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FTSE 100 closes higher after US inflation data

It comes after latest data showed that core inflation in the US was flat last month (March) while consumer spending rose

Wall Street
The 1.5% rate is still well below the Fed's 2% target
  • FTSE 100 index closes up

  • US core inflation flat in March, consumer spending surges

  • Wall Street stocks also up

FTSE 100 closed  in positive territory as the new trading week began as Wall Street shares were also up.

The UK's blue-chip index added around 12 points at 7,440.

Meanwhile, FTSE 250 also gained ground, up  over 54 points at 19,911.

It comes after latest data showed that core inflation in the US was flat last month (March) while consumer spending rose.

In Europe, stocks were also higher. The German DAX gained almost 13 at 12,328, while the French CAC 40 is up around 11 points at 5,580.
David Madden, analyst at CMC Markets, noted on US inflation. "The core PCE reading dropped to 1.6% in March – the lowest reading since January 2018, and it undershot the 1.7% forecast.

"The update is the Fed’s preferred inflation measurement, and seeing as the US central bank has an inflation target of 2%, it is clearly moving in the opposite direction. The monthly personal income figure dipped to 0.1% from 0.2%, but that was offset by the surge in consumption to 0.9% from 0.3%. In order to sustain high levels of consumption, income levels will need to tick up."

3.40pm: US inflation softens in March but consumer spending jumps

Core inflation in the US was flat in March while consumer spending soared, according to new data.

Over the month, figures showed that core personal consumption expenditures (PCE), a key inflation figure for the Fed, was flat compared to February, however the headline figure rose 0.2% compared to 0.1% in February, taking the year-on-year (YOY) increase to 1.5% in March from 1.3% the month before.

Despite the rise, inflation was still below the Fed’s target of 2%, however James Hughes, chief market analyst at Axitrader, told Proactive that while there has been recent pressure on the Fed to raise interest rates, from both president Trump and the US government, the 1.5% was “still ticking higher” than the 1.3% YOY figure in February and wouldn’t necessarily add to the pressure to raise rates.

“If anything, recent economic data out of he US suggests things are slowly picking up…[it is] below the target rate but we never seem to stay around those for very long”.

The inflation numbers were accompanied by a strong uptick in consumer spending, which rose 0.9% in March compared to growth on 0.1% in February, its biggest monthly increase in nearly a decade.

In London, the FTSE 100 was up 15 points at 7,443.

3pm: Mixed start for Wall Street

US markets have opened on a mixed footing with corporate results and inflation data at the forefront of trader’s minds.

Despite beginning the morning in positive territory, within the first hour of trading the Dow Jones Industrial Average was down 0.04% at 26,532, while the S&P 500 was 0.06% higher at 2,941 and the Nasdaq was mostly flat at around 8,143.

Meanwhile, the FTSE 100 has managed to break out of its lunchtime malaise and was 15 points higher at 7,443.

1.15pm: Wall Street tipped higher on upbeat corporate news but Fed looms

The US markets are tipped to open mostly higher on Monday morning as traders seemed poised to take upbeat sentiment from good news on the corporate front, however there could be potential for adjustment as Wednesday’s Fed meeting looms.

The market has already been given a shot in the arm from Spotify Technology (NYSE:SPOT), which reported its first quarter results before the opening bell.

Shares in the music streaming giant were 3.4% higher at US$142.9 in pre-market deals after it reported 100mln premium (fee-paying) subscribers, up 32% year-on-year, while its revenues for the period jumped 33% to €1.51bn.

The company also reported an operating loss of €47mln, which its said was better than expected as gross profits rose while marketing spend was lower than predicted.

Another beneficiary in the pre-market was media giant Walt Disney Co (NYSE:DIS), which rose 2% to US$142.8 after the opening weekend of superhero epic Avengers: Endgame from its Marvel arm smashed box office records by raking in US$1.2bn.

