(Alliance News) – London stock markets closed mixed on Thursday as US consumer price inflation rose at the fastest pace in 13 years, fueling fears that the economy could overheat and force the Federal Reserve to cap support for the pandemic.
The US CPI rose 5.0% in May, posting 4.2% growth in April and beating market expectations by 4.7%, according to FXStreet. The May reading marked the largest increase in 12 months, following a 5.4% increase over the period ending August 2008.
On a monthly basis, prices rose 0.6% in May, after rising 0.8% in April. The index of used cars and trucks continued to rise sharply, the Bureau of Labor Statistics said, climbing 7.3% in May.
“Another big surprise for US inflation casts doubt on the Fed’s claims that this is all ‘temporary’ and that monetary policy could remain extremely loose for the next three years. at the end of summer, ”ING analysts comment.
The FTSE 100 index rose 7.17 points, or 0.1%, to 7,088.18 points. The FTSE 250 fell 150.21 points, or 0.7%, to 22,608.76 points. AIM All-Share closed down 4.07 points, or 0.3%, at 1,245.49.
Cboe UK 100 closed unchanged at 706.00, Cboe UK 250 closed 0.8% lower at 20,353.20 and Cboe Small Companies fell 0.3% to 15.28.00.
In Paris, the CAC 40 fell 0.3%, while the DAX 30 in Frankfurt closed unchanged.
CMC Markets analyst Michael Hewson said: “It was another slow day for the markets in Europe, the FTSE100 performed better again, but still failed to rise above recent highs around 7,120. The rest of Europe struggled to achieve any the semblance of progress in positive territory, although the losses are insignificant, nearly hit record highs.
“The UK Index was helped by better performance in the telecommunications sector, with BT Group shares rallying after the French multinational telecommunications company Altice announced its acquisition of a 12% stake in the company. A company that owns a number of assets, including a French mobile operator. SFR has stated that it does not intend to bet on this business as the UK stake will be managed as a separate business, Altice UK. ”
BT Group ranked second on the London Stock Exchange with a 6.6% gain after Altice UK, a new company wholly owned by billionaire Altice Europe founder Patrick Drahi, said it had bought 12% of the former state monopoly.
According to Altice UK, BT has the ability to “implement one of the most important UK government policies” to expand broadband networks and is benefiting from a regulatory framework that offers incentives to invest.
Drahi said it highly values BT’s leadership and supports their strategy. He does not intend to make an offer to the entire company, which is a mandatory statement under UK takeover rules.
Auto Trader became the leader in blue-chip performance, posting 7.2% growth despite a significant drop in annual profits and revenues in the digital car market, but gave an optimistic outlook as it highlighted the growth of its online business and ” record level of “customers.
Auto Trader’s revenue for the fiscal year ended March 31 was down 29% to £ 262.8 million from £ 368.9 million. Sales revenues fell 31% to £ 225.2 million following the decision to provide free advertising to retail customers in April, May, December and February and at a reduced rate in June.
Auto Trader’s pre-tax profit fell 27% to £ 157.4 million.
However, Auto Trader decided to reinstate its capital allocation policy and offered a final dividend of 5.0p, up from no payment a year ago. Without interim dividends, the 5p would be the total dividend for the year, up from 2.4p a year earlier.
Looking ahead, Auto Trader said it kicked off the new fiscal year in a strong position and expects to see strong single-digit growth in average retail revenue in fiscal 2020, that is, two years earlier, with operating margins at 2020 levels.
On the other hand, J Sainsbury shares fell 3.0% after the stock went away without dividends, meaning new buyers are no longer eligible for the final payout.
In the FTSE 250, the Mitie Group performed best, climbing 5.9% after the management company suffered losses for the year, but predicted that its future results would be better than initial expectations after the new contracts were awarded.
The Glasgow-based company reported a loss before tax of £ 9.1 million for the fiscal year ended March 31, compared with a profit of £ 48.4 million a year earlier. The significant decline in revenues was attributed to Mitya due to a reduction in design work and a decrease in demand for the management of major facilities due to the pandemic.
Miti described “good trade resilience” during the pandemic, with the Interserve Facility Management acquisition performing better than expected and achieving a £ 6.2 million cost-benefit synergy in fiscal 2021. Interserve was acquired by Mitya for £ 271 million a year. cash and promotions in November.
Looking ahead, Mitye said his FY2022 forecast is expected to be “substantially ahead” of previous expectations.
