Major UK stocks closed down but off intra-day lows with investors again being unsettled by inflation threats. Data coming out of China showed May factory gate prices rose at their fastest annual pace in over 12 years due to surging commodity prices, highlighting global inflation pressures at a time when policymakers are trying to revitalise Covid-hit growth.
Investors are increasingly worried pandemic-driven stimulus measures could supercharge global inflation and force central banks to tighten policy, potentially curbing the recovery.
China’s data followed comments from Bank of England chief economist Andy Haldane on radio earlier today where he said that there were ‘some pretty punchy pressures on prices’ and suggested the Bank could act at some point.
With little impetus from Wall Street, the FTSE 100 continued to drift aimlessly into the end of the session, closing 0.2% down at 7,082.90, with weakness showing up insurers and house builders offsetting meagre gains elsewhere on a quiet day for corporate news.
Both the Dow Jones and S&P 500 struggled for meaningful direction, although the tech-heavy Nasdaq Composite did make modest gains, up 0.2%.
Bitcoin was desperately trying to recover after the recent sell-off from near-$60,000 level, changing hands at $34,519, while Brent crude prices rose to $72.36 per barrel on signs of strong demand in the US and Europe, while concerns over Iranian supplies coming back to the market dissipated after US officials said sanctions against the country were unlikely to be lifted.
Meanwhile, gold prices traded sideways at $1,890 per ounce as investors awaited US inflation data due on Thursday.
AIRLINES IN FOCUS
The Competition and Markets Authority announced it has opened enforcement cases against airline firms International Consolidated Airlines (IAG), the owner and operator of British Airways and Iberia, and Ryanair (RYA).
The regulator is investigating whether British Airways and Ryanair broke consumer law by failing to offer refunds for flights customers couldn’t legally take during periods of lockdown. Shares in IAG added close on 3% to 204.5p while Ryanair shares added 2% to €16.77.
Organic revenues for the first six months were down 79% to £256.7 million due to a huge drop in passenger numbers across all travel markets. The firm left its medium-term outlook unchanged and said it doesn’t expect organic revenues to return to pre-Covid levels until 2024 at the earliest. After opening lower, SSP shares traded 2% down at 302.3p.
The group said that while shareholder returns ‘will continue to be driven primarily by long-term capital appreciation, the board also considers that the business model has reached a sufficient stage of maturity that a modest but growing dividend should form a small part of the overall shareholder value proposition’. Shares drifted 0.5% to 119.8p.
Medical products maker Smith & Nephew (SN.) was a rare gainer, climbing 2% to £15.06 after analysts at investment bank Credit Suisse lifted their view from hold to buy.
Data erasure and mobile technology group Blancco Technology (BLTG:AIM) posted a trading update to flag that operating profits and cash generation for the year to June would be ‘significantly ahead’ of management’s expectations.
While revenues are seen in line with estimates, tight cost control measures during the pandemic have resulted in higher operating margins, particularly in the second half as top-line growth accelerated. Shares jumped nearly 5% to 280p.
Credit hire and legal services firm Anexo (ANX:AIM) reported positive trading for the first four months of the year, with the number of vehicles on hire ahead of the same period last year and cash collections in its Bond Turner legal business well ahead. Shares traded 2% ahead at 140.5p.
Specialist real estate investment trust Urban Logistics (SHED:AIM) posted an 88% rise in rental income for the year to the end of March and a 13% rise in the value of its portfolio excluding capital raises.
Total dividends for the year are 7.6p, giving the trust a yield of 4.7%. Meanwhile the firm said it hopes to move from AIM to the main market ‘in the near future’. Shares dipped 1% to 160p.
FOR A LIST OF FTSE 100 RISERS AND FALLERS SEE HERE