London close: Stocks end higher, but traders wary ahead of US CPI data
London stocks finished in the black tracking a late rebound on Wall Street at the end of last week, but worries remained about rising inflation and higher interest rates, with an upcoming release on consumer prices in the US the main talking point in markets.
The FTSE 100 was up 1.2% to 7,177.06 at the close of trading, with just eleven stocks ending the session in the red, while the pound was roughly unchanged against the US dollar at 1.3818 and 0.24% lower versus the euro at 1.1261.
Chris Beauchamp, chief market analyst at IG, said: "As noted on Friday, the kind of dip we have seen usually ends well over a longer-term time frame, for example six months, and indeed the next five days may also see a bounce, but previous sell-offs have faltered within a month, and it is this medium term view that should worry them. The worst may not yet be over."
Back in the UK, with interest rates and inflation at the forefront of investors' minds, comments from Bank of England policymaker Gertjan Vlieghe were a highlight on Monday, as he set out reasons why he was becoming increasingly hawkish over rates.
Speaking as a panellist at a Resolution Foundation event in London earlier, he said three rate hikes from the BoE would still leave some excess demand in the economy but he wanted to stress’ that there is "huge uncertainty" around the rate path, with rates possibly rising faster or more slowly.
Following the more hawkish turn from the Bank's monetary policy committee last week, deputy governor Vlieghe said there was "increased evidence that tight labour markets are finally starting to have some upward effect on wages".
For his part, in remarks published by the Newcastle Chronicle on Sunday, BoE chief economist Andy Haldane said: "We're in no rush, rates won't remotely go back to levels we've seen in the past, but nonetheless keeping the cost of living under control is, we think, the single best and most important thing we can do to help the economy."
On Tuesday, investors will be looking to the release of the latest UK inflation figures.
Acting as a backdrop, there was also a keen interest in Wednesday's US CPI report for January.
Commenting on the outlook for that key data point, Jim Reid at Deutsche Bank told clients: "This number has been slightly complicated as the BLS have recently made some seasonal adjustments. Before this, January's print (i.e. this week's number) had consistently exceeded expectations in the last 25 years and February's had consistently missed. So all a bit uncertain."
In corporate news, Wood Group rallied after saying it had won a new multi-million dollar, five-year contract to provide engineering and project management services on Saudi Aramco's Marjan oil field.
Shares of FTSE 250 over-50s travel and insurance group Saga also advanced after saying that it has signed a new reinsurance agreement with NewRe and Hannover Re and that trading continues to be in line with the guidance given in December 2017.
BGEO stock gained as it said its board has approved the demerger announced last July and that its investment business, Georgia Capital, plans to increase its stake in Bank of Georgia to 19.9%, up from the previously announced 9.9%.
Barclays on the other hand reversed an earlier advance to trade a little lower as it emerged that its core banking business was being charged by the Serious Fraud Office over its fundraising deal with Qatar at the height of the financial crisis, adding to the charge already brought against the parent holding company and four former executives.
Acacia Mining retreated 4%, but recovered from an early slump of nearly 15% as it scrapped its dividend and reported a drop in full-year earnings after it took a hit from an export ban by the Tanzanian government, while Euromoney slipped after announcing the sale of its Global Markets Intelligence unit for $180.5m in cash to a consortium.
In broker note action, Evraz was one of the best performers after an upgrade to 'buy' at Goldman Sachs, while oil giant BP was boosted by an upgrade at Societe Generale and Victrex was up after a double upgrade to 'buy' out of analysts at Bank of America- Merrill Lynch.
Cineworld was higher after an upgrade to 'buy' at Peel Hunt, but Moneysupermarket ticked down as it was cut to 'sector perform' by RBC Capital Markets.
FTSE 100 - Risers
Evraz (EVR) 353.60p 6.15%
NMC Health (NMC) 3,250.00p 4.50%
Shire Plc (SHP) 3,197.00p 3.97%
Rio Tinto (RIO) 3,895.50p 2.82%
Scottish Mortgage Inv Trust (SMT) 439.80p 2.76%
DCC (DCC) 6,900.00p 2.68%
Old Mutual (OML) 232.30p 2.52%
Anglo American (AAL) 1,642.40p 2.37%
Royal Dutch Shell 'B' (RDSB) 2,306.50p 2.35%
Smurfit Kappa Group (SKG) 2,442.00p 2.35%
FTSE 100 - Fallers
Severn Trent (SVT) 1,790.00p -1.68%
United Utilities Group (UU.) 685.80p -1.10%
Paddy Power Betfair (PPB) 8,080.00p -0.86%
SSE (SSE) 1,182.00p -0.63%
Barratt Developments (BDEV) 552.60p -0.25%
BT Group (BT.A) 230.40p -0.24%
Lloyds Banking Group (LLOY) 66.47p -0.12%
Taylor Wimpey (TW.) 184.25p -0.08%
National Grid (NG.) 748.90p -0.08%
Johnson Matthey (JMAT) 3,109.00p -0.03%
FTSE 250 - Risers
Ferrexpo (FXPO) 271.60p 4.06%
TalkTalk Telecom Group (TALK) 109.00p 3.81%
Saga (SAGA) 115.90p 3.67%
Wizz Air Holdings (WIZZ) 3,321.00p 3.52%
Aveva Group (AVV) 2,836.00p 3.35%
Polypipe Group (PLP) 386.40p 3.32%
Victrex plc (VCT) 2,504.00p 3.30%
F&C Global Smaller Companies (FCS) 1,315.00p 3.14%
Weir Group (WEIR) 2,034.00p 3.12%
Petrofac Ltd. (PFC) 420.80p 3.11%
FTSE 250 - Fallers
Stobart Group Ltd. (STOB) 249.00p -4.41%
Card Factory (CARD) 189.10p -3.96%
Acacia Mining (ACA) 165.25p -3.87%
Renewi (RWI) 93.70p -3.60%
BCA Marketplace (BCA) 166.20p -2.81%
Pennon Group (PNN) 632.80p -2.59%
Provident Financial (PFG) 664.80p -2.58%
Sophos Group (SOPH) 492.00p -2.57%
Capita (CPI) 191.15p -2.07%
Tate & Lyle (TATE) 571.40p -1.82%