London open: Stocks muted after US inflation print; bank earnings eyed

(Sharecast News) - London stocks were muted in early trade on Friday as hotter-than-expected US inflation data raised expectations of another rate hike by the Federal Reserve.

At 0845 BST, the FTSE 100 was up 0.1% at 7,649.41.

Stocks on Wall Street fell on Thursday after data showed that consumer price inflation rose 3.7% on the year in September, in line with August and higher than expectations of 3.6% growth, putting a potential rate hike by the Fed back on the table.

On the month, prices rose 0.4% in September, down from a 0.6% increase in August but above consensus expectations for a 0.3% jump.

Richard Hunter, head of markets at Interactive Investor, said: "While the figures were close to estimates, they nonetheless reignited concerns that the last leg towards reaching the Fed's 2% target could prove the most difficult, with some core measures apparently refusing to budge. The news also came after a stronger than expected reading on producer prices the previous day, adding to the fact that investors currently have more questions than answers.

"The hiking cycle may have reached a peak, but the level of rates is likely to remain in force until such time as inflation is comfortably under control. Releases such as the latest inflation data also push back any possibility of the interest rate cuts which many investors had been anticipating, while the underlying strength of the economy continues to point to one which remains strong enough to withstand the rate pressure."

Market participants were also mulling the latest data out of China, with the consumer price reading coming in flat and factory gate prices declining at a lower pace than in previous months.

"This suggest that deflationary pressures persist, with weak domestic demand adding to the problem. For the optimists, a further decline in China's imports and exports for September was at a slower rate, which could signal some signs of stability. In the background, however, investors are still fretting over whether any stimulative measures by the authorities to date have been sufficient to light the fire under a true recovery," said Hunter.

Looking ahead to the rest of the day, attention will turn to earnings across the pond, with JP Morgan Chase, Wells Fargo and Citigroup all slated to report.

In UK equity markets, St James's Place tumbled after the wealth manager confirmed it is assessing its fees and charges structure. The statement followed a Financial Times report suggesting that the company is under pressure from regulators.

Hargreaves Lansdown was also under the cosh.

British American Tobacco fell after the US Food and Drug Administration on Thursday blocked the sale of six flavours of its main vape brand, Vuse Alto.

Ashmore lost ground after the emerging markets asset manager said it saw an 8% drop in assets under management in its fiscal first quarter on the back of ongoing market volatility and risk aversion.

Elsewhere, the Competition and Markets Authority said it has cleared Microsoft's proposed $69bn acquisition of 'Call of Duty' maker Activision Blizzard. In August, Microsoft made a concession that would see Ubisoft, instead of Microsoft, buy Activision's cloud gaming rights.

This new deal will put the cloud streaming rights - outside the EEA - for all of Activision's PC and console content produced over the next 15 years in the hands of "a strong and independent competitor with ambitious plans to offer new ways of accessing that content," the CMA said.

The watchdog said that Microsoft buying Activision without cloud gaming rights "would preserve competitive prices and better services".

Market Movers

FTSE 100 (UKX) 7,649.41 0.06% FTSE 250 (MCX) 17,803.70 -0.18% techMARK (TASX) 4,189.83 -0.28%

FTSE 100 - Risers

Endeavour Mining (EDV) 1,622.00p 2.21% Admiral Group (ADM) 2,450.00p 2.00% BP (BP.) 543.20p 1.32% National Grid (NG.) 974.80p 1.06% BAE Systems (BA.) 1,079.00p 0.98% InterContinental Hotels Group (IHG) 6,140.00p 0.95% Shell (SHEL) 2,705.50p 0.91% Land Securities Group (LAND) 605.20p 0.87% Vodafone Group (VOD) 78.29p 0.86% Glencore (GLEN) 466.05p 0.83%

FTSE 100 - Fallers

St James's Place (STJ) 739.40p -9.68% Hargreaves Lansdown (HL.) 741.00p -3.69% Spirax-Sarco Engineering (SPX) 8,620.00p -3.08% Ocado Group (OCDO) 559.60p -2.20% British American Tobacco (BATS) 2,493.50p -1.71% Croda International (CRDA) 4,369.00p -1.58% Schroders (SDR) 397.50p -1.41% Smith & Nephew (SN.) 931.80p -1.21% Prudential (PRU) 898.40p -1.19% Scottish Mortgage Inv Trust (SMT) 684.80p -1.10%

FTSE 250 - Risers

Mobico Group (MCG) 64.75p 5.11% Ceres Power Holdings (CWR) 266.00p 4.72% Supermarket Income Reit (SUPR) 77.00p 3.36% Centamin (DI) (CEY) 85.25p 2.96% Ithaca Energy (ITH) 181.70p 2.54% Energean (ENOG) 868.00p 2.12% Carnival (CCL) 924.20p 1.52% Harbour Energy (HBR) 262.60p 1.43% Ferrexpo (FXPO) 76.20p 1.40% Trainline (TRN) 262.40p 1.31%

FTSE 250 - Fallers

Ashmore Group (ASHM) 176.90p -4.17% Darktrace (DARK) 374.00p -2.68% Moneysupermarket.com Group (MONY) 241.60p -2.66% JTC (JTC) 690.00p -2.40% Tritax Eurobox (GBP) (EBOX) 48.00p -2.34% Abrdn (ABDN) 162.80p -1.99% CAB Payments Holdings (CABP) 215.75p -1.93% Bytes Technology Group (BYIT) 491.60p -1.88% Allianz Technology Trust (ATT) 264.00p -1.86% Man Group (EMG) 225.50p -1.40%