• FTSE 100 adds 52 points
  • US inflation hits 30-year high
  • ITV jumps after update

4:45pm: FTSE adds 52 points at the close

The UK’s blue-chip index finished 52 points higher at Wednesday’s close as gold prices boosted precious metal miners.

The FTSE 100 finished at 7,326 points for a 0.71% gain on the day.

“High inflation prints are a boon for gold, and have given precious metal miners another boost after some strength earlier in the week,” IG chief market analyst Chris Beauchamp wrote Wednesday. “It represents a nice change for gold longs, which have endured a tough time and could finally mark the end of the extended decline in gold prices that has characterised the past twelve months, leading to a new leg higher in the post-2018 bull market.”

Meanwhile, over on Wall Street, all major indicies were well in the red as inflation remains “stubbornly un-transitory,” according to Beauchamp.

3.53pm: FTSE up, Dow down

UK and US markets have diverged as the former shrugs off a hefty jump in American inflation figures but the latter falls back.

The FTSE 100 is currently hovering around the same level it has been for most of the afternoon, up 45.32 points or 0.63% at 7320.22.

But on Wall Street the Dow Jones Industrial Average is down 0.18%, the S&P 500 is off 0.14% and the Nasdaq Composite has fallen 0.31%.

A weaker pound as the dollar strengthens has given a boost to the overseas earners in the UK blue chip index, such as GlaxoSmithKline PLC (LSE:GSK), up 1.62%, and British American Tobacco PLC (LSE:BATS), 1.22% better.

Miners and utilities are also heading higher, with Fresnillo PLC (LSE:FRES) up 2.87% after gains in the gold price and SSE PLC (LSE:SSE) adding 2.42%.

Positive trading updates have also helped sentiment, with ITV PLC (LSE:ITV) leading the risers with a 13.82% gain.

Marks and Spencer Group PLC (LSE:MKS) has jumped 15.66% as it raised its profit forecast, helping the FTSE 250 to climb 0.35%.

But results from software group Aveva Group (LSE:AVV) were not so well received, and its shares have fallen 3.62%.

Ahead of its own figures tomorrow, Burberry Group PLC (LSE:BRBY) is down 2.01% on concerns about the economy in China, one of the luxury retailer’s key markets.

And JD Wetherspoon Plc (LSE:JDW) is down 8.36% as like-for-like sales for the first 15 weeks of the current financial year fell 8.9% compared with the same period in pre-pandemic 2019.

The pubs group said older drinkers had been staying away due to continued COVID-19 fears.

3.33: Bitcoin pops

More thoughts on the big US inflation number earlier, with this from Fawad Razaqzada, market analyst at ThinkMarkets.

“If you ever doubted investors still see gold as an effective hedge against inflation, then you got your answer when the latest inflation data was released earlier, showing the fastest annual pace since 1990.

“Gold jumped by some $30 after initially spiking lower to hit its best levels since June, even as the USD/JPY rallied as you would have expected.

“On a side note, Bitcoin and Ethereum rallied, too, after the jump in US inflation, confirming my suspicion that the crypto rally has been fuelled in part by the rising levels of inflation.”

And Naeem Aslam at Avatrade: “For gold, which is a perfect inflation hedge, we see massive upward moves. Basically, gold is on fire and so it bitcoin which is also inflation hedge. This is despite the fact that the dollar index is up as traders believe that the fed is behind the curve and they need to do something to control the pace of inflation.”

Craig Erlam at Oanda: “I have never been on board with the suggestion that bitcoin is an inflation hedge but it’s clear today that the narrative is sticking. The cryptocurrency rallied around 4% in the short time following the US CPI number and just like gold, it’s giving very little back.

“New record highs for bitcoin and another box ticked as far as the crypto community will be concerned. And if the narrative has indeed stuck, this could bode well in the near term as the inflation data may get worse before it gets better.”

3.03pm: US markets weaken

US shares started weaker in New York as traders digested the latest inflation data, which put interest rate hikes by the Federal Reserve back in the spotlight.

In early deals on Wall Street, the Dow Jones Industrial Average shed around 49 points or 0.13% to stand at 36,274. The S&P 500 lost around 0.22% while the tech-laden Nasdaq index is down 0.5%.

