Proactive Investors -
- FTSE 100 well above opening session low of 7,282.52
- US stock futures extend gains after below-forecast CPI
- Banks advance after passing Bank of England stress test
US inflation slows
US inflation rose at the slowest pace in more than two years in June, according to new data from the US Bureau of Labor Statistics.
Headline CPI rose 3% in the 12 months ended in June—down from 4% in May, below the expected 3.1% gain and marking the smallest annual increase since March 2021. It rose 0.2% month-over-month, up from a 0.1% gain in May.
Core inflation, which removes the more volatile food and energy components, also softened more than expected during June.
Core CPI came in at 4.8% for the 12 months that ended in June, below the expected 5%.It rose 0.2% month-over-month in June, the smallest one-month gain in that reading since August 2021.
“Cold as ice—that is the number that comes to mind when you look at the US CPI data,” commented Zaye Capital Markets chief investment officer Naeem Aslam.
“This is the lowest number since the pandemic, and this is certainly good news for the economy, but it is important to keep in mind that this is still a transitory situation.”
Aslam concluded: “Overall, we think this is the best news for the markets so far this year when it comes to the US CPI data.”
Just after the inflation report was released, futures for the Nasdaq had added 0.9%, the S&P 500 had added 0.6%, and the DJIA had added 0.5% in pre-market trading.
A look at some of the top risers and fallers on the junior market
Shoe Zone PLC (LON:SHOE) marched ahead, adding 6% to 254p after the footwear retailer reported an “exceptional” month in sales.
RBG Holdings PLC (LON:RBGP), the legal and professional services group, saw its shares climb 18% to 32p following the sale of LionFish Litigation Finance.
XLMedia PLC (LON:XLM), the digital media company, bounced 2.5% after the firm confirmed the sale of three European casino assets.
EQTEC PLC (LON:EQTE) shares jumped more than a third as investors warmed to the sale of its France marketing centre to partner Idex.
Thor Explorations Ltd rose 14% on the back of higher production from its Segilola gold mine in Nigeria during the second quarter of 2023.
Fiinu Plc shares plummeted 62% to 2.5p after the 'Plugin Overdraft' company said it has still not re-applied for a banking licence as it cannot raise enough funding.
IOG PLC (LON:IOG) shares fell back 13% after an update confirmed first-half revenues below expectations due to what one City analyst described as “a quirk in farm-out royalty terms”.
US futures higher ahead of CPI figures
US stocks are expected to open higher on Wednesday, though much will depend on the June consumer price index, due at 8.30am ET, the first of this week's duo of inflation numbers, with the producer price index due on Thursday.
Economists are forecasting that June CPI will rise by 0.3% month-on-month and 3.1% on an annualized basis, down from 4.0% in May.
Excluding volatile food and energy prices, core CPI is expected to increase by 0.3% month-on-month and 5.0% on the year.
TickMill Group’s market analyst Patrick Munnelly commented: "While a further .25% hike from the Fed is widely expected as the base case scenario for the July FOMC, expectations have shifted beyond this month. With a less dovish outlook voiced by some Fed members recently and with jobs data cooling, the market is anticipating that the Fed will likely return to a pause after this next hike.
"With that in mind, today’s inflation reading will be used as a key barometer for assessing this likelihood. If CPI is seen falling further, this should reinforce the view that the Fed will pause after hiking in July".
In pre-market trading, futures for the Dow Jones Industrial Average (DJIA) were 0.1% higher, while those for the S&P 500 index and the Nasdaq 100 both added 0.2%.
Stocks finished higher on Tuesday, with the DJIA closing 317 points, or 0.9% firmer at 34,261, while the S&P 500 and Nasdaq Composite added 0.7% and 0.6%, respectively.
Aside from the consumer inflation report, investors will also monitor comments on Wednesday from Federal Reserve officials including Richmond Fed President Tom Barkin, Minneapolis Fed President Neel Kashkari, Atlanta Fed President Raphael Bostic and Cleveland Fed President Loretta Mester for any insights into the state of the US economy and the future for interest rate policy.
Unbound says administration an option if restructuring talks fail
Unbound Group PLC (LON:UBGU) could be placed into administration should restructuring and funding talks prove unsuccessful.
The owner of Hotter shoes said it continued to explore options for the group and its shareholders, which include a formal restructuring plan and equity raise.
“In the event that such discussions prove unsuccessful, it is likely that administration would occur,” it added.
The firm was responding to media speculation surrounding the firm.
Sky News reported the company was seeking to raise up to £2mln within days to pave the way for the implementation of a restructuring plan.
The company has been struggling for some time and in May announced that a £10mln investment from Marwyn Investment Management had fallen through.
Unbound said in a stock exchange announcement on 27 June that it had terminated a formal sale process for the Hotter Shoes business.
Shares sank 33% to 0.83p.