Rosy Valentines Inflation Print Lifts UK Benchmarks


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On Wednesday, UK stocks rose as lower-than-expected domestic inflation numbers raised investor optimism for a potential early interest rate cut by the Bank of England. The FTSE 100 and FTSE 250 both increased. Data revealed that British consumer price inflation remained at 4.0% in January, the same as in December, defying expectations of a rise to 4.2%. This led to speculation that it could prompt the BoE to begin reducing borrowing costs from their 16-year high. The pound weakened against the dollar following the release of the data, which boosted stocks on the export-heavy FTSE 100. The currency was down by nearly 0.3% at the time.

Money markets are now expecting approximately 68 basis points of interest rate cuts from the BoE this year, up from about 58 bps before the data. The rate-sensitive homebuilders index gained 2.3%, leading the sectoral advancers. This follows hotter-than-expected U.S. inflation and a stronger domestic labour market, which forced investors to temper their rate cut bets, leading to a decline in UK stocks on Tuesday. Base and precious metal miners were the laggards, each down around 1%, tracking weaker gold.

On the positive side of the ledger Coca-Cola HBC, the bottler, tops the FTSE 100 index after reporting a record annual profit. The company's shares are up 5% at 2,317p and it expects its profit to continue growing in 2024. The annual profit reached 1.08 billion euros ($1.16 billion), up 17.7%. The company anticipates a growth in comparable operating profit between 3% and 9% in 2024, driven by strong demand for its sparkling drinks, coffee, and energy drinks, as well as easing cost pressures. Despite a 5% year-to-date decrease in stock value, it remains the top percentage gainer on the FTSE 100 index.

On the negative side of the ledger Anglo American, is the top loser on the FTSE 100 index as Citi projects a decrease in full-year operating profit. The company's shares fell by 2.5% to 1,712p, making it the top percentage loser on the index. Citi has reduced the target price to 2,600p from 2,700p but maintains a "Buy" rating. The brokerage anticipates a decline in 2023 earnings before interest, taxes, depreciation, and amortisation (EBITDA), with potential losses in diamonds as a significant earning drag. Out of 22 analysts, ten rate the stock as 'Hold', with a median target price of 2,100p according to LSEG data. The stock is currently down 10.8% year-to-date.

FTSE Bias: Bullish Above Bearish below 7650

  • Above7710 opens 7825
  • Primary resistance at7708
  • Primary objective 7343
  • 5 Day VWAP bearish
  • 20 Day VWAP bearsih

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