London midday: Stocks maintain mild losses as inflation holds steady
By Michele Maatouk
Date: Wednesday 17 Apr 2019
(Sharecast News) - London stocks were a still a touch lower by midday on Wednesday despite the release of better-than-expected Chinese growth figures, as the latest UK inflation data undershot expectations.
The FTSE 100 was off 0.1% at 7,463.92, while the pound was flat against the dollar at 1.3049 and 0.2% lower versus the euro at 1.1540, little changed as data from the Office for National Statistics showed that UK inflation unexpectedly held steady in March, easing pressure on the Bank of England to hike interest rates.
The consumer price index came in at 1.9%, unchanged from February, below expectations for a rise to 2.0% and remaining under the Bank of England's 2% target for the third month.
Fuel and clothing prices saw the biggest increases, but this was offset by a drop in the price of recreational and cultural goods, food and motor vehicles.
Meanwhile, core inflation - which excludes energy, food and alcohol prices - was unchanged at 1.8%, below consensus expectations of 1.9%.
ING analyst James Smith said whatever happens, the rest of this year looks set to be a fairly benign period for consumer price inflation, giving the BoE another reason to keep rates on hold for now.
"However, as we noted on Tuesday, wage growth has been a larger consideration for policymakers and has continued to perform strongly. Regular pay is growing close to its fastest rate since the crisis as skill shortages intensify, albeit there are some subtle signs that momentum has eased slightly in the more recent readings.
"Either way, this makes for a better fundamental backdrop for consumer spending. Household confidence has been depressed amid ongoing Brexit uncertainty, but the temporary reduction in noise over the next few weeks may help unlock some spending in bigger-ticket items - particularly given the warm weather expected over the critical Easter trading period."
Other data released by the ONS showed that average house prices were up 0.6% in the year to February, down from 1.7% growth in January and marking the lowest annual rate of growth since September 2012.
Meanwhile, data released overnight showed that first-quarter Chinese GDP grew at 6.4%, beating estimates of 6.3% and matching the 6.4% seen in the fourth quarter of last year, while the Lunar New Year slowdown in industrial production in February of 5.3% saw a rebound to expansion of 8.5% year-on-year. This was ahead of expectations of 5.9%.
In addition, retail sales for March rose 8.7%, up from 8.2%.
Neil Wilson, chief market analyst at Markets.com, said: "Despite the better figures, we have to remind ourselves that China is growing at its weakest pace in about three decades."
Sino-US trade relations were in focus again as White House economic adviser Larry Kudlow said "very good progress" was being made in talks.
"We like what we see, but I'm not here to make a forecast," he told Fox Business Network when asked about whether he could definitively say a deal would be reached between the two.
In equity markets, miners BHP and Rio Tinto were among the fallers, with traders pointing to news that Brazil's Vale is set to reopen its Brucutu mine operations within the next 72 hours.
BHP was also in the red as it cut iron ore output forecasts, reflecting the impact of tropical cyclone Veronica in Western Australia, which also hit production at sector peer Rio Tinto.
Distribution and outsourcing group Bunzl was under the cosh as it said underlying revenue growth slowed in the first quarter, mostly due to its North America operations.
Telecom Plus lost ground as it warned that full-year adjusted pre-tax profit would be towards the lower end of previous guidance, while Hunting fell as its first-quarter profit rose but margins took a hit.
On the upside, Countryside Properties rallied as the housebuilder said it was on track to deliver full-year results in line with expectations, posted a 43% jump in first-half completions and announced the departure of its chief operating officer.
Mediclinic gained as it said full-year core profit is expected to drop by 3.5%, in line with market expectations.
Market Movers
FTSE 100 (UKX) 7,463.92 -0.08%
FTSE 250 (MCX) 19,921.43 -0.01%
techMARK (TASX) 3,572.50 -0.21%
FTSE 100 - Risers
TUI AG Reg Shs (DI) (TUI) 836.60p 2.57%
Aviva (AV.) 435.50p 2.16%
ITV (ITV) 136.94p 2.08%
Burberry Group (BRBY) 1,985.50p 1.59%
Standard Life Aberdeen (SLA) 279.10p 1.56%
Prudential (PRU) 1,775.50p 1.54%
Melrose Industries (MRO) 195.25p 1.53%
NMC Health (NMC) 2,542.00p 1.52%
Carnival (CCL) 4,104.00p 1.43%
Glencore (GLEN) 338.75p 1.42%
FTSE 100 - Fallers
Bunzl (BNZL) 2,317.00p -9.17%
Rio Tinto (RIO) 4,540.00p -2.84%
BHP Group (BHP) 1,860.60p -2.57%
AstraZeneca (AZN) 5,880.00p -2.24%
Micro Focus International (MCRO) 1,906.50p -1.75%
United Utilities Group (UU.) 810.20p -1.67%
Associated British Foods (ABF) 2,488.49p -1.60%
Severn Trent (SVT) 1,943.50p -1.57%
Mondi (MNDI) 1,732.50p -1.51%
SEGRO (SGRO) 671.80p -1.47%
FTSE 250 - Risers
Mediclinic International (MDC) 326.00p 7.31%
Countryside Properties (CSP) 338.95p 5.86%
Clarkson (CKN) 2,445.00p 3.60%
JD Sports Fashion (JD.) 592.71p 2.79%
Cairn Energy (CNE) 170.40p 2.65%
Saga (SAGA) 58.35p 2.28%
Victrex plc (VCT) 2,532.00p 2.26%
Metro Bank (MTRO) 844.00p 2.12%
Greencore Group (GNC) 222.10p 2.07%
FirstGroup (FGP) 102.03p 2.03%
FTSE 250 - Fallers
Ferrexpo (FXPO) 285.73p -5.17%
Galliford Try (GFRD) 552.00p -4.25%
Intu Properties (INTU) 99.24p -2.75%
Amigo Holdings (AMGO) 250.00p -2.72%
Hunting (HTG) 634.00p -2.46%
Games Workshop Group (GAW) 3,876.80p -2.45%
UDG Healthcare Public Limited Company (UDG) 632.00p -2.24%
Telecom Plus (TEP) 1,460.00p -2.01%
Safestore Holdings (SAFE) 635.00p -1.93%
Centamin (DI) (CEY) 82.32p -1.88%
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