FTSE 100 Live: Double-digit UK inflation rate, factory gate prices jump 17.1%

UK inflation today hit a bigger-than-expected 10.1%, the highest annual rate in over 40 years.

July’s reading for the Consumer Price Index included an increase in the core figure to 6.2%, while the Retail Price Index used in setting rail fares surged to 12.3%.

Figures from the Office for National Statistics also showed the price of goods produced by UK factories rose 17.1% in the year, the highest rate since August 1977.

Read more on today’s inflation release.

FTSE 100 Live Wednesday

• Inflation hits 10.1%, higher than expected

• Persimmon reports robust trading, shares fall

• Balfour Beatty leads FTSE 250 after strong results

FTSE 100 down in closing trade with housebuilders falling after inflation hits 10.1%

Wednesday 17 August 2022 16:45 , Michael Hunter

Housebuilders were at the bottom of a falling FTSE 100 in closing trade as London stocks cooled after the rate of inflation in the UK reached double digits for the first time since the 1980s.

The consumer price index (CPI) for July came in at 10.1%, highlighting the challenge faced by policymakers the Bank of England who are raising interest rates to tame soaring prices while also facing a slowing economy. UK government bond yields rose sharply after the CPI data as investors dumped gilts as they assessed the implications of the numbers and the outlook for the UK economy.

The FTSE 100 was down 20 points at 7516.15 in closing trade, with housebuilders prominent among the biggest fallers. Persimmon dropped by the biggest margin on the index, losing 7.6% to 1708p. Barratt Developments was down almost 4% at 465p and Taylor Wimpey lost 3.6% to 119p.

New York stocks slip as retailers lose their shine

Wednesday 17 August 2022 15:00 , Michael Hunter

The S&P 500 fell in opening trade as sentiment toward retail stocks darkened after Target reported a sharp decline in quarterly earnings, interrupting a trend for better-looking results from the sector.

Wall Street’s broad index started the day 27 points lower at 4278.0. a slip of 0.7%. Target fell by almost 4%, just a day after robust numbers from fellow Main Street heavyweights Walmart and Home Depot led the market higher. Targets results also came after core US retail sales rose more strongly than expected, playing into growing market expectations of another 0.75% interest rate rise in September from the Federal Reserve, which would be the third in a row.

The US central bank will will release minutes from its last monetary policy meeting later in the session, offering fresh insight into its fight against inflation. The minutes are published at 7pm London time.

Poor Krispy Kreme results leave sour taste for investors

Wednesday 17 August 2022 14:04 , Simon Hunt

Disappointing Krispy Kreme results left a sour taste for Wall Street investors as the stock slid 8% in pre-market trading.

The firm posted second-quarter revenues of $375 million, over $10 million below its estimates for the quarter, while pre-tax profits also slipped behind expectations to reach $47 million.

The firm cut its revenue and profits guidance for the rest of the year, citing currency fluctuations and economic pressures facing consumers.

Persimmon says demand is still strong as profits slip to £440m

Wednesday 17 August 2022 13:15 , Simon Hunt

Rising selling prices for new homes helped housebuilder Persimmon offset the impact of inflation in the first half of the year as demand from buyers stayed strong.

The average selling price for a new home built by the company rose by £9,400 year-on-year, to almost £246,000 in the six months to June 30.

But said the rate of private sales fell 11% in the first seven weeks of the second half, compared with the previous year, when the end of Covid lockdowns sparked a sales bump.

Persimmon said “sales price inflation” was “currently mitigating the cost inflation the industry is experiencing”, which it said was “around 8% to 10%”.

It also pointed to the outlook for rising mortgage costs as well as the end of government policies to help people get onto the housing ladder, but stood by its profit guidance for the full-year. First half profits fell by 8% to £440 million.

Dean Finch, chief executive of Persimmon, said it was “mindful” of wider industry challenges such as the withdrawal of Help to Buy.

First-half completions fell due to delays in securing planning permission, though the company stood by its guidance for the year to complete between 14,500 and 15,000 homes for 2022.

