Proactive Investors -
- FTSE up 70 points
- Gold continues to surge
- US inflation falls to 5%
The US inflation rate year-on-year was 5% in March, down from 6% the previous month and below the consensus of 5.2%.
Core inflation came in at 5.6%, ahead of the forecast of 5.5% and slightly ahead of the 5.5% reported last month.
CPI for March was reported at 301.836, below forecasts of 302.7 but ahead of the previous figure of 300.84.
FTSE 100 reacted positively to the news, shooting up sharply by roughly 20 points to 7,856, and up 70 points since the market opened.
London's movers
A quick look at some of London’s movers.
Risers
Technology Minerals- up 20% to 2.41p
Shares bounced after it told investors that its part-owned battery recycling business, Recyclus Group, has now received the final approval draft from the Environment Agency (EA) for its proposed lithium-ion plant in Wolverhampton, West Midlands.
The group has subsequently responded to the EA to confirm its acceptance of the draft permit and expects the official EA certification to be completed imminently,
Invinity Energy- up 12% to 38.1p
Shares were boosted after the manufacturer of ‘utility-grade’ energy storage systems landed an £11mln grant from the UK Department for Energy Security and Net Zero, under the ‘LODES’ (Longer Duration Energy Storage Demonstration) scheme.
Renalytix- up 13% to 98.7p
Renalytix jumped in London after announcing that data supportive of KidneyIntelX in minorities and veterans is to be presented at the National Kidney Foundation Spring Clinical Meeting.
The clinical data shows the importance of using KidneyIntelX bioprognosis in early-stage kidney disease and diabetes patients to blunt the effects of health inequity,
Fallers
De La Rue- down 23% to 38p
Shares plunged after it warned that falling demand for bank notes means adjusted operating profit for the financial year 2023 is expected to be below market expectations.
Petrofac- down 17% to 59p
Shares fell after warning of a widened EBIT loss after reviewing project costs and the timing of recognition of certain revenue streams.
As a result, the energy services company will now recognise an additional EBIT reduction of US$140mln to US$160mln in 2022.
US preview
Wall Street is likely to open cautiously higher as investors await the release of March’s Consumer Price Index (CPI), due before the market opens, which will help guide the Federal Reserve’s next interest rate decision.
Futures for the Dow Jones Industrial Average rose 0.24% in Wednesday's pre-market trading while those for the broader S&P 500 index gained 0.2% and contracts for the Nasdaq-100 added 0.1%.
Ahead of the inflation report, US stocks struggled to find direction on Tuesday, with the DJIA closing 0.3% higher at 33,685, while the S&P 500 ended flat at 4,109 and the Nasdaq Composite fell 0.4% to 12,032.
“More cyclical stocks such as industrials and materials held up well overall, with some weakness in what has been a burgeoning tech sector this year taking some shine from some early trading session strength,” commented Richard Hunter, head of markets at interactive investor.
“The week now gets into full swing with the release of the Consumer Price Index later today. Estimates vary on the outcome of a release which will give the Federal Reserve further food for thought.”
Hunter noted that the general expectation is that the CPI will have increased by 0.2% in March, as compared to a gain of 0.4% in February, but the core inflation number – which excludes energy and food prices – is estimated to have risen by 0.4%, and by 5.6% year-on-year.
“Indeed, while it is clear that there is some cooling of the headline inflation number, attention is likely to turn to some of the underlying measures which have so far proved more difficult to budge, such as clothing, insurance and furnishings in addition to volatile energy and food levels,” he added.
“With this in mind, the consensus remains that victory in the fight against inflation has not yet been achieved and that the Fed will hike rates by a further 0.25% in May, especially given the recent spike in the oil price and little more than a moderate labour market slowdown.”
London still going strong
Ahead of US data set to be released later this afternoon, London’s blue-chip index was up 47 points, or 0.61%, to 7,833.
Centrica (LON:CNA), DCC (LON:DCC) and BT (LON:BT) were leading the way as the top risers, up 1.9%, 1.85% and 1.79% respectively.
Iron ore rebounds
Iron ore has bounced off three-month lows, with 63.5% of iron ore content for delivery in Tianjin above US$121 per tonne.
Economic data provided some optimism after reports that raised concerns over China’s economic reopening failed to pick up traction and confidence in construction demand grew.
Ferrexpo (LON:FXPO), the FTSE 250 iron ore pellet company, was little changed, trading at 119p.
However, negative talk around steel is believed to have capped gains for iron.
Recent data for Mysteel shows the production of steel rebar and wire rods fell by 1% in the week ending 6 April, while demand supposedly dropped by 7%.
Reports out of China, the world’s top steel producer, suggest that the nation will cut metal output by 2.5% this year, the third consecutive annual decline.
This is also believed to have some read across to metal miners which have continued to drag the FTSE 100.
Fresnillo (LON:FRES) is down 1.31% while Anglo-American has shed 0.7%.
Elsewhere, Endeavour Mining has lost 0.65% while Rio Tinto (LON:RIO) has fared better than its peers and is down only 0.09%.