London closed: Shares weaker forward of Fed and Financial institution of England choices

London closed: Stocks weaker ahead of Fed and Bank of England decisions

London shares were still below the waterline as of Wednesday’s close amid investor caution ahead of the much-anticipated Fed rate decision across the pond later in the global day.

The FTSE100 ended the session down 0.09% at 7,495.93 and the FTSE250 was down 0.25% to 19,037.92.

Sterling, meanwhile, has been in the green and was last up 0.36% against the dollar to $1.2411, while gaining 0.15% against the euro to trade at €1.1646.

“European markets endured a rather dovish session ahead of today’s Fed rate decision, where the consensus is that we will see a 50 basis point rate hike as inflationary pressures ease,” said Michael Hewson, chief market analyst at CMC Markets.

“There is concern that Powell could well issue a hawkish statement to push back market expectations of an impending softening of the Fed’s position to reset market optimism, which in turn could pressure markets overnight.

“It will be an important 24 hours for equity markets as the Federal Reserve looks to set the tone ahead of tomorrow’s Bank of England and European Central Bank interest rate meetings, at which we also expect rate hikes of 50 basis points.”

In terms of economic news, UK inflation fell to 10.7% last month, according to official figures, as transport costs fell.

The Office for National Statistics said the consumer price index rose 10.7% in the 12 months to November, down from a 41-year high of 11.1% in October and below consensus expectations of 10.9% .

The largest downward contributor came from transportation after fuel and used car prices fell, along with declines in tobacco, clothing and shoes, and games, toys and hobbies.

However, this was partially offset by price increases for alcohol in restaurants, cafes and pubs.

Including owner-occupier housing costs, the CPIH rose 9.3% in November compared to 9.6% in October, while the core CPI – which excludes the more volatile items food, energy, alcohol and tobacco – rose to 6.5% from 6.5%. 3% dropped. in the year to October.

Analysts had not expected any change in the core CPI.

The Bank of England previously said it expects inflation to peak in late 2022 before declining steadily throughout 2023.

Interest rates are now at 3.0% after a series of hikes throughout the year, and most economists expect another hike when the monetary policy committee meets on Thursday.

Samuel Tombs, UK chief economist at Pantheon Macroeconomics, noted that the decline in CPI would “relieve” policymakers at the Bank of England after October’s release beat their expectations by 0.2 percentage point, adding that the Peak rate now “fixed” in the past.

“This looks like a real slowdown in price increases, similar to what happened recently in the US and the Eurozone.

“Looking ahead, CPI should continue to decline in the coming months, helped by the recent drop in oil prices.”

Elsewhere, house prices in the UK skyrocketed in October, hitting new highs, according to the ONS.

Average house prices in the UK for the year to October rose 12.6% compared with 9.9% in September, although much of the percentage change was due to favorable comparatives.

Prices fell sharply in October 2021 after the stamp duty threshold fell back to £125,000 at the end of September.

The ONS noted that house prices were also “slightly inflated” last September as buyers rushed to complete their purchases ahead of the tax change, with prices falling 2.0% between September and October 2021.

The average house price in the UK stood at a record £296,000 in October this year, which was £33,000 higher than the same month last year but just 0.3% higher than the previous month.

Seasonally adjusted, prices rose by 0.7% month-on-month.

“Official measures of house prices continued to rise in October because they are based on completed transactions, which in turn depend on mortgage offers made a few months earlier,” said Gabriella Dickens, senior UK economist at Pantheon Macroeconomics.

“Previous measures suggest that the official measure of house prices will start falling by the end of this year.

“Granted, mortgage rates have started falling from the October highs, but only at an icy pace.”

On the continent, official euro-zone data showed that industrial production fell sharply across the common currency area in October.

According to Eurostat, seasonally adjusted industrial production fell by 2.0% in October, compared with a downwardly revised increase of 0.8% in September.

Consensus had been for a 1.5% contraction.

Meanwhile, in the broader bloc of 27, industrial production fell 1.9%, reversing September’s 0.7% gain.

Across the pond, US mortgage applications rose 3.2% for the week ended December 9, marking the first gain in three weeks and the highest increase since September.

According to the Mortgage Bankers Association of America, the purchasing index rose 4% month-over-month, while the refinancing index rose 2.8%.

The move came as the 30-year mortgage rate rose a basis point to 6.42%, but held steady at levels not seen in about three months.

“The ongoing slowdown in home price growth, coupled with a further fall in mortgage rates, could encourage more buyers to return to the market in the coming months,” said MBA economist Joel Kan.

