By Chris Dorrell
London’s FTSE indexes were treading water early on Wednesday after yesterday’s rally, with investors nervy ahead of key US inflation data tomorrow.
The FTSE 100 was trading slightly higher early on Wednesday at 7,631.85 while the FTSE 250 fell 0.3 per cent to 17,911.22. Markets in Paris and Frankfurt were also trading lower.
The weaker performance this morning came after the strongest day for equities in 11 months.
Markets surged after comments from Fed officials on Monday suggested that the US central bank might not hike rates again this year. But the key data US consumer price index data is out tomorrow which may complicate that narrative.
“The surge of optimism, fuelled by hopes the Fed will go easier with its interest rate policies and buoyed by expectations of fresh stimulus in China, appears to have plateaued. A little more caution is returning, as investors look ahead to tomorrow’s snapshot of inflation in the United States,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, said.
“Investors are highly sensitive to data and if US inflation shows any signs of tripping up in its downwards path, it is set to be unsettling and could upset expectations of a more dovish stance from the Fed,” Streeter added.
On the FTSE, Shell and BP climbed as oil prices picked up again following Hamas’ assault on Israel. Although Israel is not an oil producing nation, there are concerns that supply routes will be affected by the conflict.
At the other end of the FTSE, luxury fashion Burberry stock dropped 3.6 per cent.
This came after a weak set of results from luxury French conglomerate LVMH yesterday. Stumbling demand led to lower drinks sales and its shares were trading over six per cent lower today.
On the FTSE 250, construction firm Travis Perkins slumped nearly nine per cent after slashing its profit guidance for the year. In the third quarter group revenue for the firm declined by 1.8 per cent and like-for-like sales were also down by the same amount.
The company blamed the UK’s volatile housing market for the fall, as a period of elevated mortgage rates and wage stagnation has led to a slow down in the number of homes being bought.