The US consumer price index (CPI) jumped 0.9% in October, according to official data, against expectations from economists for a 0.6% increase. It was the largest annual increase since 1990.

The key question is whether the Federal Reserve will decide to act to curb inflation or stick to its belief that the pricing pressures are merely transitory.

Dan Boardman-Weston at BRI Wealth Management, said: “Base effects, global supply chain issues and pent-up demand are all fuelling the current surge but we see all of these factors as being transitory.

“The issue many have though is what the definition of transitory actually is and whether the Fed will perform a volte-face and end up tightening policy too much. The tapering of asset purchases may be accelerated but the Fed will be reluctant to aggressively respond to these inflationary pressures.”

Back in the UK, investors seem happy to ignore the situation, although the strength of the dollar against the pound does help all those overseas earners in the leading index.

So the FTSE 100 remains fairly buoyant, up 49.91 points or 0.68% at 7323.95, close to its peak for the day.

1.54pm: Dollar climbs on inflation data

The dollar has strengthened after the CPI figures, in the belief that the Federal Reserve’s talk of inflation being transitory may not be entirely accurate, and a rate rise will be needed sooner than the central bank acknowledges.

So the pound, down around 0.22% earlier, is now off 0.47% at US$1.3495.

Meanwhile Wall Street is slipping lower, with the Dow Jones Industrial Average still set to open 0.24% lower, but the S&P 500 now forecast to fall by 0.38% and the Nasdaq Composite by 0.68%.

Naeem Aslam, chief market analyst at Avatrade, said: “Inflation isn’t going down and traders are reacting to this by pushing the dollar index higher. As for the equity markets, higher inflation isn’t the best news that they need ahead of their holiday and this is why see futures moving lower.

“For gold, which is a perfect inflation hedge, we see massive upward moves.”

In the UK, the FTSE 100 seems fairly unconcerned, up 43.89 points or 0.61% at 7317.32.

1.35pm: US data highest for 30 years

US inflation has come in much stronger than expected.

The Consumer Price Index increased 0.9% in October after rising 0.4% in September.

Over the last twelve months it rose 6.2% compared to expectations of a figure of 5.9%. This is the highest level for 30 years.

There were increases in energy, food, shelter and used cars and trucks.

The core index, which excludes energy and food and tends to be less volatile, was also above forecasts at 4.6%.

Meanwhile weekly jobless claims were also higher than expected.

The number of Americans seeking unemployment benefits for the first time rose to 267,000 compared to the forecast figure of 260,000.

The previous week’s figure was revised up from 269,000 to 271,000.

1.22pm: FTSE 100 hits peak for the day so far

Utilities are in demand, giving further support to the leading index as it hits a high for the day.

National Grid PLC (LSE:NG.) is up 2.75%, SSE PLC (LSE:SSE) has climbed 2.6% and Severn Trent (LSE:SVT) is 2.31% better.

With the rise in these defensive stocks, the FTSE 100 is up 47.55 points or 0.65% at 7321.53, a peak for the day so far.

12.08pm: US markets cautious ahead of inflation news

US stocks are expected to open lower as investors await the latest inflation data and stocks take a breather from their recent strong run.

Futures for the Dow Jones Industrial Average declined 0.24% in Wednesday pre-market trading, while the broader S&P 500 index shed 0.34% and those for the tech-heavy Nasdaq Composite fell 0.57%.

US stocks closed lower on Tuesday, ending an eight-day winning streak, with a 12% slide in Tesla’s share price weighing on the Nasdaq after company founder Elon Musk discussed in a Twitter post the possible sale of 10% of his shares in the electric vehicle maker.

At the close, the Dow was 0.31% lower at 36,320, while the S&P 500 shed 0.35% to 4,685 and the Nasdaq sank 0.6% to 15,887.

October’s US consumer price index data is expected to show a 0.6% jump from the previous month and a year-on-year acceleration to 5.9%. The producer price index for the same month, released on Tuesday, also increased 0.6% month over month, in line with the consensus estimate but was still up 8.6% from October 2020.

Neil Wilson, chief market analyst at markets.com, said: “Wall Street closed lower, ending one of its best win streaks in years.