Finally, on the economic front, the latest estimates from the International Energy Agency (IEA) have forecast an increase in oil demand with possible price hikes in the event of supply disruptions.

The IEA raised its 2022 production forecast by 140,000 barrels per day to 2.3 million.

It said a rebound in Chinese oil demand after a 400,000 barrels per day drop in 2022 would boost global demand by 1.7 million barrels to a total of 101.6 million barrels per day.

“As we move through the winter months and towards a tighter oil balance in the second quarter of 2023, further price recovery cannot be ruled out,” the IEA said.

Holiday giant on the London stock markets TUI plummeted 7.99% after announcing it would raise money to pay back government support it received during the Covid-19 pandemic.

It also reported a return to full-year earnings, saying underlying earnings would rise significantly in 2023 despite market uncertainty.

Swiss Group Watches was down 5.32% even after it confirmed its full-year guidance and reported an increase in first-half profit and revenue on solid demand.

BA and Iberia holders IAG and low-cost carriers WizzAir fell 2.93% and 7.72% respectively after a US domestic markets sales warning JetBlue Airways.

house builder Taylor Wimpey And redraw were knocked down 1.87% and 3.26% respectively by rating downgrades at JPMorgan Cazenove, while Miner Rio Tinto Group fell 2.18% after a downgrade to underweight from JPMorgan.

evolutionary group previous earnings down 0.43% even after group revenue for the four months ended November 30 rose 7% on a combination of volume and price increases, with all three geographies growing organically.

On the top, BT group rose 2.06% after Nokia announced it was expanding its partnership with the telecoms giant to a five-year deal for its fixed-line AVA analytics software.

Reporting by Josh White for Additional reporting by Michele Maatouk, Frank Prenesti, Abigail Townsend and Iain Gilbert.

market mover

FTSE 100 (UKX) 7,495.93 -0.09%
FTSE 250 (MCX) 19,037.92 -0.25%
techMARK (TASX) 4,431.50 0.08%

FTSE 100 – risers

BT group (BT.A) 116.25 p 2.06%
Centric (NAC) 91.98p 1.61%
Admiral Group (ADM) 2,085.00p 1.61%
BAE Systems (BA.) 834.20p 1.61%
Compass Group (CPG) 1,925.00p 1.37%
British Land Company (BLND) 400.40p 1.29%
DCC (CDI) (DCC) 4,314.00 p 1.22%
National Network (NG) 1,027.50p 1.18%
Experian (EXPN) 2,984.00p 1.15%
Land Securities Group (LAND) 635.60 p 1.15%

FTSE 100 – Faller

Airtel Africa (AAF) 113.90 p -2.98%
International Consolidated Airlines Group SA (CDI) (IAG) 131.28p -2.93%
Anglo-American (AAL) 3,132.50 p -2.26%
Rio Tinto (RIO) 5,622.00p -2.18%
Taylor Wimpey (TW.) 102.25 p -1.87%
Ocado Group (OCDO) 688.60 p -1.63%
Antofagasta (ANTO) 1,459.50p -1.58%
Barratt Developments (BDEV) 403.60p -1.32%
Included (ENT) 1,395.50p -1.31%
F&C Investment Trust (FCIT) 910.00 p.p -1.30%

FTSE 250 – risers

Syncona Limited NPV (SYNC) 197.00p 5.12%
Hammerson (HMSO) 24.28p 4.07%
Ferrexpo (FXPO) 159.80p 3.70%
Telecom Plus (TEP) 2,295.00p 3.61%
Marshalls (MSLH) 290.60p 3.34%
UK Commercial Property Reit Limited (UKCM) 60.60p 3.24%
Morgan Advanced Materials (MGAM) 313.00p 2.96%
Hochschild Mining (HOC) 70.50p 2.84%
Assura (EGR) 56.50p 2.45%
Balanced Commercial Property Trust Limited (BCPT) 97.70 p 2.31%

FTSE 250 – Faller

TUI AG Reg Shs (DI) (TUI) 135.85p -7.99%
Wizz Air Holdings (WIZZ) 2,224.00 p -7.72%
Helios Towers (HTWS) 108.50p -6.87%
ASOS (ASC) 535.00p -5.81%
Moonpig Group (MOON) 112.50p -5.78%
Watches of the Switzerland Group (WOSG) 908.00p -5.32%
Petrofac Ltd. (PFC) 78.65p -4.95%
888 Holdings (DI) (888) 89.65p -4.53%
Dark Track (DARK) 292.10p -4.01%
Red Row (RDW) 457.00p -3.26%