London close: Stocks green as US inflation comes in cooler

The FTSE 100 closed with a modest increase of 0.21%, finishing at 8,445.80, while the FTSE 250 rose 0.76% to settle at 20,775.63.

In currency markets, sterling was last up 0.51% on the dollar to trade at $1.2656, while it advanced 0.13% against the euro, last changing hands at €1.1653.

“The gains in the FTSE 100 have slowed to a crawl, and tough news from a number of names today has not helped matters,” said IG chief market analyst Chris Beauchamp.

“In the short term a lot of the good news for the index is now priced in, and a lot of the much-vaunted valuation discount has been cleared through the huge gains of recent week.

“In the short-term, the catalyst to further gains seems tough to discern.”

Beauchamp said the US inflation data lit a fire under equities, coming in below expectations for the monthly figure.

“The key event of the week had acted as a stumbling block to further upside for stocks, but today’s figure has helped to cancel out the jitters caused by yesterday’s PPI data.

“Combined with Powell’s reiteration yesterday that the bar to rate hikes remains very high, it looks like stocks have a clear path to make another run at record highs.”

US inflation comes in slower than expected

In economic news, consumer goods and services prices in the US saw a 0.3% increase in April, according to the Bureau of Labor Statistics.

That uptick, driven primarily by higher oil prices and housing costs, fell short of economists' expectations of a 0.4% rise and was below the prior month's figures.

The core rate of inflation, excluding volatile food and energy prices, saw a minimal increase of 0.03% compared to March, marking the smallest rise in four months.

Year-on-year, inflation stood at 3.4%, slightly down from the prior month's 3.5%.

Core CPI meanwhile climbed 3.6% over the 12 months through April, a decrease from the previous month but still above the Federal Reserve's 2% target.

Central bankers had recently hinted that persistent inflation could delay interest rate cuts until later in 2024.

Meanwhile, American consumers curtailed their spending in April, particularly on motor vehicles and online purchases.

Economists attributed the decline partly to the expiration of a one-off Amazon sales event, suggesting it as a temporary factor.

According to the Department of Commerce, retail sales volumes remained flat month-on-month at $705.18bn, missing economists' forecasts of a 0.4% increase.

The shortfall added to a slight downward revision in the prior month's rise.

In the housing sector, US mortgage applications rose 0.5% in the week ended 10 May, following a 2.6% increase in the prior week.

Despite the increase, the average mortgage rate decreased 10 basis points.

Refinance applications surged by 5%, while applications for home purchases dipped by 2%.

Closer to home,. official data from Eurostat showed a slight uptick in economic growth in the eurozone for the first quarter of 2024.

Seasonally-adjusted GDP increased by 0.3% in both the eurozone and the wider EU bloc, contrasting with a 0.1% decline in the previous quarter.

On the inflation front, the European Commission's latest spring economic forecast projected a faster-than-expected decline in eurozone inflation for the year.

The forecast anticipated a drop from 5.4% in 2023 to 2.5% in 2024, followed by a further decrease to 2.1% in 2025.

That was lower than the EC’s previous forecast, which predicted inflation rates of 2.7% in 2024 and 2.2% in 2025.

Experian in the green, Burberry slides on challenging first half

In equity markets, Experian jumped 8.41% following an announcement stating that its growth for the 2024 financial year exceeded expectations.

Tobacco giant Imperial Brands gained 5.48% despite a decline in interim profits and sales, after it reaffirmed its full-year outlook.

Engineering firm Spirax-Sarco rose 4.3% after it maintained its guidance for organic sales growth, despite market weaknesses, though it acknowledged foreign exchange headwinds impacting profits more than previously expected.

Keller Group rallied 21.13%, fuelled by expectations for annual earnings significantly surpassing forecasts.

Soft drinks maker Britvic added 10.95% after reporting a substantial increase in interim profit and revenue, alongside a £75m share buyback, citing robust customer demand for its brands.

Hunting increased 20.67% after securing a $145m order with the Kuwait Oil Company, projecting full-year earnings at the upper end of expectations.

Royal Mail owner International Distributions Services (IDS) also saw a surge, rising 15.99%, following the recommendation of a revised takeover offer from EP Group.

On the downside, Burberry Group declined 5.64% after it warned of a challenging first half due to slowing demand impacting annual sales and profits.

Compass Group fell 2.22%, despite lifting its 2024 underlying operating profit growth guidance.

Bank of Georgia Group tumbled 12.08% after Georgian lawmakers passed a “foreign agents law”, which imposes registration requirements on organisations receiving over 20% of their funding from abroad.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,445.80 0.21%
FTSE 250 (MCX) 20,775.63 0.76%
techMARK (TASX) 4,785.61 0.83%

FTSE 100 - Risers

Experian (EXPN) 3,752.00p 8.13%
Imperial Brands (IMB) 1,986.50p 5.75%
SEGRO (SGRO) 936.80p 5.52%
Persimmon (PSN) 1,471.50p 4.47%
Flutter Entertainment (DI) (FLTR) 16,575.00p 4.41%
Spirax-Sarco Engineering (SPX) 9,600.00p 4.27%
Vodafone Group (VOD) 76.10p 3.85%
DCC (CDI) (DCC) 5,980.00p 3.64%
Fresnillo (FRES) 596.00p 3.56%
Centrica (CNA) 143.60p 3.41%

FTSE 100 - Fallers

Burberry Group (BRBY) 1,102.00p -7.28%
Compass Group (CPG) 2,252.00p -2.97%
B&M European Value Retail S.A. (DI) (BME) 535.20p -2.44%
St James's Place (STJ) 485.20p -2.33%
Barclays (BARC) 213.10p -1.89%
Pershing Square Holdings Ltd NPV (PSH) 4,058.00p -1.84%
Ocado Group (OCDO) 363.10p -1.81%
Diageo (DGE) 2,803.00p -1.27%
International Consolidated Airlines Group SA (CDI) (IAG) 182.05p -1.11%
Shell (SHEL) 2,869.00p -1.10%

FTSE 250 - Risers

Keller Group (KLR) 1,364.00p 21.13%
International Distributions Services (IDS) 314.80p 15.99%
Britvic (BVIC) 1,018.00p 10.95%
Redde Northgate (REDD) 427.50p 4.78%
Big Yellow Group (BYG) 1,184.00p 4.59%
Crest Nicholson Holdings (CRST) 218.60p 4.29%
Derwent London (DLN) 2,290.00p 3.90%
IP Group (IPO) 52.60p 3.75%
Safestore Holdings (SAFE) 851.00p 3.72%
IWG (IWG) 206.20p 3.46%

FTSE 250 - Fallers

TBC Bank Group (TBCG) 2,530.00p -14.24%
Bank of Georgia Group (BGEO) 4,105.00p -13.03%
Wood Group (John) (WG.) 185.60p -7.48%
Trainline (TRN) 328.20p -4.91%
Syncona Limited NPV (SYNC) 111.60p -2.96%
TP Icap Group (TCAP) 217.50p -2.47%
Ferrexpo (FXPO) 47.10p -2.28%
Just Group (JUST) 101.00p -2.13%
Energean (ENOG) 1,183.00p -1.74%
Pennon Group (PNN) 720.00p -1.71%