Investors will also be on the look out for earnings from Google parent Alphabet Inc (NASDAQ:GOOG), although these are not expected to be released until after the close.

However, James Hughes, chief market analyst at Axitrader, said that while the corporate earnings could reinforce the “generally upbeat sentiment”, the meeting of the Federal Reserve on Wednesday “could end up carrying the greater weight”.

“Against a backdrop of improving macroeconomic news, it’s arguably going to be difficult for the Fed to maintain such a dovish stance over its monetary policy outlook. An adjustment in view here could therefore see some enthusiasm being knocked out of stocks.”

“The [personal consumption expenditures price index] deflator data due for release today will also be under scrutiny. This is seen as the Fed’s preferred measure of inflation and forecasts have the year on year figure nudging a little higher, again suggesting that the lax approach to policy right now might prove difficult to sustain. US personal income and expenditure data will also be under scrutiny, again for signs of building inflationary pressures”, Hughes added.

Axitrader has called the Dow Jones Industrial Average to open 27 points higher and the S&P 500 3 points higher.

In London, the FTSE 100 was flat at 7,428.

12.00pm: FTSE 100 in reverse as morning ends

Despite kicking off the week in positive territory, the FTSE 100 had fallen back into the red by the end of the morning, down 6 points at 7,421.

Oil majors were key weights on the index as the oil price continued its slide from last week, while grocery firm Ocado Group plc (LON:OCDO) also provided some downward pressure after revealing that an electrical fault may have been responsible for a fire at its robot-run Andover warehouse in February, sending the shares slumping 5.1% to 1,326.5p.

Connor Campbell, financial analyst at Spreadex, said that despite the decline the blue-chips had been “saved from something more serious” by gains in the shares of Barclays PLC (LON:BARC), which was up 1.5% at 163.5p, and miner Glencore which was up 1% at 314p.

On the currency markets, the pound had given up most of its early gains and was up 0.04% at US$1.292 as investors seemed to be keeping their powder dry ahead of key economic data due later this week as well as the Bank of England's interest rate decision on Thursday.

There was a similarly glum mood on the continent, with the Spanish IBEX dragged lower as investors expressed dismay over the results of yesterday’s election that saw the left-wing Socialist party poised for a return to power.

10.30am: FTSE 100 loses gains

In mid-morning the FTSE 100 had lost its initial gains and was ticking along a touch lower than Friday’s close, down 4 points at 7,423.

The easing of the oil price put pressure on majors BP PLC (LON:BP.), which was down 0.6% at a one-month low of 552.9p in mid-morning, and Royal Dutch Shell PLC (LON:RDSA) which had slipped 0.3% to 2,431p.

Brent crude has fallen 1.1% to US$70.81 a barrel, continuing a decline from last week after US president Donald Trump claimed to have spoken to OPEC and demanded that the oil cartel lower its prices.

Investors are also likely to be sitting on their hands with both BP and Shell scheduled to report trading updates this week on Tuesday and Thursday respectively.

Meanwhile, sterling was trading higher against the dollar in mid-morning on the currency markets, however some analysts are saying it is unlikely that the pound will be breaking above the psychological ‘Brexit barrier’ of US$1.30 any time soon.

The pound was up 0.18% against the dollar at US$1.294 and flat against the euro at €1.158.

Connor Campbell, financial analyst at Spreadex, said a late-April recovery in the currency was now “unlikely” given waning investor confidence despite rallying off of last week’s lows as the whole Brexit process showed little signs of positive development.

“The Halloween Brexit extension proved less to be a sterling-booster, and more a value-eroding reminder that no-one on the UK side of the equation knows what they are doing.”

Chris Beauchamp, chief market analyst at IG, added that the market was “clearly fretting about the lack of progress” in Brexit discussions, both between the UK and the EU and in cross-party talks between the Conservative and Labour parties.

The UK local elections, scheduled for 2 May, would make any breakthrough between the two sides unlikely and would also serve as a test of sentiment for the European Parliament elections later on this month.

