Dollar bill below inflation newspaper headline
The latest core personal consumption expenditures reading is released on Friday / Image source: Adobe

London’s FTSE 100 edged lower after the opening bell on Wednesday, as investors moved with trepidation as eyes turn to a US inflation reading due later in the week.

The FTSE 100 index opened down 13.02 points, 0.2%, at 7,917.94. The FTSE 250 was down 23.35 points, 0.1%, at 19,754.29, and the AIM All-Share was up 0.27 of a point at 739.79.

The Cboe UK 100 was down 0.2% at 791.57, the Cboe UK 250 was marginally down at 17,166.97, and the Cboe Small Companies was up 0.1% at 14,639.45.

In European equities on Wednesday, the CAC 40 in Paris was marginally higher, while the DAX 40 in Frankfurt edged up 0.1%.

Sterling was quoted at $1.2620 early Wednesday, lower than $1.2655 at the London equities close on Monday. The euro traded at $1.0825 early Wednesday, lower than $1.0850 late Tuesday. Against the yen, the dollar was quoted higher at JP¥151.78 versus JP¥151.34.

The latest core personal consumption expenditures reading, the Fed’s preferred inflation gauge, is released on Friday. Financial markets across the globe, including in London and New York, will be closed that day for Good Friday, however.

‘We expect dollar crosses to keep stabilising until Friday’s US PCE,’ analysts at ING commented.

‘When it comes to Fed pricing, we doubt expectations for the June meeting will change much this week unless we see a surprise in Friday’s PCE. There is still 19bp priced in for June and 78bp by year-end, which pretty much mirrors the March median dot plot. Some quarter-end flows may slightly mix up the FX picture today, but the dollar appears in stabilisation mode.’

According to FXStreet cited consensus, the rate of core PCE inflation is expected to have been unmoved at 2.8% in February. The headline rate is expected to have picked up to 2.5% in February, from 2.4% in January.

In the US on Tuesday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.1%, the S&P 500 down 0.3% and the Nasdaq Composite down 0.4%.

Investors also digested some industrial data from China, while elsewhere in Asia, focus was also on the yen, which tumbled to a 34-year low.

The unit weakened to JP¥151.97 per dollar, its softest since 1990, raising speculation that authorities will intervene in markets to prop up the currency. But its value soon recovered to levels of around JP¥151.72.

The drop came after a top central bank official suggested it would continue to pursue an accommodative policy for the time being, echoing previous comments from the BoJ.

In Asia on Wednesday, the Nikkei 225 index in Tokyo rose 0.9%. In China, the Shanghai Composite ended down 1.3%, while the Hang Seng index in Hong Kong lost 1.4%. The S&P/ASX 200 in Sydney closed up 0.5%

In London’s FTSE 100, Diploma was the top performing stock, soaring 12%, after announcing the proposed acquisition of Peerless Aerospace Fastener, a distributor of specialty fasteners into the US and European aerospace markets, for around £236 million.

The London-based supplier of specialised technical products and services said it expects the transaction to complete in the next few weeks, following customary regulatory clearances.

Smiths Group rose 7.4%, continuing gains from strong half-year results on Tuesday, when it also appointed a new chief executive officer and unveiled plans for a new £100 million share buyback programme.

Sainsbury’s improved 2.7%, after UBS raised its rating for the supermarket to ’buy’ from ’neutral’, setting an improved target price of 295 pence from 275p. Its current share price is 269.3p.

AstraZeneca rose 1.0%, after the pharmaceutical firm announced two drug approvals in Japan.

In collaboration with Sanofi, the pharmaceutical firm’s Beyfortus treatment was approved for the treatment of lower respiratory tract disease caused by respiratory syncytial virus in infants and children.

AstraZeneca expects Beyfortus to be available for the upcoming 2024/25 RSV season, in line with existing Japanese guidelines.

Meanwhile, its Truqap treatment in combination with Faslodex has also been approved in Japan for the treatment of adult patients with various forms of breast cancer after treatment with hormone therapy.

In the FTSE 250, Ithaca Energy fell 0.7%.

The London-based North Sea oil and gas operator signed an exclusivity agreement with Eni for a ‘potential transformational combination’ with substantially all of Eni’s UK upstream assets. Eni has granted Ithaca Energy exclusivity for a period of four weeks from today.

Executive Chair Gilad Myerson commented: ‘We believe this potential combination would be a strong strategic fit with Eni UK’s cash generative portfolio complementing Ithaca Energy’s high-quality, long-life asset base with significant development opportunity.’

Ithaca Energy also reported pretax profit in 2023 fell to $302.0 million from $2.24 billion in 2022, while revenue declined to $2.32 billion from $2.60 billion.

It said full-year production of 70,200 barrels of oil equivalent per day was in line with its previously stated range of 68,000 to 74,000 boe per day, while it expects 2024 production of between 56,000 to 61,000.

Among London’s small-caps, CMC Markets rose 11%.

The London-based online trading platform operator for retail investors and financial institutions said it expects net operating income in the financial year ending Sunday to exceed the top end of the previously guided range of between £290 million and £310 million.

It also expects operating costs to be in line with guidance at around £240 million, while noting it continues to identify opportunities for further cost savings across the global business as it focuses on improving profit margins.

‘Following the strong trading performance seen in the third quarter, the positive momentum continued in the fourth quarter. We continue to see strength in the institutional and [business-to-business] business as the group benefits from the long-term investments in this area. The group also has a strong pipeline of B2B partnerships some of which are in the advanced stages,’ CMC Markets said.

On AIM in London, Strix fell 4.5%, after it said a recent acquisition helped boost its annual revenue, but it lowered its dividend as it aims to focus on debt reduction.

The Isle of Man-based provider of kettle safety controls said revenue jumped 35% to £144.6 million in 2023 from £106.9 million the year before.

This was largely driven Billi Australia Pty Ltd, which it acquired back in 2022, and ‘continues to be highly profitable and is strongly cash generative.’ The full-year inclusion of Billi revenues stood at £41.3 million, Strix said.

Billi is an Australia-based supplier of premium filtered and non-filtered instant boiling, chilled and sparkling water systems.

Pretax profit rose by 9.9% to £17.7 million as a result, from £16.1 million the year before. Strix declared a total dividend for 2023 of 0.9 pence per share, down 85% from 6.0p the year before.

In addition, it announced a ‘temporary pause in the final and interim dividend payments in calendar year 2024’.

Looking ahead, Strix said it is undertaking a rebasing of its core business in 2024 to ‘build strong foundations for medium-term growth opportunities as the market continues to recover.’

It added that Billi’s double-digit revenue and profit growth is expected to continue, helped by a staged expansion into key European markets.

Gold was quoted at $2,178.63 an ounce early Wednesday, higher than $2,171.90 on Tuesday. Brent oil was trading at $84.80 a barrel, lower than $86.00 late Tuesday.

Still to come on Wednesday’s economic calendar, eurozone consumer confidence and economic sentiment index data come out at 1000 GMT.

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Issue Date: 27 Mar 2024