London midday: Stocks up as investors position for US inflation data

(Sharecast News) - Stocks were catching a bid on Friday on greater confidence in the outlook for the US economy and signs that inflation was cooling across the Channel. It was against that backdrop that investors were positioning themselves ahead of Consumption and inflation data due out in the US later in the session.

Reflecting the market mood, Stephen Innes at SPI Management said: "But with 10 y US yields shooting higher on the back of a sharp drop in weekly jobless claims and an upward revision to 1Q23 GDP growth -- stock pickers may still be concerned that the data points to a stronger economy than the Fed wants and likely puts more at stake on tonight PCE inflation report."

At 1200 BST, gains on the top-flight index had picked up to 0.73%, taking it to 7,526.28, while the second-tier index was up by 0.55% to 18,271.27.

The yield on the benchmark 10-year Gilt and Sterling were up as well, while gold futures were a tad lower.

Despite the seemingly generalised optimism around the US, overnight Ian Shepherdson at Pantheon Macroeconomics told clients that there were downside risks to the US inflation numbers about to be released.

Similarly, of the US jobs markets he said: "the increase in [weekly unemployment] claims from last fall's low already is consistent with a clear slowing in payroll growth; it's coming."

For his part, Michael Hartnett at BofA reminded clients that the US unemployment rate of 3.4% in April was reminiscent of the all-time low of 0.7% hit during that same month of 1929.

He also highlighted how the US budget deficit - at 8% of GDP - was the biggest in six decades - outside of wars and recessions.

Overnight, China's National Bureau of Statistics said that its manufacturing sector Purchasing Managers' Index improved from a reading of 48.8 for May to 49.0 in June.

However, the non-factory PMI slipped from 54.5 to 53.2 (consensus: 53.5).

The US Department of Commerce would release its personal income and spending figures June at 1330 BST

Included in that report would be the core price deflator for personal consumption expenditures, the Federal Reserve's preferred measure of inflation (consensus: 0.3% month-on-month).

As an aside, Innes also noted interventions by Chinese authorities to support the country's currency, the yuan, but added that for things to improve what was needed was fiscal support and not interest rate cuts.

Also due out on Friday afternoon were MNI Chicago's factory sector index for June and a final reading on US consumer confidence for the same month out of the University of Michigan.

Centrica squirrels away for the winter

Energy group Centrica has increased capacity at its previously mothballed Rough gas storage facility, it confirmed on Friday. The owner of British Gas said that following engineering work, the facility - located 18 miles off the coast of east Yorkshire - can now hold 54bn cubic feet of gas, the equivalent of around six days of average gas use.

Global automotive distributor Inchcape has formed a global strategic partnership with China's Great Wall Motor Company, the company said on Friday.Under the partnership, Inchcape and GWM will develop new areas of collaboration, including opportunities to distribute GWM vehicles in markets where Inchcape is already present, starting with Indonesia.

Barratt Developments has agreed the future sale of 604 homes to Citra Living Properties, a wholly-owned subsidiary of Lloyds Bank for £168.4m. The housebuilder on Friday said it would recognise revenue and profit on the legal completion of each home under the sale agreement.

Endeavour Mining announced the sale of its 90% interests in the Boungou and Wahgnion mines in Burkina Faso to Lilium Mining for over $300m on Friday. The consideration included upfront and deferred cash payments, as well as net smelter return royalties. Following the sale, Endeavour updated its 2023 production and cost guidance, with a decrease in production but an improvement in all-in sustaining costs.

Market Movers

FTSE 100 (UKX) 7,525.70 0.72% FTSE 250 (MCX) 18,376.39 0.58% techMARK (TASX) 4,464.08 0.48%

FTSE 100 - Risers

Hargreaves Lansdown (HL.) 811.60p 3.57% Ocado Group (OCDO) 559.00p 3.48% Centrica (CNA) 123.70p 3.04% NATWEST GROUP (NWG) 240.90p 2.38% IMI (IMI) 1,629.00p 2.20% Aviva (AV.) 395.90p 1.96% Burberry Group (BRBY) 2,126.00p 1.87% Frasers Group (FRAS) 704.50p 1.81% Fresnillo (FRES) 608.00p 1.77% Persimmon (PSN) 1,036.00p 1.77%

FTSE 100 - Fallers

Airtel Africa (AAF) 108.20p -1.81% Endeavour Mining (EDV) 1,837.00p -1.45% United Utilities Group (UU.) 964.20p -1.23% Severn Trent (SVT) 2,566.00p -1.04% International Consolidated Airlines Group SA (CDI) (IAG) 161.65p -0.83% Rolls-Royce Holdings (RR.) 147.85p -0.57% Compass Group (CPG) 2,183.00p -0.46% Scottish Mortgage Inv Trust (SMT) 664.00p -0.21% Associated British Foods (ABF) 1,980.50p -0.15% GSK (GSK) 1,392.40p -0.11%

FTSE 250 - Risers

Aston Martin Lagonda Global Holdings (AML) 357.00p 3.96% Wood Group (John) (WG.) 139.00p 2.89% Carnival (CCL) 1,261.50p 2.73% Baltic Classifieds Group (BCG) 175.00p 2.46% Redde Northgate (REDD) 375.50p 2.46% Dr. Martens (DOCS) 122.20p 2.43% Inchcape (INCH) 775.50p 2.38% Safestore Holdings (SAFE) 860.00p 2.32% NCC Group (NCC) 96.70p 2.22% Drax Group (DRX) 574.00p 2.21%

FTSE 250 - Fallers

ICG Enterprise Trust (ICGT) 1,050.00p -4.37% Capita (CPI) 27.70p -2.19% Mobico Group (MCG) 97.95p -2.15% Wizz Air Holdings (WIZZ) 2,677.00p -1.54% Plus500 Ltd (DI) (PLUS) 1,451.00p -1.43% North Atlantic Smaller Companies Inv Trust (NAS) 3,490.00p -1.41% Babcock International Group (BAB) 279.40p -1.34% Ascential (ASCL) 220.80p -1.34% Warehouse Reit (WHR) 78.70p -1.25% Bakkavor Group (BAKK) 95.20p -1.24%