London midday: FTSE treads water, pound rallies as inflation eases

(Sharecast News) - London stocks were still treading water by midday on Wednesday as investors mulled the latest UK inflation data. The FTSE 100 was up 0.1% at 7,856.62, while the pound was 0.8% firmer against the dollar at1.2378.

Russ Mould, investment director at AJ Bell, said: "After a strong start to the year for UK stocks amid better-than-expected corporate results from retailers and signs of falling inflation, the FTSE 100 has taken a breather over the past few days.

"Importantly for investors, the FTSE hasn't given up the year-to-date gains, merely staying firm, with investors waiting for the next nuggets of information on inflation and interest rate expectations before plotting their next move.

"It's a similar situation in the US where the S&P 500 enjoyed a jump in the first two weeks of the year and has now lost momentum."

Figures released earlier by the Office for National Statistics showed that consumer price inflation eased to 10.5% in December from 10.7% the month before, falling for the second month in a row. Economists had been expecting the inflation rate to be unchanged. Still, it remains close to a 40-year high and well above the Bank of England's 2% target.

A drop in petrol and clothing prices was behind the decline, helping to offset higher prices in hotels, restaurants, food and non-alcoholic drinks.

Meanwhile, the core rate of inflation - which excludes food, energy, alcohol and tobacco - was flat at 6.3%.

In equity markets, online supermarket Ocado was the top gainer on the FTSE 100, having tanked on Wednesday after a disappointing update on its joint venture with Marks & Spencer, Ocado Retail.

Luxury fashion brand Burberry rose despite saying it took a hit from Covid-19 disruption in its key market of China. Like-for-like sales grew by only 1% to £756m in the three months to end-December, compared with a rise of 7% a year earlier and against a forecast increase of 2%.

Diversified engineer Smiths Group rallied after lifting its full-year guidance, while electricals retailer Currys surged after it backed its full-year guidance, with a solid performance in the UK and Ireland helping to offset weakness in the international segment.

Shares in TI Fluid Systems tumbled as the company said sales in China had been hit in the fourth quarter due to Covid restrictions and a switch to electric vehicles in the country. The manufacturer of automotive fluid storage systems for light vehicles said 2022 revenue is expected to be around €3.26bn, up 10% year on year.

However, it warned that group constant currency revenue growth was expected to 100 basis points behind global light vehicle production (GLVP) growth due to the rapid transition of domestic Chinese original equipment manufacturers (OEM) to electric vehicles "which presents a short-term mix issue for the group in that market".

In broker note action, British Land was boosted by an upgrade to 'buy' at Bank of America Merrill Lynch, but Segro was hit by a rating downgrade by the same outfit.

Market Movers

FTSE 100 (UKX) 7,856.62 0.07% FTSE 250 (MCX) 19,953.29 0.03% techMARK (TASX) 4,516.38 -0.48%

FTSE 100 - Risers

Ocado Group (OCDO) 778.40p 6.19% International Consolidated Airlines Group SA (CDI) (IAG) 161.60p 2.97% Experian (EXPN) 3,047.00p 2.90% Glencore (GLEN) 567.20p 2.59% InterContinental Hotels Group (IHG) 5,592.00p 2.42% Burberry Group (BRBY) 2,297.00p 2.41% Antofagasta (ANTO) 1,782.00p 2.33% Smiths Group (SMIN) 1,720.00p 2.32% Centrica (CNA) 98.86p 1.69% Pearson (PSON) 930.20p 1.51%

FTSE 100 - Fallers

BT Group (BT.A) 129.75p -1.85% United Utilities Group (UU.) 1,021.50p -1.73% CRH (CDI) (CRH) 3,627.00p -1.63% SEGRO (SGRO) 836.60p -1.58% Diageo (DGE) 3,709.00p -1.53% Kingfisher (KGF) 264.80p -1.49% GSK (GSK) 1,416.60p -1.47% Coca-Cola HBC AG (CDI) (CCH) 1,936.50p -1.38% Pershing Square Holdings Ltd NPV (PSH) 2,960.00p -1.33% Frasers Group (FRAS) 753.50p -1.31%

FTSE 250 - Risers

Currys (CURY) 64.25p 7.17% Baltic Classifieds Group (BCG) 157.00p 4.67% Digital 9 Infrastructure NPV (DGI9) 96.00p 4.46% Coats Group (COA) 70.40p 3.07% Carnival (CCL) 793.00p 2.69% Wizz Air Holdings (WIZZ) 2,841.00p 2.30% easyJet (EZJ) 445.80p 2.27% TUI AG Reg Shs (DI) (TUI) 187.60p 2.21% Kainos Group (KNOS) 1,510.00p 2.17% Lancashire Holdings Limited (LRE) 653.50p 2.03%

FTSE 250 - Fallers

TI Fluid Systems (TIFS) 115.20p -15.04% Genuit Group (GEN) 317.50p -4.51% Molten Ventures (GROW) 400.60p -3.28% Bridgepoint Group (Reg S) (BPT) 234.80p -3.06% Hilton Food Group (HFG) 602.00p -2.90% Wood Group (John) (WG.) 149.60p -2.57% W.A.G Payment Solutions (WPS) 78.00p -2.50% Travis Perkins (TPK) 993.60p -2.40% Watches of Switzerland Group (WOSG) 975.00p -2.16% Synthomer (SYNT) 147.10p -2.13%