London close: Stocks red as US inflation, jobless claims top forecasts

10th Oct 2024 14:58

(Sharecast News) - London's stock markets ended Thursday in negative territory as investors weighed a higher-than-expected inflation and jobless claims readings out of the United States.

The FTSE 100 index dipped 0.07% to close at 8,237.73 points, while the FTSE 250 saw a steeper decline, dropping 0.55% to 20,708.37 points.

In currency markets, sterling was last down 0.11% on the dollar to trade at $1.3056, as it slipped 0.02% against the euro, changing hands at €1.1947.

"Today's US inflation data was quickly discarded in favour of a focus on the rise in jobless claims," said IG chief market analyst Chris Beauchamp.

"Initial claims hit their highest level since June 2023, having risen for a second week in a row.

"This contrasts sharply with last week's solid payrolls data, leaving investors in a bind."

Beauchamp noted that last night's Fed minutes gave the dollar a boost, but a few more weeks of rising claims could see the case for a 50 basis point rate cut revived.

"It looks increasingly likely that Israel will go for a large-scale attack on Iran, as reports emerge of Gulf states lobbying the US to rein in its ally.

"Oil prices have surged on hints that Israel is seeking to take advantage of the Iranian attack to deliver a major strike on its opponent.

"The consequences of that could include a closing of the Straits of Hormuz, leading to major disruption to oil supplies."

US inflation tops expectations, jobless claims surge past forecasts

In economic news, US inflation rose faster than expected in September, with consumer prices increasing by 0.2% month-on-month, surpassing the 0.1% forecast by economists.

The core inflation rate, which excludes food and energy, came in at 3.3%, just above analysts' expectations of 3.2%.

Overall inflation eased slightly to 2.4%, down from 2.5% in August, though it fell short of the 2.3% expected.

While food prices climbed 0.4% during the month, shelter costs showed signs of easing, with rents cooling by 0.2%.

"Inflation appears to still be cooling off from the elevated levels seen earlier in the year, with September's year-on-year CPI coming slightly above the forecasted 2.3%," said Mahmoud Alkudsi at ADSS.

"This has continued the disinflationary pattern we have seen in the last several months, although not at the pace the markets had predicted.

"This pattern comes contrary to the unexpectedly strong job market data reported earlier in the month."

In the US labour market, jobless claims surged, with initial claims rising by 33,000 to 258,000 in the week ended 5 October.

That was well above market expectations of 230,000, marking a 14-month high.

Continuing claims also rose, and the four-week moving average ticked up to 231,000.

The increase in claims, particularly in states like Michigan and California, added weight to expectations that the Federal Reserve could cut interest rates in the coming months.

On home shores, UK house prices saw their first rise in two years, according to the Royal Institution of Chartered Surveyors (RICS).

The house price net balance reached 16 in September, a notable improvement from August's reading of zero.

Despite that, buyer demand was largely unchanged, while new property listings jumped sharply.

Optimism in the housing market was reportedly growing, with respondents to the survey expecting further growth over the next three and 12 months.

"This is another sign that the UK housing market is picking up as interest rates are falling," said Kathleen Brooks, research director at XTB.

"However, the details are interesting.

"The survey has reported an uptrend in housing in the last few months; however, in September, some sub-indices moderated, including sales expectations, price expectations and new buyer enquiries."

On the continent, German retail sales rose in August, according to delayed data from Destatis.

Sales volumes grew by 1.6%, following a 1.5% increase in July, marking the strongest performance since March.

Ecommerce and mail-order sales led the gains, surging 8.9%, while food and non-food sales also saw notable increases.

Destatis released several months of data in one go, following delays caused by technical issues with a data system update.

Insurers rise on weakened Milton, Volution Group deflates

On London's equity markets, pharmaceutical giant GSK surged 3.22% after announcing a $2.2bn settlement to resolve around 80,000 Zantac lawsuits in the US.

The settlement covered 93% of state court cases, with GSK also agreeing to pay $70m to resolve a whistleblower complaint over alleged concealment of cancer risks linked to the drug.