8.50am: Modest early gains for Footsie

The FTSE 100 made a subdued, but positive start to the new trading week as it advanced 7.5 points higher to 7,435.73.

A mixed session earlier meant Asia was unable to provide much direction, while Wall Street’s record close Friday was consigned to the memory banks rather than seen as a providing momentum.

Traders were instead assessing whether the Socialist Party’s gains at the polls in Spain would unsettle the uneasy status quo in Europe among EU members other than the UK. 

However, radical reform appears unlikely given the left wing group was unable to gain full political control and instead look set to govern in coalition.

In the meantime, the markets look set to trade sideways ahead of the US Federal Bank’s monthly review of interest rates, according to analysts.

“European indices were flat to negative on the open as they gave a cautious response to the strong performance in the US on Friday,” said Neil Wilson of Markets.com. 

“There’s not quite the same impetus in Europe compared to the US to drive equities.”

The oil price has eased back from its highs last week amid comments from President Trump urging OPEC to what it could to temper the cost of a barrel of crude.

This in turn benefited travel stocks, with holiday firm TUI, which has a fleet of fuel guzzling aircraft, flying 2.75% higher. 

Following in TUI’s vapour trails was budget carrier easyJet (LON:EZJ), up 1.5%, and British Airways owner IAG (LON:IAG), ahead 1%.

Barclays founds some fans after last week’s results as it rose 1.9%, which received a lukewarm reception.  The figures appear to look better with every bank that reports, while it should be pointed out the company was the victim of a pre-emptive sell-off ahead of its quarterlies.

Proactive news headlines:

Freight forwarder Xpediator PLC (LON:XPD) believes its services will be “critical” for companies looking to move goods in and out of the UK post-Brexit. The company confirmed on Monday (29 April) that revenue rose by 54% to £179.2mln in the year ended 31 December 2018. Pre-tax profits more than doubled to £5.6mln.

Kibo Energy PLC (LON:KIBO) told investors that it has received formal notice from the Tanzanian authorities inviting it to develop the Mbeya coal-to-power project. TANESCO, the Tanzania Electric Supply Company, has asked the company to develop the project for export market which, Kibo highlights, allows the company to engage with the African Power Pools regarding off-take agreements.

Mirada PLC (LON:MIRA) said it expects to break even at an underlying level as the over-the-top TV software designer generated higher revenues than expected over the past 12 months.

OptiBiotix Health PLC (LON:OPTI) said expects commercial traction and revenues to grow after signing a raft of deals for its health products. Having developed new strains of bacteria that target the gut microbiome to tackle conditions such as high cholesterol, diabetes and obesity, it has seen significant commercial demand for its technology.

Avation PLC (LON:AVAP) has acquired and leased its fifth Airbus A220-300 aircraft to Latvian carrier airBaltic.

Faron Pharmaceuticals Ltd (LON:FARN) said a separate Japanese study effectively confirmed the results of an earlier phase III trial of its Traumakine drug for people with acute respiratory distress syndrome (ARDS). In other words, it did not reduce mortality or increase the number of ventilator-free survival days when compared to placebo.

ClearStar Inc (LON:CLSU) has announced a further extension to a contract for its financial institution screening capabilities with a customer that provides outsourcing services.

University technology investment group Tekcapital PLC (LON:TEK) has confirmed its portfolio company, Guident, has filed for a new patent with US regulators.

Polarean Imaging Plc (LON:POLX) has appointed the former chief financial officer (CFO) of an oncology therapeutics firm as its new finance boss. The medical imaging firm said Charles (Chuck) Osborne, Jr, who joins the company from Innocrin Pharmaceuticals Inc, would begin the role with immediate effect and will replace outgoing CFO Bill Patrick, who would take up the post of financial controller at Polarean Inc, the group’s subsidiary.

