London midday: City traders waiting on US CPI numbers with bated breath

(Sharecast News) - London stocks remained lower at midday but had come off their lows thanks to an economic growth surprise in the UK, although traders in the City remained cautious ahead of Wednesday afternoon's consumer inflation print out of the US. "It may not be monster surf breaks in Hawaii or Uluwatu in Bali, but today is shaping up to be a stormy day for markets, with plenty of chances to get dumped and held under the waves for a while," said Jeffrey Halley, senior market analyst for Asia Pacific at Oanda.

At 0845 BST, the FTSE 100 was down 0.83% at 7,149.94, and the FTSE 250 was off 0.32% at 18,793.75.

"A relatively rare economic bright spot came in the form of the UK GDP reading, showing that the economy grew by 0.5% in May after contractions in March and April, and better than the zero growth which had been expected," said Interactive Investor head of markets Richard Hunter.

"Nonetheless, economic data points cannot be taken in isolation, such that the number does little to change the overall economic dial for prospects in the UK."

Perhaps, yet after the close of London markets the day before, Bank of England Governor, Andrew Bailey, told an audience that Bank's goal was to bring inflation back down to the 2% target with "no ifs or buts".

The annual rate of headline CPI in the States was expected to have edged up by two tenths of a percentage point in June to 8.8%, although at the core level inflation was seen slipping from 6.0% for May to 5.8% last month.

The US Department of Labor was scheduled to release the CPI report at 1330 BST.

For some economists, the CPI data would have a direct bearing on whether the US central bank hiked short-term interest rates by 50 or 75 basis points at the end of July.

Worth noting, analysts at SP Angel linked selling pressure in stocks the day before to the release of a fake CPI report on Twittet showing CPI inflation reaching 10.2% in June.

What wasn't fake news however was the International Monetary Fund's decision to cut its forecasts for US gross domestic product growth in 2022 from 2.9% to 2.3%, as per Reuters.

Central banks were also in focus overnight, after policymakers in both South Korea and New Zealand sated market expectations with 50-basis point hikes.

The Bank of Korea confirmed its highest rate rise since its current framework began in 1999, taking its benchmark rate to 2.25%.

Further south, the Reserve Bank of New Zealand delivered its sixth consecutive hike to take the official cash rate to 2.5%, while sticking to its guns with regard to plans for further rises.

In equities, shipping services group Clarkson was soaring after it said it now expected to report unaudited underlying pre-tax profits of no less than £42.0m for the six months ended 30 June.

It added that its first-half performance had been "strong" across all divisions, with its broking unit performing "particularly well".

Property developer Countryside Partnerships was edging lower, after revealing that chairman John Martin had decided to resign from all his roles at the company with immediate effect.

Countryside said senior independent director Douglas Hurt was to take over as chairman, while Amanda Burton will replace Hurt, effective immediately.

The FTSE 250-listed firm also reiterated its full-year financial adjusted operating profit guidance for the twelve months ending 30 September.

Also to the downside, commercial broadcaster ITV and telecoms behemoth BT Group were weaker after the competition watchdog launched a probe into potential cartel-like behaviour by a number of British sports broadcasters.

The Competition and Markets Authority said it believed there were "reasonable grounds" to suspect that ITV, as well as BT, Comcast-owned Sky, and Endeavour Group division IMG Media, may have broken competition rules with the purchase of freelance services in the UK.

"The investigation relates to the purchase by such companies of freelance services which support the production and broadcasting of sports content in the UK," said the CMA.

Elsewhere, technology services firm Computacenter was slightly weaker after announcing the acquisition of US value-added reseller Business IT Source for an undisclosed sum.

Computacenter said that BITS' existing leadership team would stay on to run the business as a separate operating unit within its US division, as part of an effort to maximise its growth opportunity.

JD Wetherspoon was sharply in negative territory, after it said sales in the first 11 weeks of its fourth quarter were 0.4% below the same pre-pandemic period in 2019 - an improvement compared to the prior quarter, when sales were down 4%.

The FTSE 250 pub operator said sales of spirits were up 4.4%, cocktails up 18.6%, food up 2.1%, hotel rooms up 8.4%, and fruit machines ahead 16.6%, while draught ales, lagers and ciders - historically the largest contributors to pub sales - were 8% below 2019.