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LONDON MARKET OPEN: London on the up early ahead of US inflation data

London Stocks started strong on Wednesday, with strong results from Experian offsetting a poor performance at Burberry, as investors await the afternoon’s US consumer price index reading.

Amongst individual stocks, Experian jumped as shareholders celebrated higher revenue and profit. Burberry fell, however, as it warned of a tough start to its new financial year.

The FTSE 100 index opened up 40.31 points, 0.5%, at 8,468.44. The FTSE 250 was up 83.64 points, 0.4%, at 20,702.16, and the AIM All-Share was up 0.75 of a point, 0.1%, at 790.48.

The Cboe UK 100 was up 0.4% at 845.66, the Cboe UK 250 was up 0.6% at 18,012.17, and the Cboe Small Companies was up marginally at 16,127.40.

In European equities on Wednesday, the CAC 40 in Paris was up 0.1%, while the DAX 40 in Frankfurt was up 0.2%.

Stocks in Europe were in the green on Wednesday morning, a sign of cautious optimism ahead of a key US inflation print.

In the US on Tuesday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.3%, the S&P 500 up 0.5% and the Nasdaq Composite up 0.8%.

Eyes are firmly on Wednesday’s consumer price index data at 1330 BST. This is the main focal point for investors this week.

According to FXStreet-cited consensus, consumer prices are expected to have risen 3.4% annually in April, cooling slightly from 3.5% in March.

‘All eyes are on the US CPI update today. Both headline and core inflation are expected to have moderated last month. If that’s the case, the risk rally will likely continue,’ said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

On Tuesday, data showed that US producer price inflation picked up in April, as expected. US producer prices rose by 2.2% on-year in April, in line with expectations, after a 1.8% climb in March.

On a monthly basis, prices rose by 0.5% in April from March, following a 0.1% fall in March from February and beating expectations of a 0.3% rise.

The pound was quoted at $1.2596 early on Wednesday in London, higher compared to $1.2582 at the equities close on Tuesday. The euro stood at $1.0828, up against $1.0818. Against the yen, the dollar was trading at JP¥156.07, lower compared to JP¥156.41.

In the FTSE 100, Experian grabbed the spotlight, jumping 6.3%.

Experian reported that revenue rose to $7.10 billion in the year ended March 31, from $6.62 billion a year earlier. Pretax profit jumped to $1.55 billion from $1.17 billion.

On the back of the results, Experian upped its full year dividend to 58.50 US cents from 54.75 cents.

On the other hand, Burberry lost 3.8%, with financial results underperforming original expectations.

The luxury retailer reported that revenue fell to £2.97 billion in the year ended March 30 from £3.09 billion a year earlier. Pretax profit plummeted to £383 million from £634 million.

Burberry left its dividend unchanged at 61.0p.

Looking ahead, Burberry said it expects trade in the first half of financial 2025 to ‘remain challenging’.

In the FTSE 250, Hunting rose 14%.

The London-based maker of parts and technology systems for the oil and gas sector said it has secured a ‘record’ $145 million oil country tubular goods order with the Kuwait Oil Co. It noted that revenue is expected to be recognised late into the fourth quarter of 2024 and into 2025.

Given the timing of this order, Hunting now expects earnings before interest, tax, depreciation and amortisation to be towards the top end of its current guidance of $125 to $135 million for 2024.

Keller jumped 8.6%.

The London-based geotechnical engineering firm said that in the first fourth months of 2024, its ‘strong momentum’ continued. It noted that overall performance was materially ahead of prior year.

‘This momentum, combined with a strong order book and recent contract wins, gives us good visibility and enhanced confidence in performance for the remainder of the year. Accordingly, we now anticipate full year performance to be materially ahead of the board’s original expectations,’ Keller added.

In Asia on Wednesday, the Nikkei 225 index in Tokyo was up 0.1%. In China, the Shanghai Composite was down 0.8%, while the Hang Seng index in Hong Kong was down 0.2%. The S&P/ASX 200 in Sydney closed up 0.4%.

Brent oil was quoted at $82.71 a barrel early in London on Wednesday, up from $82.25 late Tuesday. Gold was quoted at $2,362.40 an ounce, higher against USDD2,351.24.

Before the US inflation data, Wednesday’s economic calendar has a eurozone gross domestic product reading at 1000 BST.

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