Sound Energy PLC (LON:SOU) has told investors that a required piece of equipment has now arrived on site in Morocco, and, it will now advance testing programmes on the TE-10 well. With the receipt of coiled tubing, the company will work to start a programme of unstimulated tests, followed by stimulated flow tests.

Europa Oil & Gas Holdings PLC (LON:EOG) told investors that a public inquiry will take place in November to hear an appeal against last year’s denial of planning permission to the Wressle field. The new hearing is expected to start on 5 November and will last around 5 days.

Union Jack Oil PLC’s (LON:UJO) executive chairman David Bramhill said he is looking forward to a fair hearing over the Wressle oil field project, which was previously denied planning permission.

Anglo Asian Mining (LON:AAZ) has revealed the results of extensive exploration on its Azerbaijan properties. Follow-up work on the most promising targets is now getting underway. Big Pic in December.

Eurasia Mining plc (LON:EUA) expects to resume operations at the West Kytlim alluvial site in Russia in the next two weeks. A gravity separation device has been installed to improve recoveries of platinum.

Mkango Resources Ltd (LON:MKA, CVE:MKA) has unveiled a new partnership deal with MetalNRG PLC which is committing to spend US$2mln on exploration at the Thambani uranium project, in Malawi. MetalNRG will earn up to 75% of Thambani as it invests in the project.

Metal Tiger PLC (LON:MTR) has reported an update on infill drilling at the T3 copper project in Botswana. T3 is owned by MOD Resources (LON:MOD), in which Metal Tiger holds a 10.48% stake.  Since commencement of the infill drilling in January 2019, 49 of the planned 60 hole programme have now been completed at T3, with the remaining 11 holes expected to be completed by the end of the first half of 2019.

Kore Potash PLC (LON:KP2) has switched tack in the Republic of Congo to a smaller potash project at the Dougou Extension (DX) site. Until now Kore Potash had focused on the much larger Kola project, but said it would require substantially lower investment to get DX up and running.

OPG Power Ventures PLC (LON:OPG) has reported that full-year profits are likely to be on target as the India-focused power generation group drove up tariffs for its captive customers.

KRM22 PLC (LON:KRM22) said its KRM22 Central Limited subsidiary has entered into a new five-year debt facility with Harbert European Growth Capital Fund II to support future business growth and allow it to pursue a pipeline of investment targets. The AIM-listed firm said the facility is for up to €11.55mln (around £10.0mln) of which an initial £1mln will be drawn down immediately.

Oriole Resources PLC (LON:ORR), the AIM-quoted exploration company operating in Africa and Europe, said it has now received a repayment of £522,000 from Her Majesty's Revenue and Customs following the positive resolution of its VAT dispute last year. Bob Smeeton, Oriole’s chief financial officer, said: “The end of the dispute allows us to reduce professional advisor fees and provides funds for our continued exploration operations."

Anglesey Mining PLC (LON:AYM) has raised £200,000 in a placing of just over nine million new shares at 2.135p each.  The placing price represents a discount of approximately 9.1% on the previous closing price.

i3 Energy PLC (LON:I3E) said its 2019 drilling programme remains on track to commence mid-summer as its debt financing plans for the programme continue to progress. The AIM-listed independent oil and gas company, with assets and operations in the UK focused on the North Sea, said the junior debt facility with warrants, announced on 1 March, which will be used to partially finance the programme continues to progress to legally binding loan documentation.

Oracle Power Plc (LON:ORCP), the UK energy developer of a combined lignite coal mine and mine mouth power plant located in the south-eastern Sindh Province of Pakistan, said that as part of the China Belt and Road Summit held in Beijing 27-28 April 2019, the Memorandum of Understanding agreed between its Chinese partners, Beijing Jingneng Power Company Limited and PowerChina International Group Limited, announced on 27 March 2019,  has been ceremonially signed by the parties.