“The decline in Tesla was a factor, but ultimately such a straight charge up will just run out of gas sooner or later.”

Back in the UK, the FTSE 100 is off its best levels but remains in positive territory.

The leading index is up 25.72 points or 0.36% at 7299.33, having earlier reached 7315.

11.21am: Markets higher ahead of US inflation figures

The positive mood remains in place, with the FTSE 100 up 39.5 points or 0.54% at 7312.66 despite worries about China’s inflationary pressures being exported to the rest of the world.

AJ Bell investment director Russ Mould said: “Some strong corporate updates helped outweigh continued concerns about inflation as the FTSE 100 made a positive start on Wednesday.

“China continued to offer evidence of mounting inflationary pressures as factory gate prices saw their biggest increase since 1995.

“Given Chinese goods are widely exported around the globe, there is a risk that inflation gets exported too. There will be significant focus on US inflation figures when they are released later today.

“Both the Bank of England and the US Federal Reserve surprised the markets by adopting a softer stance on tightening monetary policy but if prices continue to rise then the pressure to act more quickly on scaling back financial stimulus and raising rates will build too.”

ITV PLC (LSE:ITV) continues to lead the FTSE 100 risers, and is now up 12.08%.

10.18am: Burberry out of style

Worries about the Chinese economy after its inflation rate hit a 26 year high have sent shares in Burberry Group PLC (LSE:BRBY) lower.

The luxury goods retailer, which counts China as one of its main markets, is down 1.54% at 1956.5p, making it the biggest faller in the leading index.

Overall though investors appear to be ignoring rising pricing pressures around the globe despite the Chinese increase and the prospect of a high figure when the US reports later.

The FTSE 100 is currently up 39.51 points or 0.54% at 7313.14, close to the day’s high.

The FTSE 250 is 0.43% better, helped by a near 15% surge in Marks and Spencer Group PLC (LSE:MKS) after it raised its profit forecast.

9.34am: Halfords takes the brakes off

Halfords Group PLC (LSE:HFD) joins the list of companies getting a positive response to their updates.

Its shares have accelerated 10.91% after first half revenues rose to GBP694.8m, 19.2% ahead of the pre-pandemic figure.

Underlying profits before tax nearly doubled to GBP57.9m, and it has raised its full year profit guidance from GBP75mln to GBP80mln-GBP90mln.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “A very strong set of results in Halford’s retail business has seen full year profit guidance upgraded – no mean feat given the disruption the group has faced. Retail sales have climbed despite the closure of some 40 stores over the last two years, reflecting significant overtrading by remaining stores and resulting in substantially lower costs. The shift of gears to online has paid off here and as a result retail profits have more than doubled.

“Autocentres are less promising. Despite recent acquisitions boosting revenues substantially, profits have gone nowhere. The group expects an increase in lucrative MOTs in the second half to improve profitability, but 2.4% operating margins in a business where revenues can be volatile is as much of a risk as an asset.

“Overall though these are good numbers, and support our long term belief that Halfords’ mixed online and bricks & mortar offer makes sense in an increasingly digital world. With management increasing focussed on upskilling its workforce to deliver great service as well as good products that fundamental strength should grow. Together with diminished supply chain disruption that bodes well for the second half of the year.”

Meanwhile markets overall remain positive.

The FTSE 100 is 23.19 points or 0.33% better at 7296.54, while the FTSE 250 is up 0.34% at 23,447.98.

8.37am: Market holds on to early gains

ITV PLC (LSE:ITV) is leading the way in the FTSE 100.

Its shares have jumped 6.22% to 116p after a positive nine month update, which saw revenues rise 28% to GBP2.38bn. It said advertising revenues were set to hit a record high.

Keith Bowman, investment analyst at interactive investor said: “ITV continues to deliver a strong recovery from the depths of the pandemic…

“Its shares remain at a big discount to the big streamers like Netflix, and the dividend payment restarts soon. While ITV is a small player compared to the global giants, its strengths and pedigree are unlikely to be completely overlooked. As such and with analysts’ currently estimating a fair value price per share of around 139p, consensus opinion currently points towards a buy.”

After the well received results from Marks and Spencer Group PLC (LSE:MKS), Next PLC (LSE:NXT) is also benefitting, with its shares up 1.82%.

