (EDV) 1,589.00p 5.93% Hochschild Mining (HOC) 239.00p 5.29% Kainos Group (KNOS) 839.00p 4.48% Close Brothers Group (CBG) 246.20p 3.45% Bridgepoint Group (Reg S) (BPT) 379.20p 3.44% Volution Group (FAN) 569.00p 3.27% Oxford Instruments (OXIG) 2,130.00p 3.14% Trainline (TRN) 433.40p 2.85% Trustpilot Group (TRST) 306.00p 2.68%

FTSE 250 - Fallers

Future (FUTR) 992.00p -3.50% Domino's Pizza Group (DOM) 321.60p -3.47% W.A.G Payment Solutions (WPS) 81.80p -2.62% Spectris (SXS) 2,590.00p -2.56% NCC Group (NCC) 134.20p -2.47% Baltic Classifieds Group (BCG) 326.00p -2.40% NextEnergy Solar Fund Limited Red (NESF) 67.50p -2.03% Computacenter (CCC) 2,236.00p -1.93% JTC (JTC) 1,036.00p -1.90% Workspace Group (WKP) 519.00p -1.89%