London close: Stocks mixed as investors digest US inflation reading

(Sharecast News) - London markets ended Friday with mixed results as investors assessed a series of economic data from the UK and the US.

The FTSE 100 index edged down slightly by 0.04% to close at 8,376.63 points, while the FTSE 250 managed to post a modest gain of 0.26% to 21,086.54 points.

In currency markets, sterling was last down 0.3% on the dollar, trading at $1.3128, while it dipped 0.1% against the euro to change hands at €1.1875.

"August is finishing in a very different form to how it began," said IG chief market analyst Chris Beauchamp.

"While the Nikkei 225 is still down for the month by 1.2%, itself a significant achievement, the FTSE 100, DAX, Dow and others are all in positive territory for the month.

"The summer squall of early August has been forgotten, and with US economic data still looking strong, and rate cuts on the way, investors remain confident about the near-term outlook."

Beauchamp added that another see-saw week for oil prices was ending with the commodity firmly on the back foot.

"Hopes of a sustained rebound on stronger demand seem to have been definitively dashed as OPEC pledges to boost production from October.

"This is good news for consumers, but the oil majors will fear a hit to margins in coming quarters."

US PCE inflation rises in July as expected, UK house prices take a dip

In economic news, the US Federal Reserve's preferred inflation gauge, the personal consumption expenditures (PCE) index, rose in July as expected, according to fresh data from the Commerce Department.

The PCE increased by 0.2% month-on-month, matching consensus estimates, and climbed 2.5% year-on-year.

At the same time the core PCE, which excludes food and energy, also rose 0.2% for the month, with an annual increase of 2.6%, slightly below the anticipated 2.7%.

In other US news, consumer confidence remained stable in August, with the University of Michigan's index coming in at 67.9, a slight increase from July's 66.4.

The figure was just below the expected 68.0, reflecting continued uncertainty among Americans ahead of the upcoming presidential election.

On home shores, Nationwide reported a surprise dip in UK house prices for August, with a 0.2% monthly decline following a 0.3% rise in July.

Despite that, annual house price growth reached 2.4% - the fastest pace since December 2022, although prices remained about 3% below the peak seen in summer 2022.

The average house price in August stood at £265,375, slightly down from £266,334 in July.

"While house price growth and activity remain subdued by historic standards, they nevertheless present a picture of resilience in the context of the higher interest rate environment and where house prices remain high relative to average earnings - which makes raising a deposit more challenging," said Nationwide chief economist Robert Gardner.

"Providing the economy continues to recover steadily, as we expect, housing market activity is likely to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth."

At the same time, data from the Bank of England showed a rise in mortgage activity, with net borrowing increasing to £2.8bn in July - the highest since November 2022.

Mortgage approvals for house purchases also rose, hitting 62,000, the highest since September 2022, indicating stronger demand in the housing market.

UK retail footfall meanwhile saw a minor year-on-year decline of 0.4% in August, an improvement from the 3.3% drop in July, according to BRC-Sensormatic IQ data.

High street footfall decreased by 0.3%, recovering from a sharper decline the previous month.

Retail parks performed well, with footfall rising by 2.6%, while shopping centres saw a smaller decline of 1.8%.

On the continent, inflation in the eurozone fell to a three-year low of 2.2% in August, down from 2.6% in July, raising expectations that the European Central Bank could cut interest rates in its next meeting.

The drop in inflation, in line with forecasts, was driven by larger-than-expected declines in Germany and Spain, bolstering hopes of a quarter-point rate cut to 3.5%.

Burberry in the red, property stocks manage gains

On London's equity markets there was a notable lack of corporate news headlines, although Burberry Group dropped 1.18% as the luxury fashion house faced potential demotion from the FTSE 100 in the upcoming reshuffle.

"A slowdown in consumer demand for luxury goods has weighed on the sector, with Chinese consumers particularly notable by their absence," said Richard Hunter, head of markets at Interactive Investor.

"Burberry grabbed the headlines in July for the wrong reasons, bringing forward its first quarter update amid some developments which came as a shock to investors.