Primark owner Associated British Foods PLC (LSE:ABF) continues to gain ground, adding another 1.35% in the wake of Tuesday’s trading statement.

And with the oil price remaining firm, BP PLC (LSE:BP.) is 1.9% better.

But Aveva Group (LSE:AVV), after an early jump, is now down 0.46%.

In contrast, the FTSE 100 is holding on to its gains, up 23.04 points or 0.33% at 7298.03.

8.23am: Leading shares defy expectations

Investors appear to have shrugged off renewed fears about inflation, with UK markets defying expectations and opening in positive territory.

The FTSE 100 is up 22.16 points or 0.29% at 7295 while the FTSE 250 has added 0.35% or 79.54 points to 23,449.36.

Marks and Spencer Group PLC (LSE:MKS) – now a mid-cap company of course – is certainly helping things along with a 15.76% surge in its share price to 225.48p.

The retailer said full year profits would be ahead of expectations and in the region of GBP500mln, up from a previous forecast of GBP300mln to GBP350mln.

The upgrade follows a strong first half performance from its food business and signs of revival in its struggling clothes business, which pushed it back into a profit of GBP187.3mln compared to a GBP87.6mln loss.

In the leading index, software group Aveva Group (LSE:AVV) has added 1.99% after a 33.9% rise in half-year adjusted profits.

But with Chinese and German inflation rising – the latter up from 4.1% in September to 4.5% in October – and a strong US figure expected later, the focus is set to remain on pricing pressures.

And when central bank’s will decide to hike interest rates to deal with the situation.

Jim Reid at Deutsche Bank said: “A lot is resting on this inflation being transitory. This will be the multi-trillion dollar question for 2022, that’s for sure…

“One factor that may help on the inflation front over the coming months was a major decline in natural gas prices yesterday, with both European (-8.16%) and US (-8.26%) futures witnessing substantial declines. This wasn’t reflected elsewhere in the energy complex though, with WTI (+2.71%) and Brent crude (+1.62%) oil prices seeing a further rise following reports that the US would not need to release strategic reserves due to the demand outlook.”

6.50am: UK market set for downbeat start

Borrowing from Sesame Street, today’s early market report is brought to you by the letter ‘I’.

Any need to spell it out? Inflation is on the agenda (again) with China’s producer price index advancing by at a faster-than-expected (and eye-watering) rate of 13.5%, which represented a 26-year high.

Predictably, this sent Asia’s main markets into a bit of a flap.

In the US, the consumer price index is set to hit a 30-year zenith, according to analysts paid to track and record these things. The last big high-water mark was 2008 when inflation hit 5.6%. You have to go back to 1990 to find a reading similar to the 5.9% expected later.

“With a number of Fed policymakers making louder noises about the need for rate hikes next year, a strong number here could well prompt a rebound in US yields which have declined quite sharply in the last week or so, with the 10-year down over 15 basis points from last week’s highs,” said Michael Hewson of CMC Markets.

“On a more positive note, we also have the latest weekly jobless claims numbers due to Veteran’s Day on Thursday, and which are expected to fall to 260,000, from 269,000, while continuing claims are expected to fall further from 2.1mln to just over 2mln, and closer to the pre-pandemic levels of 1.7mln, which was the average in the first three months of 2020.”

Around the markets

  • Pound US$1.3554 (-0.02%)
  • Bitcoin US$66,444.25 (-2.64%)
  • Gold US$1,827.20 (-0.20%)
  • Brent crude US$85.29 (+0.53%)

6.50am: Early Markets – Asia / Australia

Asia-Pacific stocks declined on Wednesday with shares of Chinese real estate developer Fantasia Holdings crashing 37.5% after returning to trade.

The Hong Kong-listed stock was suspended for more than a month after Fantasia failed to repay a $206 million bond that matured in early October.

China’s Shanghai Composite slipped 0.66% while Hong Kong’s Hang Seng index declined 0.73%

In Japan, the Nikkei 225 fell 0.61% and South Korea’s Kospi plunged 1.04%.

Australia’s S&P/ASX200 declined for the third consecutive day, finishing 0.14% lower at 7,423.90 points, with some major miners closing at 18-month lows.


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