London open: Stocks nudge lower as investors mull sharp fall in inflation
Sharecast
Opening Market Report
07:09, 16th September 2020

(Sharecast News) - London stocks nudged lower in early trade on Wednesday as investors digested a sharp decline in UK inflation.
At 0830 BST, the FTSE 100 was down 0.2% at 6,093.03, while the pound was flat against the dollar at 1.2889.

Figures released earlier by the Office for National Statistics showed inflation plunged in August as the government's Eat Out to Help Out scheme cut the cost of restaurant bills.

Annual consumer price inflation fell to 0.2% from 1% in July as the Chancellor Rishi Sunak's subsidy for meals out and a VAT cut for the hospitality industry reduced prices. On average, economists had expected the rate of price increases to drop to zero.

Prices in the hotels and restaurant sector fell 2.8% compared with a 1.8% increase in July. Clothing and footwear prices also fell as retailers delayed price rises for autumn ranges and air fares fell in August for the first time on record.

The unusually big drop for inflation showed the effects of the Covid-19 crisis hitting large swathes of the economy. Recreation and culture was the only sector to register a small increase to 2.8% from 2.6%.

ONS statistician Jonathan Athow said: "The cost of dining out fell significantly in August thanks to the Eat Out to Help Out scheme and VAT cut, leading to one of the largest falls in the annual inflation rate in recent years."

Capital Economics said August was probably the low point for inflation after the Eat Out to Help Out subsidy finished at the end of August.

"The VAT cut for the hospitality industry will expire on 12 January [and] the drag on inflation from the previous collapse in the oil price will continue to fade," economist Thomas Pugh said. "But the big picture is that it will be a few years before the economy is strong enough to sustain CPI inflation at the 2% target."

In corporate news, B&Q and Castorama owner Kingfisher was the top performer on the FTSE 100, having fallen heavily on Monday on the back of French DIY sales data.

Oil and gas exploration company Energean was the top gainer on the FTSE 250 after securing two new gas shale agreements for its flagship Karish project off Israel.

On the downside, housebuilder Redrow lost ground after it said full-year profits slumped 66% due to the coronavirus and associated lockdowns, although reservations were up in the first 11 weeks of the new fiscal year and it expected to resume dividend payments in 2021.

Trading platform Plus500 fell despite saying it was very confident about its outlook after momentum from the first half continued into the second half. Revenue has stayed strong supported by higher customer numbers and use of its platform is at "elevated levels", it said.

Supermarket retailer Morrisons was in the red after a downgrade to 'underweight' from 'neutral' at JPMorgan Cazenove.

Market Movers

FTSE 100 (UKX) 6,093.03 -0.20%
FTSE 250 (MCX) 17,782.22 -0.19%
techMARK (TASX) 3,881.40 -0.29%

FTSE 100 - Risers

Kingfisher (KGF) 284.40p 3.99%
JD Sports Fashion (JD.) 815.60p 1.72%
Intermediate Capital Group (ICP) 1,275.00p 1.67%
M&G (MNG) 160.20p 1.55%
Fresnillo (FRES) 1,313.50p 1.35%
Associated British Foods (ABF) 2,011.00p 1.06%
Ferguson (FERG) 7,504.00p 1.05%
Avast (AVST) 534.50p 1.04%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,504.00p 0.97%
Johnson Matthey (JMAT) 2,649.00p 0.95%

FTSE 100 - Fallers

Taylor Wimpey (TW.) 110.60p -2.73%
Rolls-Royce Holdings (RR.) 199.30p -1.97%
International Consolidated Airlines Group SA (CDI) (IAG) 131.00p -1.80%
HSBC Holdings (HSBA) 318.05p -1.47%
Morrison (Wm) Supermarkets (MRW) 175.50p -1.46%
Rio Tinto (RIO) 5,070.00p -1.27%
InterContinental Hotels Group (IHG) 4,373.00p -1.26%
Whitbread (WTB) 2,231.00p -1.24%
Melrose Industries (MRO) 123.65p -1.24%
BT Group (BT.A) 110.65p -1.21%

FTSE 250 - Risers

Energean (ENOG) 558.80p 6.89%
Weir Group (WEIR) 1,344.00p 3.58%
4Imprint Group (FOUR) 2,075.00p 2.98%
TI Fluid Systems (TIFS) 158.08p 1.99%
Henderson Smaller Companies Inv Trust (HSL) 780.00p 1.56%
Dunelm Group (DNLM) 1,417.00p 1.50%
Spirent Communications (SPT) 290.50p 1.40%
Avon Rubber (AVON) 4,275.00p 1.30%
Hochschild Mining (HOC) 239.40p 1.27%
Grafton Group Ut (GFTU) 734.50p 1.24%

FTSE 250 - Fallers

Hammerson (HMSO) 24.24p -4.42%
Liontrust Asset Management (LIO) 1,300.00p -3.70%
Equiniti Group (EQN) 109.80p -3.51%
Carnival (CCL) 999.80p -3.35%
John Laing Group (JLG) 273.00p -2.57%
Hiscox Limited (DI) (HSX) 865.00p -2.52%
Dixons Carphone (DC.) 88.05p -2.44%
TUI AG Reg Shs (DI) (TUI) 330.10p -2.19%
Provident Financial (PFG) 221.20p -2.12%
SSP Group (SSPG) 213.20p -2.11%

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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