Cineworld shares plunge after update on ‘lower admissions’

Wednesday 17 August 2022 12:28 , Simon Hunt

Cineworld shares collapsed 40% this morning after the chain delivered a car-crash trading update that blamed disappointing post-pandemic ticket sales on a lack of blockbuster releases.

The cinema operator said it was seeking new sources of liquidity to shore up its balance sheet which could result in “very significant dilution of existing equity interests” for shareholders.

Its update stated: “Lower levels of admissions are due to a limited film slate that is anticipated to continue until November 2022 and are expected to negatively impact trading.”

The firm, which also owns the Picturehouse cinema chain in the UK and the Regal chain in the US, has seen its net debt swell to £7.4 billion as months of lockdowns and pandemic restrictions forced the company to secure more loans to stay afloat. In March, the company warned it would not have enough liquidity to pay a potential multi-million-dollar fine relating to a legal dispute with Canadian chain Cineplex.

The global film industry has released fewer films in recent months as it struggles after pandemic restrictions suspended the production of several major films. Avatar 2 is not set to premier until December 2022 after Covid-related issues delayed its release by over a year.

Asos finance chief to step down in latest boardroom change

Wednesday 17 August 2022 11:32 , Simon Hunt

The finance chief at fast fashion brand Asos has become the latest boardroom departure from the troubled retailer.

Mat Dunn, who also holds the role of chief operating officer, is to step down at the end of the October but will stay on as an employee until the end of the year as the company “restructures” its executive line up.

In June Asos issued a profit warning, leading to an immediate 25% dip in its share price, and announced a new boss and chairman. José Antonio Ramos Calamonte took the post of CEO and Jørgen Lindemann became chairman.

Lindemann today said Dunn had worked “tirelessly” on the retailer’s “strategic progress”.

Boost for GSK as Zantac claimant steps away from trial

Wednesday 17 August 2022 11:02 , Simon Hunt

GSK came a step closer to victory in its legal battle over the health effects of its Zantac drug last night after the claimant in what was to be the first trial walked away from the case.

Lawyers for claimant Joseph Bayer — who had alleged Zantac increased the risk of developing cancer — said he will file a notice of voluntary dismissal for the trial.

“GSK welcomes this outcome and believes the dismissal of Mr Bayer’s case is the correct result. The overwhelming weight of the scientific evidence supports the conclusion that there is no increased cancer risk,” the company said.

GSK is set to defend up to 3,000 personal injury cases relating to the drug.

Balfour Beatty shares jump 8% after results, FTSE 250 lower

Wednesday 17 August 2022 10:24 , Graeme Evans

Balfour Beatty shares jumped a further 8% today as the HS2 infrastructure firm hailed a “favourable outlook” across its key markets.

Alongside a 42% rise in underlying half-year profits to £85 million, Balfour boss Leo Quinn reported a 10% increase in the order book to £17.7 billion as governments in the UK, US and Hong Kong boost spending on major projects.

Balfour’s portfolio of work includes HS2 rail schemes in Warwickshire and at Old Oak Common, as well the Hinkley Point nuclear power station and Thames Tideway tunnel. It recently won a £50 million contract for upgrades on London Underground's Piccadilly line.

The FTSE 250-listed shares jumped 24.2p towards a multi-year high of 313.4p, buoyed by Quinn’s promise of significant shareholder returns in 2023 and today’s 17% increase in interim dividend.

Shares stood at 215p in March but analysts at UBS see the potential to reach 375p given the strong outlook.

Balfour provided the stand-out performance in the FTSE 250 index, which declined 65.55 points to 20,270.86. Big fallers included ASOS, which slid 7% or 66p to 893.5p. Trading platform Plus500 also declined 22p to 1679p after a big increase in half-year profits was offset by a drop in its number of active customer numbers.

The FTSE 100 index fell 16.24 points to 7519.82, partly due to profit taking in the mining sector after yesterday’s strong performance.

