Stocks gain in London as positive US inflation report boosts market confidence across Europe and the US.
The FTSE 100 experienced a strong rebound on Tuesday, climbing 56.92 points, or 0.76%, to close at 7,502.89, driven by positive US inflation figures that spurred optimism among global traders. The latest data from the US Consumer Price Index (CPI) revealed a lower-than-expected inflation rate of 7.1% in November, primarily influenced by a decline in gasoline prices. This outcome provided hope that aggressive interest rate hikes in the US and other major markets could soon ease.
Joshua Mahoney, Senior Market Analyst at IG, noted that global markets were given a much-needed boost by the CPI figures, which showed a broader decline in inflation beyond the volatile energy sector. He highlighted that while house rents were the only area still showing upward pressure, the overall results offered reassurance to investors.
Michael Hewson, Chief Market Analyst at CMC Markets UK, commented on the widespread market gains, especially among online retailers like Ocado and German-based Zalando, which saw significant stock price increases. In addition, the positive sentiment extended across Europe, with the German DAX rising 1.34% and the French CAC climbing 1.42%, reaching their highest levels in about six months.
In the US, the inflation report led to a surge in major stock markets and a weakening of the US dollar. This also benefitted the British pound, which rose 0.95% against the dollar to 1.237, while holding steady against the euro at 1.163.
In company news, shares of outsourcing firm Capita saw an uptick after reporting growth in revenues, particularly from its contract with the Royal Navy. Capita’s shares climbed 2.02p to 25p as it reduced debt by shedding parts of its business.
Meanwhile, Rolls-Royce saw a dip in its share price after being placed on negative catalyst watch by JP Morgan, with shares falling by 2.23p to 90.61p ahead of a leadership change. EasyJet, the FTSE 250 airline group, also saw a drop in value following downgrades from both Oddo BHF and Deutsche Bank, as concerns about rising costs and consumer pressure weighed on its outlook.
Oil prices also gained momentum, supported by the weakened dollar, despite OPEC’s lowered guidance for Q4 2022. Brent crude increased by 3.86% to $80.96 per barrel at the close of the London markets.
Among the top performers on the FTSE 100 were Intermediate Capital Group (+66p), Ocado (+30.6p), and Antofagasta (+58p). The biggest losers of the day included Rolls-Royce, Imperial Brands, Centrica, BAT, and Pearson.
