London midday: FTSE up but off highs as inflation eases more than expected

(Sharecast News) - London stocks were off earlier highs but still firmly in the black by midday on Wednesday after data showed that UK inflation slowed more than expected in November, boosting rate cut hopes for next year. The FTSE 100 was up 0.6% at 7,684.55, while sterling was down 0.6% against the dollar at 1.2656.

Russ Mould, investment director at AJ Bell, said: "Considerably lower than expected inflation figures have put a rocket under the UK stock market as investors take the view the Bank of England will have no choice but to cut rates soon."

Figures released by the Office for National Statistics showed that consumer price inflation slowed to 3.9% from 4.6% in October. This marked the lowest reading since September 2021 and was below analysts' expectations of 4.4%.

The ONS said the largest downward contributions came from transport, recreation and culture, and food and non-alcoholic beverages.

Core inflation - which strips out volatile food and energy prices - fell to 5.1% in November from 5.7% the month before. Economists were expecting it to ease to 5.6%.

ONS chief economist Grant Fitzner said: "Inflation eased again to its lowest annual rate for over two years, but prices remain substantially above what they were before the invasion of Ukraine.

"The biggest driver for this month's fall was a decrease in fuel prices after an increase at the same time last year.

"Food prices also pulled down inflation, as they rose much more slowly than this time last year.

"There was also a price drop for a range of household goods and the cost of second-hand cars."

ING economist James Smith said markets are now pricing a whopping 140 basis points of rate cuts next year.

"That's maybe pushing it, but investors are right to be thinking about several cuts next year, despite the Bank of England's recent pushback," he said.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "November's surprisingly sharp fall in CPI inflation reinforces the likelihood that the MPC will begin to reduce Bank Rate in the first half of 2024, far earlier than it has been prepared to signal so far."

In equity markets, Intertek jumped after a double upgrade to 'outperform' at Exane, which said it sees 20% upside from a re-rating as the market prices in stronger mid-term earnings per share growth.

Mike Ashley's Frasers Group ticked up after saying it bought loss-making luxury clothing site Matchesfashion from Apax Partners for around £52m in cash.

Indivior gained as it settled a patent dispute with Actavis, which is part of Teva Pharmaceuticals.

Petrofac surged after it saying it has secured a second contract award under the six-project, $14bn multi-year framework agreement with Tennet, with its portion valued at around $1.4bn.

Market Movers

FTSE 100 (UKX) 7,684.55 0.61% FTSE 250 (MCX) 19,446.47 0.68% techMARK (TASX) 4,262.13 0.87%

FTSE 100 - Risers

Intertek Group (ITRK) 4,241.00p 3.46% Flutter Entertainment (CDI) (FLTR) 14,275.00p 2.55% IMI (IMI) 1,685.00p 2.00% Pershing Square Holdings Ltd NPV (PSH) 3,500.00p 1.92% SEGRO (SGRO) 895.80p 1.86% BT Group (BT.A) 125.55p 1.62% Ocado Group (OCDO) 778.80p 1.56% Beazley (BEZ) 534.00p 1.52% Convatec Group (CTEC) 246.00p 1.40% Compass Group (CPG) 2,112.00p 1.34%

FTSE 100 - Fallers

Centrica (CNA) 139.95p -0.99% NATWEST GROUP (NWG) 216.90p -0.96% Smith (DS) (SMDS) 308.50p -0.80% Anglo American (AAL) 1,879.80p -0.62% Smurfit Kappa Group (CDI) (SKG) 3,158.00p -0.44% Rolls-Royce Holdings (RR.) 293.90p -0.37% Rio Tinto (RIO) 5,769.00p -0.29% JD Sports Fashion (JD.) 172.00p -0.29% Associated British Foods (ABF) 2,373.00p -0.25% Rightmove (RMV) 563.60p -0.25%

FTSE 250 - Risers

Diversified Energy Company (DEC) 1,169.00p 4.19% Indivior (INDV) 1,190.00p 3.75% C&C Group (CDI) (CCR) 148.00p 3.06% Currys (CURY) 50.85p 2.98% Energean (ENOG) 1,013.00p 2.95% Future (FUTR) 719.00p 2.71% Tullow Oil (TLW) 36.54p 2.70% International Public Partnerships Ltd. (INPP) 139.00p 2.66% Harbour Energy (HBR) 242.20p 2.58% Bank of Georgia Group (BGEO) 3,770.00p 2.45%

FTSE 250 - Fallers

Me Group International (MEGP) 124.20p -3.12% Helios Towers (HTWS) 79.35p -2.04% Trustpilot Group (TRST) 145.80p -1.49% IntegraFin Holding (IHP) 292.20p -1.48% Watches of Switzerland Group (WOSG) 699.00p -1.48% W.A.G Payment Solutions (WPS) 87.00p -1.14% North Atlantic Smaller Companies Inv Trust (NAS) 3,940.00p -1.01% Savills (SVS) 955.50p -0.98% Moonpig Group (MOON) 165.20p -0.72% Quilter (QLT) 101.00p -0.69%