Ladbrokes owner Entain topped the fallers board with a decline of 4% or 52p to 1354p amid weakness across the gaming sector. Financial stocks attracted buying interest, however, as Lloyds Banking Group and NatWest both rose 1%.

FTSE 100 flat, Balfour Beatty jumps 10%

Wednesday 17 August 2022 09:05 , Graeme Evans

The FTSE 100 index is flat at 7534, with one of the factors being profit taking in the mining sector after yesterday’s strong performance.

Ladbrokes owner Entain topped the fallers board with a decline of 3% or 45p to 1361.5p and there was further selling pressure on GSK and consumer healthcare firm Haleon after their shares declined another 2%.

Retailers attracted buying interest as JD Sports Fashion, B&M European Value Retail and B&Q owner Kingfisher all lifted by more than 1%.

The FTSE 250 index edged up 19.98 points to 20,356.39, led by Balfour Beatty after the infrastructure firm upgraded its full-year guidance and lifted its interim dividend by 17% to 3.5p a share. The stock jumped 28.4p to 317.6p.

Persimmon shares fall despite robust trading

Wednesday 17 August 2022 08:54 , Graeme Evans

Persimmon’s robust half-year results failed to lift the housebuilder’s shares today, with the FTSE 100-listed stock down 8.5p to 1840.5p.

The company had been above 2500p at the start of the year but expectations of a slower housing market and rising costs have dampened investor sentiment across the sector.

Today’s figures were skewed by strong comparators from the year before, meaning lower first half revenues of £1.69 billion and profits down from £480.1 million to £439.7 million.

But the housing gross margin edged up to 31% despite the inflationary pressures and demand remains strong, with the group's average private sales rate around 1% ahead year-on-year. It reported a robust forward order book of £2.32 billion.

Richard Hunter, head of markets at Interactive Investor, said: “The housebuilding sector is deeply out of favour with investors at the moment, even though its constituents continue to make hay while the sun shines, and Persimmon is no exception.”

Peak inflation still to come, September rates rise seen

Wednesday 17 August 2022 08:26 , Graeme Evans

The peak for UK inflation is still to come as further increases in household energy bills mean the annual rate is likely to head above 12% from October.

But ING economist James Smith is hopeful that core inflation might have peaked - or is close to peaking - now that goods price pressures are easing.

He expects the headline rate to dip back below 10% in next month’s release following a near-7% fall in average petrol/diesel prices, which came too late to affect the July figure.

Smith sees another half point rise in interest rates in September and possibly another hike in November, though this heavily depends on the fiscal response from the new prime minister in September.

He added: “it is wage pressures that will heavily influence the Bank of England’s decision-making over coming months.

“Wages (at least in nominal terms) have decent momentum right now, but there’s a lot of uncertainty over how far labour demand is falling, and how much labour supply is improving.”

Retail relief for Wall Street, FTSE 100 seen higher

Wednesday 17 August 2022 07:55 , Graeme Evans

Retailers Walmart and Home Depot boosted Wall Street as their quarterly results helped the S&P 500 index into positive territory.

Home Depot shares jumped 4% as it beat earnings expectations and stuck by previous outlook guidance, while Walmart rose 5% as its figures proved to be better-than-feared after last month’s profits warning.

The focus on US consumer spending continues today, with earnings due from Target and Lowe’s alongside official retail sales data for July.

Ahead of these releases, US futures are pointing slightly higher and the FTSE 100 index is forecast by CMC Markets to open 24 points higher at 7,560.

London’s top flight added 0.4% yesterday, aided by big gains in the mining sector after BHP reported its highest-ever full-year profit and pledged to distribute the equivalent of 77% of its underlying earnings through dividends.

After Europe’s close, the release of US Federal Reserve meeting minutes will be closely watched for clues as to where policymakers see the “neutral” level for interest rates after their decision to raise rates by 0.75% to between 2.25% and 2.5%.

The Reserve Bank of New Zealand this morning raised rates by another half a percentage point to a seven year-high of 3%.