Stock prices were higher and the dollar slightly lower at midday in London on Wednesday, as market participants await a US inflation reading that could influence the monetary policy tightening path being followed by the Federal Reserve.
‘European shares followed the Asian bullish trend overnight, pushing benchmarks higher alongside Treasuries, as risk aversion eased overnight. Today's bullish pressure came from China after investors welcomed improvements registered on the virus front, with a decrease in cases, sparking hopes of reduced restrictions and impact towards growth,’ said Pierre Veyret, analyst at ActivTrades.
Attention, however, is now firmly shifting to the US consumer price index for April, due at 1330 BST.
‘Even if no significant change is expected, today's inflation print is seen as crucial by many as investors are desperate to know where rising prices will go. A higher-than-expected CPI would be concerning and pave the way for more monetary tightening, putting further pressure on riskier assets,’ Veyret continued. ‘On the other hand, a lower figure could be seen as an evidence inflation has peaked, sparking hopes of a less aggressive approach from the [US] Fed which would benefit stocks and bonds.’
Market consensus is predicting a slight slowing in inflation, but it will remain above 8%. The index was up 8.5% in March from a year before.
In London, the FTSE 100 index was up 81.97 points, or 1.1%, at 7,325.19 midday Wednesday. The mid-cap FTSE 250 index was up 262.89 points, or 1.4%, at 19,648.36. The AIM All-Share index was up 9.31 points, or 1.0%, at 954.56.
The Cboe UK 100 index was up 1.0% at 729.86. The Cboe 250 was up 1.3% at 17,297.83 and the Cboe Small Companies up 0.7% at 14,562.63.
In Paris, the CAC 40 stock index was up 1.8%. The DAX 40 in Frankfurt was 1.1% higher.
The US inflation print will follow high readings from China and Germany.
China's consumer prices rose at their quickest pace in nearly half a year, official data showed, reflecting the growing costs of the country's zero-Covid curbs and high commodity prices.
April's consumer price index, a key gauge of retail inflation, rose more than expected at 2.1% on-year, picking up pace from 1.5% in March, said the National Bureau of Statistics.
This was followed by consumer price inflation in Germany ticking to a new record high in April, as expected, data from the Federal Statistical Office showed. The annual inflation rate accelerated to 7.4% in April from 7.3% in March.
Ahead of the US inflation data, which will be issued before the opening bell on Wall Street, the Dow Jones Industrial Average was pointed 0.8% higher, the S&P 500 up 0.9%, and the Nasdaq Composite up 1.1%.
In London, Compass was sitting atop the FTSE 100, advancing 7.8%.
The contract caterer announced a £500 million share buyback and said it has achieved an ‘important milestone’ with run-rate revenue topping pre-virus levels.
In the six months to March 31, pretax profit jumped to £632 million from £133 million the year before, as revenue rose 36% to £11.5 billion from £8.4 billion.
In the half-year that ended March 31, 2020, largely before the Covid-19 lockdowns, Compass achieved pretax profit of £771 million on revenue of £12.62 billion.
Compass noted its underlying revenue in the second quarter of financial 2022 was double the year prior, and it maintained a run rate above its pre-Covid levels.
Due to its strong performance in the first half, Compass lifted its organic growth guidance to about 30% from the previous expectation of 20% to 25% growth.
Pershing Square - an investment holding company focused on North American companies - launched a share buyback programme for up to $100.0 million shares in London and Amsterdam, sending the stock 3.0% higher.
ITV added 2.6%. The FTSE 100-listed television broadcaster and programmer producer reported a first-quarter revenue rise, as it looks towards to the launch of its video streaming service later this year.
ITV's total external revenue in the three months to March 31 climbed 18% to £834 million. ITV Studios revenue was up 23% to £458 million. Media & Entertainment revenue was up 13% to £545 million, aided by total advertising revenue rising 16%.
It was a ‘robust operational and financial performance’, Chief Executive Carolyn McCall said.
Airtel Africa was at the bottom of the FTSE 100, shedding 5.4%. The telecommunications and mobile money services provider reported a sharp increase in full-year profit and revenue due to healthy customer base growth.
Airtel generated a pretax profit of $1.22 billion in the year ended March 31, up 75% versus $697 million the year prior. This was on revenue growth of 21% to $4.71 billion from $3.91 billion.
The firm said it delivered strong double-digit growth across all its key services. It credited this to customer base growth of 8.7% to 128.4 million and growth in average revenue per user of 15%.
In the midcaps, Watches of Switzerland was 6.2% higher after Goldman Sachs raised the luxury watches retailer to 'buy' from 'neutral'.
Tui was up 4.5% after it posted a sharp first half revenue jump, with the Anglo-German holiday operator's fortunes resembling pre-Covid times.
Tui said revenue in the first half ended March 31 soared to €4.50 billion from €716.3 million a year earlier. In the second quarter alone, revenue jumped to €2.13 billion from €248.1 million.
Despite strong year-on-year rises, both revenue figures fell short of what Tui achieved two years earlier, largely before the impact of Covid-19. Revenue in the first half of financial 2020 was €6.59 billion, while in the second quarter, it achieved revenue of €2.79 billion.
The Hanover, Germany-based firm said its pretax loss narrowed in the first half of financial 2022. Tui posted a pretax loss of €871.0 million, slimmed from €1.54 billion a year prior. In the second quarter, Tui's pretax loss narrowed to €466.5 million from €736.9 million.
Tui said it operated 71% of its financial 2019 capacity during the second quarter.
At the other end of the FTSE 250, Marshalls was down 9.3%, the worst performer in the midcaps.
The landscaping products company cautioned about uncertainty ahead and said that revenue in its Domestic division took a hit.
Marshalls said revenue in the four months to April 30 was up 5% at £201 million compared to the same period in 2021. Marshalls explained that revenue growth was supported by the implementation of price increases at the start of 2022.
But in the Domestic market, meaning private homes, revenue dropped 9% due to a reduction in installer capacity in March and April, despite end-customer demand being buoyant. The sector represents 26% of Marshalls's total revenue.
Brent oil was quoted at $105.78 a barrel Wednesday midday, higher from $104.75 late Tuesday. Gold stood at $1,854.10 an ounce, higher against $1,846.88.
Ahead of the US CPI report, the dollar was trading lower.
The pound was quoted at $1.2355 midday Wednesday, up from $1.2300 at the London equities close Tuesday.
The euro was priced at $1.0552, higher against $1.0533. Against the yen, the dollar was trading at JP¥129.77, down from JP¥130.38.
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