London close: Inflation in focus as geopolitical tensions ease
- FTSE closes up 38.06 at 6,779.31
- UK CPI drops to 1.6%
- US housing starts jump 15.7% in July
techMARK 2,800.98 +0.68%
FTSE 100 6,779.31 +0.56%
FTSE 250 15,895.26 +0.63%
It was another positive finish for London's blue chips on Tuesday, which saw a jump at the opening bell followed by relatively steady trading throughout the session, with a slight dip seen late in the morning.
The driving force continued to be the easing of political tensions, although there were reports that the ceasefire between Israel and Hamas has been broken after the launch of three rockets from the Gaza Strip.
Ultimately, the FTSE 100 closed 38.06 points higher at 6,779.31.
With geopolitical tensions no longer taking up as much focus, traders turned their attention to the day's inflation figures, which showed that UK inflation, as measured by the consumer price index (CPI), had dropped to 1.6% in July, compared to 1.9% the previous month and expectations of 1.8%. The figures come ahead of the release of the minutes of the most recent Monetary Policy committee (MPC) meeting on Wednesday.
"Lower levels of inflation take the heat of the Bank of England to hike rates," CMC Markets analyst Jasper Lawler explained.
"This latest report won't have been factored into the decision-making at the latest Bank of England (BoE) meeting, but with core inflation below 2% anyway it seems entirely possible no members of the MPC dissented the decision to keep interest rates unchanged."
Over in the US, inflation climbed 2% year-on-year in July, in line with expectations, after rising 2.1% in June. Consumer prices increased 0.1% in July when compared to a month ago, as forecast, following a 0.3% increase. Excluding food and energy, prices rose 1.9% year-on-year and 0.1% month-on-month.
However, it was the 15.7% jump in housing starts in July that pushed stocks higher.
Rail fares to rise by up to 5.5% from January
UK rail fares will be up to 5.5% more costly on average from January 2015, it was announced following the inflation figure.
Regulated rail prices are pegged to inflation and capped at retail price inflation (RPI) plus 1%, although the "flex" rule allows train operators to lift fares on some routes by an extra 2%.
In other news, the year-on-year rate of home-price appreciation slowed from 10.4% to 10.2% in June, putting the average UK mix-adjusted house price at £265,000, according to the Office for National Statistics (ONS).
Home prices in England again paced gains, rising by 10.7%, nearly doubling the pace of rises seen in the next most buoyant market, Scotland, where the sum being asked of would-be purchasers increased by 6%.
Gains led by retailers and housebuilders
Retailers Kingfisher, Sports Direct and Next were all high risers on Tuesday, while housebuilders also performed well as forecasts for a rate hike were pushed back after the inflation figures.
Persimmon moved higher after pleasing with a 57% jumped in first-half profits, while other stocks such as Barratt Developments were also higher.
However, building materials group CRH underwhelmed with its own interim results. The company swung to a profit in the first half, as favourable weather in Europe and an ongoing recovery in the States helped to offset difficult conditions in the wider Americas region.
Imperial Tobacco was up after it maintained its full-year guidance for "modest" earnings growth despite revenues slipping in the first nine months. Total reported volumes were down 8% in the first three quarters ended 30 June reflecting the company's "stock optimisation programme", while underlying tobacco volumes were 5% lower and so broadly in line with the industry.
Details of BHP Billiton's hotly-anticipated "portfolio simplification" were unveiled on Tuesday morning but failed to excite the market with the stock slipping sharply into the red.
Fellow miners such as Fresnillo, Glencore and Anglo American also fell into negative territory.
FTSE 100 - Risers
Kingfisher (KGF) 310.60p +3.74%
Sports Direct International (SPD) 726.50p +3.34%
3i Group (III) 392.00p +3.00%
Barratt Developments (BDEV) 368.60p +2.90%
easyJet (EZJ) 1,335.00p +2.61%
Imperial Tobacco Group (IMT) 2,585.00p +2.34%
Royal Bank of Scotland Group (RBS) 359.40p +2.33%
ITV (ITV) 212.00p +2.17%
GKN (GKN) 351.00p +2.12%
Next (NXT) 7,050.00p +2.03%
FTSE 100 - Fallers
BHP Billiton (BLT) 1,965.00p -4.93%
Fresnillo (FRES) 973.00p -2.99%
Rolls-Royce Holdings (RR.) 1,033.00p -1.99%
CRH (CRH) 1,428.00p -1.92%
Glencore (GLEN) 358.95p -1.41%
Anglo American (AAL) 1,578.50p -1.28%
Rexam (REX) 494.00p -1.02%
G4S (GFS) 263.10p -0.68%
Meggitt (MGGT) 466.50p -0.51%
Aggreko (AGK) 1,740.00p -0.51%
FTSE 250 - Risers
AO World (AO.) 218.00p +8.03%
CSR (CSR) 568.50p +7.26%
Ophir Energy (OPHR) 229.60p +7.09%
Supergroup (SGP) 1,128.00p +5.13%
Wood Group (John) (WG.) 788.50p +4.92%
Ocado Group (OCDO) 369.00p +4.74%
Countrywide (CWD) 530.00p +4.54%
Howden Joinery Group (HWDN) 355.70p +3.46%
Balfour Beatty (BBY) 256.00p +3.23%
Redrow (RDW) 268.20p +3.15%
FTSE 250 - Fallers
Amlin (AML) 434.10p -3.23%
Petra Diamonds Ltd.(DI) (PDL) 192.90p -3.16%
Hochschild Mining (HOC) 160.00p -2.85%
Diploma (DPLM) 656.00p -2.81%
Rank Group (RNK) 163.70p -2.68%
Daejan Holdings (DJAN) 4,854.00p -2.37%
Fisher (James) & Sons (FSJ) 1,389.00p -1.91%
Fenner (FENR) 362.50p -1.71%
Xaar (XAR) 577.50p -1.62%
Telecity Group (TCY) 779.50p -1.52%
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