CMC Markets closed 1.7% after its online bookmaker posted a record second-year profit as client growth boosted trading income, resulting in a sharp increase in dividends.
In the fiscal year ending March 31, CMC’s pretax profit more than doubled to £ 224.0 million from £ 98.7 million a year earlier. Profit after tax rose to an annual record of £ 178.1 million from £ 86.9 million a year earlier.
Net operating income rose 63% year-on-year to £ 409.8 million from £ 252.0 million.
CMC has doubled its shareholder payments in the wake of skyrocketing earnings. Annual dividends were improved to 30.6p from 15.0p in FY2020 following the announcement of a final payment of 21.43p. CMC said it still intends to pay dividends equal to 50% of profit after tax.
New York stocks rallied slightly at the close of the London Stock Exchange, with the S&P 500 hitting a new all-time intraday high as equity markets showed little concern over data suggesting higher US inflation.
The DJIA is up 0.2%, the S&P 500 is up 0.3% and the Nasdaq Composite is up 0.2%.
The pound was quoted at the close of London stocks at $ 1.4147, up from $ 1.4120 at the close on Wednesday when the G7 summit is taking place in Cornwall, southern England.
The summit will take place on British soil for the first time since 2013, when then Prime Minister David Cameron welcomed world leaders to Northern Ireland.
US President Biden will tell British Prime Minister Boris Johnson not to let the Northern Ireland Brexit scandal jeopardize the Good Friday deal when the couple meet on Thursday.
During Biden’s first overseas visit, aides said he would highlight the need to “support” the Northern Ireland Protocol, part of the Brexit deal that sparked a controversy between the UK and the EU. The issue threatens to cloud Johnson’s first meeting with the US president and his G7 summit, which begins Friday in Cornwall.
In addition to Brexit, Johnson and Biden will work to resume transatlantic travel and agree on a new Atlantic Charter, paving the way for cooperation on issues including climate change and security.
Commenting on the current state of affairs, OFX analysts explained: “There are currently two factors contributing to this. First, as mentioned throughout the week, Covid cases in the UK are on the rise, with the highest number of infections reported yesterday since the end of February. This raises more and more fears that the “Freedom Day” June 21 will be postponed. Matt Hancock is speaking to MPs this morning, so all eyes will be on him.
“The second factor contributing to the weakening of the pound at the moment is Brexit. Escalating tensions over trade rules in Northern Ireland drove the pound down and even President Biden added pressure to end the standoff. “
The euro was at $ 1.2168 at the close of European stock markets, up from $ 1.2186 late Wednesday, following the dovish tones of the European Central Bank.
The ECB has confirmed that its “highly adaptive” monetary policy will continue as it maintains the pace of its pandemic bond buying program.
The central bank of Frankfurt kept the interest rate on major refinancing operations and interest rates on the margin line and deposit line unchanged at 0.00%, 0.25% and negative 0.50%, respectively.
The ECB also left the size of its Pandemic Emergency Procurement Program, or PEPP, unchanged at € 1.85 trillion, at least until the end of March 2022 and “until it decides that the coronavirus crisis phase is over. “.
In addition, the central bank significantly raised its economic growth forecast for 2021 and 2022 on Thursday as the virus weakens and the eurozone recovery gains momentum.
The eurozone economy is expected to grow 4.6% this year and 4.7% in 2022, up from previous forecasts of 4.0% and 4.1%, respectively. The forecast for 2023 remained unchanged – an increase of 2.1%.
ECB President Christine Lagarde warned that it was “premature” to start tightening monetary policy, saying further support is needed to reduce economic uncertainty, despite better prospects.
Tightening funding conditions “would be premature and jeopardize the ongoing economic recovery and the outlook for inflation,” Lagarde said, adding that keeping the easy money taps open during the pandemic crisis “remains essential to reduce uncertainty and build confidence.” …
Against the yen, the dollar traded at JPY109.56, slipping slightly from JPY109.60 late Wednesday night.
Brent crude was quoted at $ 72.45 a barrel at the close of stock exchanges, up from $ 72.36 at Wednesday’s close. Gold at the close of London stock exchanges was worth $ 1,891.85 an ounce, almost unchanged from $ 1,890.50 late Wednesday night.
On Friday’s economic calendar, UK industrial production, trade and growth will be at 07:00 BST, while Spanish inflation will be at 08:00 BST.
The UK corporate calendar for Friday has the annual results from Naked Wines and Mind Gym.
Arvind Bhunjun; [email protected]
Copyright 2021 Alliance News Limited. All rights reserved.