Tritax EuroBox rallied 2.75% after Canadian investment firm Brookfield made a £557m bid to acquire the warehouse owner, outbidding Segro's previous offer.

Brookfield's bid of 69p per share marked a 6% premium over Segro's offer of 65.1p.

Insurers Beazley and Hiscox gained 3.45% and 1.35%, respectively, as Hurricane Milton weakened before reaching Florida, with the state's governor downplaying the severity of the storm.

Auction Technology Group jumped 9.23%, despite announcing its chief financial officer's resignation and lowering its full-year revenue expectations.

The company said annual revenues would likely rise by 5% to $174m, just below previous guidance.

On the downside, Volution Group fell 4.58% despite posting a 6.1% increase in full-year revenue and an 8.7% rise in adjusted pre-tax profit.

Indivior shares plunged 18.86% after the addiction treatment specialist cut its full-year revenue forecast for a second time, citing weaker-than-expected performance for its opioid treatment Sublocade.

The company highlighted competition from a new long-acting injectable and funding variability within the criminal justice system.

Kingfisher, Tesco, Taylor Wimpey, and WPP all declined, with drops of 1.27%, 1.35%, 4.94%, and 2.71% respectively, as they traded without dividend entitlements.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,237.73 -0.07%

FTSE 250 (MCX) 20,708.37 -0.55%

techMARK (TASX) 4,774.36 -0.69%

FTSE 100 - Risers

Fresnillo (FRES) 654.00p 3.48%

Beazley (BEZ) 780.00p 3.45%

GSK (GSK) 1,505.00p 3.22%

Next (NXT) 10,050.00p 1.89%

Hiscox Limited (DI) (HSX) 1,123.00p 1.35%

Flutter Entertainment (DI) (FLTR) 18,185.00p 1.31%

BP (BP.) 410.85p 1.09%

Antofagasta (ANTO) 1,916.00p 1.03%

Associated British Foods (ABF) 2,342.00p 0.82%

Haleon (HLN) 382.30p 0.79%

FTSE 100 - Fallers

Taylor Wimpey (TW.) 151.95p -4.94%

Vistry Group (VTY) 901.00p -4.61%

BAE Systems (BA.) 1,251.50p -3.95%

Whitbread (WTB) 3,079.00p -3.02%

WPP (WPP) 755.80p -2.80%

Intertek Group (ITRK) 5,025.00p -2.14%

Croda International (CRDA) 4,085.00p -2.09%

Barratt Redrow (BTRW) 453.40p -2.07%

Smiths Group (SMIN) 1,603.00p -2.02%

Intermediate Capital Group (ICG) 2,078.00p -1.99%

FTSE 250 - Risers

Hochschild Mining (HOC) 190.40p 5.90%

Auction Technology Group (ATG) 435.00p 5.58%

Lancashire Holdings Limited (LRE) 650.00p 3.67%

Centamin (DI) (CEY) 149.00p 3.33%

Tritax Eurobox (GBP) (EBOX) 71.20p 3.04%

W.A.G Payment Solutions (WPS) 82.40p 3.00%

Bank of Georgia Group (BGEO) 3,895.00p 2.91%

Wood Group (John) (WG.) 128.50p 1.98%

TBC Bank Group (TBCG) 2,585.00p 1.97%

Ninety One (N91) 190.30p 1.76%

FTSE 250 - Fallers

Indivior (INDV) 583.00p -18.86%

Bytes Technology Group (BYIT) 476.80p -5.43%

Genus (GNS) 2,060.00p -4.64%

Volution Group (FAN) 587.00p -4.58%

Bluefield Solar Income Fund Limited (BSIF) 103.60p -4.25%

Primary Health Properties (PHP) 97.30p -3.48%

Supermarket Income Reit (SUPR) 71.70p -3.37%

Crest Nicholson Holdings (CRST) 176.00p -3.25%

Wizz Air Holdings (WIZZ) 1,241.00p -2.82%

Bodycote (BOY) 555.00p -2.63%