London midday: Stocks maintain gains as pound slides on inflation data
London stocks were maintaining gains by midday on Wednesday as stalling inflation piled more pressure on the pound, while updates from airline EasyJet and miner BHP Billiton lent a hand.
The FTSE 100 was up 0.6% to 7,675.40, while sterling slid 0.7% against the dollar to 1.3028, hitting its lowest level since October, and 0.3% versus the euro at 1.1215 after data from the Office for National Statistics showed the consumer prices index rose 2.4% year-on-year in June, coming in below expectations of 2.6% and unchanged from May.
Core inflation, which strips out fuel and food, was 1.9% against 2.1% last month. That was also below expectations; some analysts had predicted it would remain unchanged while others had even pencilled in a slight increase.
The downside surprise to core inflation entirely reflected a slump in core goods inflation to 1.3%, from 1.7% in May. Clothing retailers, in particular, cut prices more than usual for this year's summer sales, while food price inflation dropped to 2.0%, from 2.3% in May.
London Capital Group analyst Jasper Lawler said: "Even though UK inflation remains above the Bank of England’s target of 2%, the disappointment in the latest reading suggests that the inflationary pressures are easing off. This data on top of sluggish wages could easily give MPC members sitting on the fence enough evidence to hold interest rates unchanged in August."
"That said, we still think (Bank of England) chief economist Andy Haldane holds his nerve and votes for a hike again. It seems every time the Bank of England peer through an open window of opportunity to lift UK rates, economic and political headwinds blow it shut again."
The pound had been under pressure before the inflation release as Theresa May battled to keep her government together amid various important Brexit votes in the House of Commons.
Overnight, Brexiteers forced May to accept an amendment to her plans for a softer Brexit that commentators say will make it even more difficult for the European Union to accept her proposed customs arrangement. Confusingly the government lost to the Brexiters by winning the Commons vote 305 to 302.
In company news, EasyJet took off on the back of third-quarter revenues rising 14% to £1.6bn, as passenger numbers grew 9.3%. The budget carrier upped full-year profits guidance to £550-590m, from the previous £530-580m. British Airways owner IAG was lifted in its wake.
Miner BHP Billiton was up after revealing fourth-quarter iron ore production rose 3% and raising 2019 guidance to +3%.
Building materials group CRH gave its shares a boost as it sold off its DIY business in the Netherlands and Belgium for €510m.
Going the other way, Ladbrokes owner GVC Holdings fell despite announcing a not-unsurprising boost from the World Cup in recent weeks that helped growth accelerate in the third quarter. Helped by 11% growth in the second quarter, group net gaming revenue grew 8% in the first half.
Smiths Group tumbled despite reporting a return to growth with underlying revenue for the 11 months to 30 June up 3%. All divisions were expected to be in-line with full-year expectations, except for a fall for Smiths Medical amid a suspension of some products ahead of new EU 2020 regulations.
Plastics manufacturer RPC also slumped as it revealed revenue from continuing operations for its first quarter was up 5.8%, benefitting from the contribution from Astrapak, polymer price tailwinds and organic growth of 2.0%. This is down from revenue growth of 33% last year, when organic growth was 2.8%.
Shares in water and waste company Severn Trent leaked slightly lower as it reiterated full-year guidance, with no material change to business performance or outlook.
Market Movers
FTSE 100 (UKX) 7,675.40 0.64%
FTSE 250 (MCX) 20,977.61 0.51%
techMARK (TASX) 3,605.72 0.72%
FTSE 100 - Risers
BHP Billiton (BLT) 1,659.80p 2.20%
CRH (CRH) 2,739.00p 2.20%
Scottish Mortgage Inv Trust (SMT) 560.50p 2.19%
InterContinental Hotels Group (IHG) 4,989.00p 2.17%
Halma (HLMA) 1,393.00p 1.98%
Kingfisher (KGF) 315.10p 1.91%
Schroders (SDR) 3,240.00p 1.89%
AstraZeneca (AZN) 5,654.00p 1.86%
Croda International (CRDA) 5,052.00p 1.79%
Ashtead Group (AHT) 2,399.00p 1.70%
FTSE 100 - Fallers
Smiths Group (SMIN) 1,600.82p -8.50%
Royal Mail (RMG) 462.50p -5.52%
GVC Holdings (GVC) 1,079.00p -2.53%
RSA Insurance Group (RSA) 636.00p -0.63%
Sainsbury (J) (SBRY) 326.60p -0.61%
Barclays (BARC) 187.34p -0.54%
BT Group (BT.A) 218.37p -0.54%
National Grid (NG.) 841.30p -0.47%
Severn Trent (SVT) 1,889.00p -0.45%
Centrica (CNA) 155.05p -0.42%
FTSE 250 - Risers
Hilton Food Group (HFG) 990.00p 4.21%
Go-Ahead Group (GOG) 1,525.00p 4.10%
FirstGroup (FGP) 90.46p 3.98%
Vietnam Enterprise Investments (DI) (VEIL) 421.00p 3.69%
Equiniti Group (EQN) 218.00p 3.56%
Alfa Financial Software Holdings (ALFA) 172.40p 3.48%
NewRiver REIT (NRR) 283.00p 3.47%
Hunting (HTG) 767.50p 3.30%
Inmarsat (ISAT) 545.28p 3.12%
Centamin (DI) (CEY) 120.65p 3.08%
FTSE 250 - Fallers
RPC Group (RPC) 735.60p -5.08%
Premier Oil (PMO) 122.30p -2.00%
Hikma Pharmaceuticals (HIK) 1,452.00p -1.89%
Dairy Crest Group (DCG) 475.40p -1.82%
TalkTalk Telecom Group (TALK) 117.00p -1.43%
Tullow Oil (TLW) 216.10p -1.32%
Millennium & Copthorne Hotels (MLC) 543.00p -1.27%
Clarkson (CKN) 2,420.00p -1.22%
Galliford Try (GFRD) 856.00p -1.21%
John Laing Group (JLG) 281.40p -1.19%