"An immediate change of the chief executive was accompanied by a suspension of the dividend on the back of what the company itself described as a disappointing start to the year."

Hunter noted that if current levels of trading persisted, the group could slip to an operating loss for the first half.

"The shares have declined by 51% in the year to date and by 68% over the last year, leaving the group at number 144 in the overall market capitalisation rankings, where anything below 110 spells automatic relegation.

"The demise will see Burberry lose its FTSE 100 status after a run which stretches back to 2009, with a turnaround strategy not yet obviously in place."

Similarly, budget airline easyJet fell by 0.86%, also on concerns about its position in the index.

On the upside, Rentokil Initial managed a modest gain of 0.06%, even after JPMorgan placed the stock on a "negative catalyst watch" ahead of its third-quarter results in October.

RS Group edged up 0.13% after JPMorgan issued a "positive catalyst watch" ahead of its capital markets day in September.

Property stocks performed well, with LondonMetric Property rising 2.56%, Land Securities Group gaining 2.03%, and Segro advancing 1.28%.

Close Brothers Group jumped 3.23% following an upgrade by RBC Capital Markets on Thursday, which raised its rating to 'outperform' from 'sector perform' and significantly increased its price target, citing several potential catalysts.

Grafton Group also saw a rise of 1.93%, buoyed by Berenberg's upgraded target price, reflecting what analysts described as an "attractive opportunity" in the building materials company.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,376.63 -0.04% FTSE 250 (MCX) 21,086.54 0.26% techMARK (TASX) 4,939.15 0.44%

FTSE 100 - Risers

LondonMetric Property (LMP) 204.00p 2.56% Entain (ENT) 646.00p 2.22% Flutter Entertainment (DI) (FLTR) 16,200.00p 2.05% Land Securities Group (LAND) 629.50p 2.03% Severn Trent (SVT) 2,571.00p 1.54% Unite Group (UTG) 957.50p 1.32% SEGRO (SGRO) 871.20p 1.28% Antofagasta (ANTO) 1,853.00p 1.26% Ashtead Group (AHT) 5,398.00p 1.24% Vistry Group (VTY) 1,359.00p 1.04%

FTSE 100 - Fallers

Fresnillo (FRES) 541.50p -2.34% Whitbread (WTB) 2,885.00p -1.77% Intermediate Capital Group (ICG) 2,126.00p -1.67% Anglo American (AAL) 2,209.00p -1.34% BP (BP.) 429.40p -1.23% Burberry Group (BRBY) 667.80p -1.18% Shell (SHEL) 2,681.00p -1.11% Relx plc (REL) 3,539.00p -1.09% Smith (DS) (SMDS) 468.00p -1.06% easyJet (EZJ) 475.10p -0.86%

FTSE 250 - Risers

Close Brothers Group (CBG) 546.50p 3.70% British Land Company (BLND) 411.20p 2.75% W.A.G Payment Solutions (WPS) 68.00p 2.72% RHI Magnesita N.V. (DI) (RHIM) 3,305.00p 2.64% Shaftesbury Capital (SHC) 147.00p 2.44% Trustpilot Group (TRST) 213.50p 2.40% Pennon Group (PNN) 603.50p 2.20% International Workplace Group (IWG) 180.80p 2.03% Premier Foods (PFD) 179.40p 1.93% Grafton Group Ut (CDI) (GFTU) 1,079.40p 1.93%

FTSE 250 - Fallers

Diversified Energy Company (DEC) 904.50p -2.85% Allianz Technology Trust (ATT) 346.50p -2.39% Drax Group (DRX) 638.50p -2.22% Energean (ENOG) 972.50p -2.11% Senior (SNR) 164.60p -2.01% PureTech Health (PRTC) 163.00p -1.93% SSP Group (SSPG) 171.30p -1.89% Bank of Georgia Group (BGEO) 4,550.00p -1.74% Ithaca Energy (ITH) 129.00p -1.68% Mony Group (MONY) 214.20p -1.56%