London close: Stocks mixed ahead of Fed decision

Market Close Report
15:28, 16th June 2021

(Sharecast News) - London stocks finished in a mixed state on Wednesday, as investors digested news that inflation jumped past the Bank of England's 2% target in May for the first time in nearly two years, and awaited the latest policy announcement from the Federal Reserve.
The FTSE 100 ended the session up 0.17% at 7,184.95, while the FTSE 250 slipped 0.06% to 22,617.66.

Sterling was in positive territory, last trading 0.18% stronger against the dollar at $1.4108, and advancing 0.26% on the euro to €1.1643.

"The FTSE 100 was able to put in a new post pandemic high above 7,220, before slipping back, with most of market attention on this evening's Federal Reserve rate decision, which in all probability will turn out to be a complete non-event," said CMC Markets chief market analyst Michael Hewson.

"It's highly unlikely the Fed will say anything that might upset the apple cart risk wise, though we could well see the early signs of some discussion of a timetable to tapering in its monthly bond purchase programme, which is currently running at $120bn a month."

Hewson said that in light of recent data, it would be more surprising if they did not kick off such a discussion.

"Today's surprise jump in UK inflation above the Bank of England's 2% target doesn't appear to have caused that much consternation despite the rises in the likes of clothing, fuel as well as restaurant meals and drink as indoor dining reopened."

As markets closed in Europe, trader attention was turning across the pond to the latest policy announcement from the Fed.

IG market analyst Joshua Mahony said earlier that unlike the Fed, the Bank of England did not have a policy of average inflation targeting, which would allow above-target prices for a period of time.

"Nonetheless, the BoE is likely to take a similar approach to the Fed for now, with base effects and reopening adjustments bringing a potential short-term spike that could prove fleeting.

"That topic of transitory inflation will be key as we look towards the FOMC meeting today, with the Fed looking unlikely to move the dials this time around," Mahony said.

"Instead, there is likely to be a focus on the latest dot plot and inflation projections, alongside questions around to what degree the Fed have discussed tapering in forthcoming meetings."

Figures released earlier in the day by the Office for National Statistics showed that consumer price inflation rose to 2.1% in May from 1.5% in April, coming in above expectations for a reading of 1.8% as more businesses reopened after Covid restrictions were eased.

It also marked the highest consumer price inflation reading since July 2019.

Meanwhile, core inflation - which strips out volatile elements such as food and energy - increased to 2% in May from 1.3% the month before, coming in above consensus expectations of 1.5%.

The ONS said the largest upward contribution to the inflation rate came from transport.

Rising prices for clothing, motor fuel, recreational goods, and meals and drinks consumed out also contributed.

"The rate of inflation rose again in May and is now above 2% for the first time since the summer of 2019," said ONS chief economist Grant Fitzner.

"This month's rise was led by fuel prices which fell this time last year, but have jumped this year thanks to rising crude prices.

"Clothing prices also added upward pressure as the amount of discounting fell in May."

In equity markets, Tullow Oil added 0.9% after saying its production to the end of May was in line with expectations, and that it was increasing the volume of oil it protects with hedging to 75% of the group's output for the next two years.

On the downside, mining stocks were under pressure after Chinese industrial production and retail sales data missed expectations.

Glencore was down 1.23%, Anglo American lost 1.18%, Antofagasta fell 0.99%, and BHP was 0.09% lower.

Telecommunications company Helios Towers slumped 3.6% after a share placing, while Hipgnosis Songs Fund fell 1.61% after the music rights buyer said it planned to raise £150m in a share placing to fund what it called a "substantial" pipeline of songs.

Market Movers

FTSE 100 (UKX) 7,184.95 0.17%
FTSE 250 (MCX) 22,617.66 -0.06%
techMARK (TASX) 4,491.93 0.60%

FTSE 100 - Risers

Renishaw (RSW) 5,560.00p 3.35%
Flutter Entertainment (CDI) (FLTR) 13,765.00p 3.22%
Weir Group (WEIR) 1,919.00p 2.51%
Bunzl (BNZL) 2,361.00p 2.47%
Aveva Group (AVV) 3,614.00p 2.29%
Admiral Group (ADM) 3,226.00p 2.25%
Intertek Group (ITRK) 5,568.00p 2.02%
Rolls-Royce Holdings (RR.) 110.06p 1.91%
Johnson Matthey (JMAT) 3,197.00p 1.85%
InterContinental Hotels Group (IHG) 5,130.00p 1.75%

FTSE 100 - Fallers

Associated British Foods (ABF) 2,327.00p -1.69%
Vodafone Group (VOD) 130.16p -1.39%
Anglo American (AAL) 2,963.50p -1.18%
Barclays (BARC) 177.12p -1.17%
BP (BP.) 328.95p -1.13%
Glencore (GLEN) 317.65p -1.04%
SEGRO (SGRO) 1,087.00p -1.00%
Antofagasta (ANTO) 1,454.00p -0.99%
Imperial Brands (IMB) 1,600.50p -0.90%
Standard Chartered (STAN) 485.30p -0.86%

FTSE 250 - Risers

Watches of Switzerland Group (WOSG) 858.00p 4.45%
Network International Holdings (NETW) 390.90p 3.99%
Lancashire Holdings Limited (LRE) 640.50p 3.31%
Centamin (DI) (CEY) 112.60p 2.97%
888 Holdings (888) 379.60p 2.48%
FDM Group (Holdings) (FDM) 998.00p 2.46%
C&C Group (CDI) (CCR) 238.40p 2.41%
Hiscox Limited (DI) (HSX) 818.00p 2.40%
Beazley (BEZ) 316.30p 2.36%
Rotork (ROR) 343.20p 2.20%

FTSE 250 - Fallers

Hammerson (HMSO) 39.68p -4.09%
PureTech Health (PRTC) 351.00p -3.85%
Helios Towers (HTWS) 166.00p -3.60%
BlackRock World Mining Trust (BRWM) 606.00p -3.19%
SSP Group (SSPG) 314.60p -3.07%
Genus (GNS) 5,200.00p -2.80%
Ferrexpo (FXPO) 441.60p -2.47%
TP Icap Group (TCAP) 195.46p -2.44%
Wood Group (John) (WG.) 241.20p -2.43%
NCC Group (NCC) 283.50p -2.41%

Disclaimer & Declaration of Interest

The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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