A strong start to the year for London’s FTSE 100 continued on Wednesday, shaking off some less-than-stellar economic data as eyes shift to what minutes from the Federal Reserve’s most recent meeting have in store.
The US Federal Open Market Committee will release its meeting minutes at 1900 GMT.
The FTSE 100 index was up 49.22 points, or 0.7%, at 7,603.31. The FTSE 250 was up 173.48 points, or 0.9%, at 19,307.82, and the AIM All-Share was up 3.76 points, or 0.5%, at 842.39.
The Cboe UK 100 was up 0.6% at 760.28, the Cboe UK 250 was up 1.1% at 16,763.25, and the Cboe Small Companies was up 0.6% at 13,321.28.
In European equities on Wednesday, the CAC 40 in Paris was up 1.7%, while the DAX 40 in Frankfurt was up 1.5%.
The European benchmarks rose despite a drab, but slightly improved, reading of the eurozone’s private sector.
The eurozone economy remained in a downturn at the end of 2022, though displayed some signs of improvement, data from S&P Global showed.
The seasonally adjusted S&P Global eurozone composite purchasing managers’ index output index was 49.3 in December, up from 47.8 in November. Market consensus, as cited by FXStreet, had expected a reading of 48.8.
Though remaining below the 50.0 mark that separates growth from contraction, December’s decline was the slowest since July, when activity levels in the eurozone first started shrinking. The decrease has now softened in the past two survey periods.
Joe Hayes, senior economist at S&P Global Market Intelligence, noted that cooling price pressures have helped temper the decline in economic activity levels.
Hayes added there was ‘little evidence’ to suggest the eurozone economy may return to ‘meaningful and stable growth any time soon’, however.
Hopes that the European Central Bank would take its foot off the monetary policy tightening pedal were given more hope on Wednesday.
Inflation in France cooled in December, according to figures from Insee.
The annual inflation rate faded to 5.9% in December from 6.2% in November, which Insee put down to slowing energy price rises.
On a monthly basis, consumer prices declined by 0.1% in December, compared to an increase of 0.3% in November from October. Energy price rises fell due to the decrease in petroleum product prices.
The data followed a reading on Tuesday which said the inflation rate in Germany, as measured by the year-on-year change in the consumer price index, is expected to be 8.6% in December, compared to 10.0% in November, Destatis reported.
Inflationary readings were also in focus in the UK. The rate of grocery price inflation in the UK has dropped for the second time in a row, the latest market survey from Kantar revealed.
The grocery price inflation rate faded to 14.4% in December, from 14.6%. UK shop price inflation also faded ever-so-slightly last month.
Meanwhile, according to the latest British Retail Consortium-NielsenIQ tracker, shop price annual inflation decelerated to 7.3% in December, from 7.4% in November.
Food inflation, however, quickened to 13.3% in December, from 12.4% a month earlier.
‘This is above the 3-month average rate of 12.5%. This is the highest inflation rate in the food category on record,’ the BRC added.
In London, online grocer Ocado jumped 7.3%. It was the best performer in the FTSE 100.
Data from Kantar showed Ocado sales increased by 8.2% year-on-year in the 12 weeks to Christmas Day, as it maintained a market share of 1.7%.
Tesco sales, meanwhile, grew by 6.0%. It remained the UK’s most popular supermarket though its market share slipped to 27.5% from 27.9%. Peer Sainsbury saw sales growth of 6.2%, though its market share fell to 15.5% from 15.7%.
Shares in Sainsbury’s and Tesco were up 3.6% and 2.3%, respectively, at midday.
Elsewhere on the FTSE 100, BT was up 2.9% as Bloomberg reported that the telecommunications firm will take a stake in drone startup Altitude Angel.
BT will provide ‘network infrastructure and its scalability experience to deploy and maintain Altitude Angel’s ARROW tower network,’ Altitude Angel said on its website.
In the FTSE 250, Wizz Air climbed 5.8%. The airline received a boost from positive passenger numbers from low-cost peer Ryanair.
The Dublin-based firm said passenger numbers grew 21% to 11.5 million in December from 9.5 million the previous year.
Ryanair said it operated over 65,500 flights in December with a load factor of 92%, compared to 81% a year prior.
On AIM, Corcel soared 17% after it announced it had entered into a farm-out and joint venture agreement with Riversgold, covering its recently acquired rare earth elements project in Laverton, Australia.
Under the agreement, Riversgold will make an immediate payment to Corcel of A$30,000, around £17,089, and will also commit to funding 100% of an initial exploration programme of A$500,000.
Gold was quoted at $1,858.59 an ounce at midday on Wednesday, sharply higher against $1,829.14 late Tuesday. Brent oil was quoted at $79.89 a barrel, down significantly from $83.03.
BP and Shell fell 2.3% and 2.0%, respectively, at midday, tracking the lower Brent price.
Investors are becoming increasingly concerned about the current Covid situation in China, where a relaxation of restrictions is leading to a surge in cases, suggesting negative implications for global growth and supply chains.
The pound was quoted at $1.2050 at midday on Wednesday in London, higher compared to $1.1980 at the local close on Tuesday. The euro stood at $1.0606 at midday on Wednesday, higher against $1.0550 at the London equities close on Tuesday. Against the yen, the dollar was trading at JP¥130.57, lower compared to JP¥130.89.
UK consumers borrowed an additional £1.5 billion in consumer credit during November, according to data from the Bank of England.
Driven by an additional £1.2 billion of credit card borrowing, consumers borrowed an additional £1.5 billion in consumer credit in November, well above the £700 million borrowed in October.
This was also higher than the previous six-month average of £1.1 billion and came in well above market expectations, as cited by FXStreet, of £900 million.
Stocks in New York were called higher. The Dow Jones Industrial Average is called up 0.3%, the S&P 500 index up 0.5%, and the Nasdaq Composite up 0.7%.
Still to come on Wednesday’s economic calendar, there is an ISM US PMI print at 1500 GMT alongside job openings and labour turnover data.
By Heather Rydings, Alliance News senior economics reporter
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