Midatech Pharma PLC (LON:MTPH) (NASDAQ:MTP) said at the close on Friday that, further to its announcement on 3 May 2018, it received written notification on 23 April 2019 from NASDAQ that for the last 10 consecutive business days, from April 8 to April 22 2019, the closing bid price of the company's American Depositary Shares had been at $1.00 per share or greater and, accordingly, the company has regained compliance with NASDAQ Listing Rules.

6.25am: Early gains expected

The FTSE 100 looks set to open in positive territory, clawing back some ground lost last week.

The index of blue-chip stocks will nudge up 14 point to 7,442.19, according to the spread betting firms, taking its cue from Wall Street, which closed sharply higher on Friday.

Asia’s main markets were mixed ahead of the resumption of Sino-American trade talks and the US Federal Reserve’s monthly review of interest rates on Wednesday.

Chinese equities rebounded after a losing ground last week, while Japan's NIKKEI 225 is nudged into the red.

In Spain, the Socialist Party won the general election, although it fell well short of gaining an outright majority, which means it will have to strike a coallition deal.

Back here in the UK, the bank reporting season continues this week following on from updates by Barclays (LON:BARC) and Royal Bank of Scotland (LON:RBS), which suggested the UK’s big financial institutions are marking time rather than making rapid headway.

This week it is the turn of Lloyds Banking Group (LON:LLOY), HSBC (LON:HSBA) and Standard Chartered (LON:STAN) to provide summaries of trading in the first three months of the year.

The retailers will also be in focus with an updates from Sainsbury (LON:SBRY) and Next (LON:NXT).

Significant announcements expected on Monday April 29:

Trading updateEvraz plc (LON:EVR)

Interims: Lok’n Store Group PLC (LON:LOK), Proactis Holdings PLC (LON:PHD), UP Global Sourcing Holdings PLC (LON:UPGS)

Finals: Horizon Discovery Group PLC (LON:HZB), Nasstar Plc (LON:NASA)

Economic data: US personal income, personal spending

Around the markets:

  • Pound worth US$1.2934

  • Brent crude US$71.77 barrel, down 38 cents

  • Gold US$1,287.40, down US$1.40 an ounce

City Headlines: 

  • Financial Times

  • KPMG criticised over Patisserie Valerie conflict of interest

  • JPMorgan bans staff from Brunei-owned hotels over gay law

  • Deutsche Bank chairman rejects strategy overhaul

  • May faces big loss in English local council elections

  • Brexit threatens pound’s status as global currency

  • Financial watchdog dawn raids reach highest in eight

  • UK’s ‘fracking tsar’ resigns, saying science is being overlooked

  • Times

  • Apple ‘puts block’ on apps that curb iPhone use

  • The rail industry is to call for the present train franchise system to be scrapped, that long-distance routes are opened up to competition between multiple operators and that commuter services into London and around leading cities come under the control of local authorities

  • Employers ‘not giving workers chance to raise productivity’

  • Green’s retail empire secures help to keep suppliers onside

  • Investors are preparing a series of rebellions, with Convatec, the embattled medical devices group, Barclays and the owner of the Daily Mirror newspaper in the line of fire

  • Daily Telegraph

  • Hunt urges caution on Huawei - foreign secretary publicly questions PM over Chinese firm's access to 5G network

  • Oil market jitters may hit profits at Shell and BP, analysts warn

  • Pressure is growing on the Government to reclassify Navy support vessels as warships, to save thousands of jobs

  • Airlines facing a £900mln hit from the rising price of oil

  • RBS chief could lose £2mln bonus if he joins rival Down Under

  • Banks facing new wave of cases linked to Libor scandal

  • Investors are urged to vote against re-electing Countrywide director

  • Europe's largest online trading platform is offloading cannabis stocks after lawyers warned that making profits by dealing in recreational marijuana shares may be a crime

  • Guardian

  • Anti-fracking activists hail resignation of shale gas tsar

  • Evgeny Lebedev in talks to sell London Live TV station - Evening Standard owner believed to be in discussions with That’s Media

  • Hammerson faces shareholder rebellion over executive pay

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