London midday: FTSE stays up ahead of US inflation reading

(Sharecast News) - London stocks were still in the black by midday on Friday as investors digested a slew of UK data releases and looked ahead to a key US inflation reading. The FTSE 100 was up 0.3% at 8,407.82.

Joshua Mahony, chief market analyst at Scope Markets, said: "The US economic outlook comes back into focus today, following on from yesterday's improved GDP metric that allayed recent fears of a potential impending recession.

"Coming off the back of an impressive 9.9% core durable goods orders figure, yesterday's 3% GDP metric for the second quarter has helped eased calls for a 50-basis points cut next month. With Nvidia earnings out the way, traders will undoubtedly feel more confident as we move into a September than many expect to herald a widespread move towards monetary easing that should help boost economic growth and lift equity markets.

"For today, the big focus lies on the latest US core PCE price index release, with the trajectory of the Fed's favoured inflation metric helping to impact expectations for rates going forward. Currently standing at 2.6%, any additional disinflation that might come today would help further the case for a 50-basis point cut in September.

"Nonetheless, the trajectory for US inflation looks likely to remain somewhat flat for the rest of 2024, with the Fed having to cut rates despite above target price growth. For now markets can feel emboldened, but there is a risk that such expansive monetary policy could yet help rekindle inflation pressures."

On home shores, data from the Bank of England showed that approvals and borrowing for mortgages rose to their highest levels in nearly two years in July.

Net borrowing of mortgage debt by individuals increased to £2.8bn last month, the highest since November 2022, and up from £2.6bn in June.

Meanwhile, net mortgage approvals for house purchases, a closely watched indicator of future borrowing, jumped to 62,000 from 60,600 the month before, marking the highest level since September 2022.

The increases came despite interest rates remaining broadly stable over the month, at 4.81% on newly drawn mortgages, with July being the final month before the Bank of England eased monetary policy.

On 1 August, the central bank reduced the Bank Rate from 5.25% to 5.0%, marking the first reduction in rates since March 2020.

In other news, net consumer credit borrowing also increased in July, rising to £1.2bn from £0.9bn in June, while household deposits with banks and building societies rose by a net £5.7bn.

Earlier, figures from Nationwide showed that house prices unexpectedly dipped on the month in August, but rose at their fastest annual pace since December 2022.

On the month, prices were down 0.2% following a 0.3% increase in July, and versus expectations for a 0.2% increase.

On the year, house prices picked up 2.4% in August following a 2.1% gain the month before and versus expectations for a 2.9% jump. Prices are still around 3% below the all-time highs recorded in the summer of 2022, Nationwide said.

The average price of a home stood at £265,375 in August compared to £266,334 in July.

Nationwide chief economist Robert Gardner said: "While house price growth and activity remain subdued by historic standards, they nevertheless present a picture of resilience in the context of the higher interest rate environment and where house prices remain high relative to average earnings (which makes raising a deposit more challenging).

"Providing the economy continues to recover steadily, as we expect, housing market activity is likely to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth."

Elsewhere, data from BRC-Sensormatic IQ showed that retail footfall across the UK experienced a slight decline of 0.4% year-on-year in August.

That represented a significant improvement from July's 3.3% drop, indicating a degree of resilience in the sector despite disruptions caused by riots earlier in the month.

There wasn't much happening on the equities front, but Burberry fell ahead of its expected demotion from the FTSE 100.

Rentokil was just higher despite JPMorgan placing the shares on "negative catalyst watch" into the 17th October third-quarter results.

RS Group gained as JPM opened a "positive catalyst watch" on the shares ahead of the capital markets day on 24 September.

Market Movers

FTSE 100 (UKX) 8,407.82 0.34% FTSE 250 (MCX) 21,088.89 0.27% techMARK (TASX) 4,939.79 0.46%

FTSE 100 - Risers

Vistry Group (VTY) 1,376.00p 2.30% LondonMetric Property (LMP) 203.00p 2.06% Severn Trent (SVT) 2,579.00p 1.86% SEGRO (SGRO) 873.80p 1.58% National Grid (NG.) 1,005.00p 1.35% SSE (SSE) 1,899.00p 1.33% Unite Group (UTG) 956.50p 1.22% Haleon (HLN) 382.80p 1.22% Reckitt Benckiser Group (RKT) 4,391.00p 1.20% Antofagasta (ANTO) 1,850.00p 1.09%

FTSE 100 - Fallers

Burberry Group (BRBY) 661.20p -2.16% easyJet (EZJ) 472.40p -1.42% Smith (DS) (SMDS) 467.80p -1.10% Whitbread (WTB) 2,917.00p -0.68% Rolls-Royce Holdings (RR.) 496.80p -0.68% F&C Investment Trust (FCIT) 1,026.00p -0.58% International Consolidated Airlines Group SA (CDI) (IAG) 182.50p -0.49% Informa (INF) 830.00p -0.48% Relx plc (REL) 3,562.00p -0.45% JD Sports Fashion (JD.) 137.45p -0.43%

FTSE 250 - Risers

Aston Martin Lagonda Global Holdings (AML) 152.60p 4.16% Close Brothers Group (CBG) 546.00p 3.61% Fidelity China Special Situations (FCSS) 182.00p 2.36% Target Healthcare Reit Ltd (THRL) 84.00p 2.31% British Land Company (BLND) 408.40p 2.05% Grafton Group Ut (CDI) (GFTU) 1,080.60p 2.04% IP Group (IPO) 42.05p 1.94% Trustpilot Group (TRST) 212.50p 1.92% Great Portland Estates (GPE) 338.00p 1.81% Helios Towers (HTWS) 113.80p 1.79%

FTSE 250 - Fallers

SSP Group (SSPG) 170.00p -2.63% 4Imprint Group (FOUR) 5,250.00p -2.23% Bank of Georgia Group (BGEO) 4,515.00p -2.06% Wizz Air Holdings (WIZZ) 1,327.00p -1.41% Auction Technology Group (ATG) 420.50p -1.18% Polar Capital Technology Trust (PCT) 2,950.00p -1.17% Drax Group (DRX) 645.50p -1.15% Allianz Technology Trust (ATT) 351.00p -1.13% Baltic Classifieds Group (BCG) 285.00p -1.04% Softcat (SCT) 1,563.00p -1.01%