London open: Stocks rise as inflation jumps past BoE target

Sharecast
Opening Market Report
07:02, 16th June 2021

(Sharecast News) - London stocks rose in early trade 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.
At 0835 BST, the FTSE 100 was up 0.5% at 7,205.86.

Figures released earlier 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 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.

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

"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."

After the European close, all eyes will be on the latest policy announcement from the US Federal Reserve.

Richard Hunter, head of markets at Interactive Investor, said investors are on high alert for any changes in outlook.

"The accompanying comments from the Fed meeting will be closely scrutinised, with further evidence of a strengthening recovery and inflationary pressures guiding the next steps. At some point, there will need to be a signal that the currently easy monetary conditions will be scaled back. The expectation is that the subject of tapering some of the relief has at least made its way to the table for discussion, if not immediate action.

"This will follow on from the latest set of data, showing another spike in wholesale inflation and a drop in retail sales which was more than anticipated. The increasing success of the vaccination programme and therefore the mobility of the population is being reflected in a move towards spending on services and away from goods, as consumers look to spend in public rather than in private."

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

On the downside, telecommunications company Helios Towers slumped after a share placing.

Hipgnosis lost ground 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) 7,205.86 0.47%
FTSE 250 (MCX) 22,714.56 0.37%
techMARK (TASX) 4,480.63 0.34%

FTSE 100 - Risers

NATWEST GROUP PLC ORD 100P (NWG) 209.80p 1.84%
Prudential (PRU) 1,525.00p 1.57%
Mondi (MNDI) 1,968.50p 1.55%
M&G (MNG) 248.10p 1.47%
Berkeley Group Holdings (The) (BKG) 4,634.00p 1.27%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,544.00p 1.25%
Kingfisher (KGF) 351.40p 1.24%
Bunzl (BNZL) 2,330.00p 1.13%
Royal Mail (RMG) 597.60p 1.12%
Rolls-Royce Holdings (RR.) 109.20p 1.11%

FTSE 100 - Fallers

Glencore (GLEN) 315.80p -1.62%
Anglo American (AAL) 2,968.50p -1.02%
Associated British Foods (ABF) 2,345.00p -0.93%
British American Tobacco (BATS) 2,825.50p -0.70%
Imperial Brands (IMB) 1,607.00p -0.50%
Vodafone Group (VOD) 131.50p -0.38%
BHP Group (BHP) 2,123.50p -0.35%
Scottish Mortgage Inv Trust (SMT) 1,231.00p -0.28%
Antofagasta (ANTO) 1,465.00p -0.24%
Ocado Group (OCDO) 1,885.50p -0.21%

FTSE 250 - Risers

Network International Holdings (NETW) 384.10p 2.18%
Clarkson (CKN) 3,150.00p 1.78%
Direct Line Insurance Group (DLG) 300.50p 1.59%
Mitie Group (MTO) 75.30p 1.48%
Schroder Oriental Income Fund Ltd. (SOI) 278.00p 1.46%
Vistry Group (VTY) 1,264.50p 1.44%
Syncona Limited NPV (SYNC) 213.50p 1.43%
Scottish American Inv Company (SAIN) 499.00p 1.42%
Avon Rubber (AVON) 2,758.00p 1.32%
Lancashire Holdings Limited (LRE) 628.00p 1.29%

FTSE 250 - Fallers

Helios Towers (HTWS) 164.20p -4.65%
Cineworld Group (CINE) 86.12p -2.14%
Hipgnosis Songs Fund Limited NPV (SONG) 122.00p -1.61%
Ferrexpo (FXPO) 446.40p -1.41%
Wetherspoon (J.D.) (JDW) 1,236.00p -0.96%
Restaurant Group (RTN) 124.40p -0.96%
Softcat (SCT) 1,765.00p -0.84%
Oxford Biomedica (OXB) 1,300.00p -0.76%
Wickes Group (WIX) 252.60p -0.71%
Oxford Instruments (OXIG) 2,230.00p -0.67%

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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