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(Alliance News) - Stock market investors in London will look to keep the rally going on Wednesday - after notching two straight days in the green - despite a historically high inflation reading from the UK.
Consumer price inflation in the UK undershot expectations slightly in April, but still raced ahead from March.
Later this morning, there is a eurozone inflation reading at 1000 BST.
IG futures indicate the FTSE 100 index will open up just 0.95 of a point at 7,519.30 on Wednesday. The blue-chip index closed up 53.55 points, 0.7%, at 7,518.35.
In the US on Tuesday, equities enjoyed some respite from recent selling pressure, with tech shares among those leading the gains. The Dow Jones Industrial Average closed up 1.3% and the S&P 500 up 2.0%, while the Nasdaq Composite closed 2.8% higher.
"[The] positive US finish looks set to translate into a flat European open, with the pound and euro riding higher on expectations that both the Bank of England and ECB might have to raise rates more aggressively in the coming months than originally the markets had been pricing," CMC Markets analyst Michael Hewson said.
Data from the Office of National Statistics showed UK consumer prices shot up in April, but the pace was slightly slower than market expectations.
Versus the prior month, consumer prices rose 2.5% in April, accelerating from March's 1.1% rise, but fell short of market forecasts - according to FXStreet - of a 2.6% month-on-month rise.
Annually, consumer prices jumped 9.0%, accelerating from March's 7.0% rise, but this again was slightly behind market expectations of 9.1%.
It was the fastest measured rate since records began in 1989, and the ONS estimates it was the highest since 1982.
Grant Fitzner, chief economist at the ONS, said: "Inflation rose steeply in April, driven by the sharp climb in electricity and gas prices as the higher price cap came into effect. Around three-quarters of the increase in the annual rate this month came from utility bills."
AvaTrade's Naeem Aslam added: "Consumers are struggling to meet their daily needs, and now the pressure is even more on the Bank of England to do more to control inflation. But the fact is that the BOE is walking on a fine line, and it can only do so much to control inflation by increasing the interest rate."
The pound was quoted at USD1.2441 early Wednesday, down from USD1.2465 at the London equities close on Tuesday.
The euro was priced at USD1.0522, down from USD1.0534 on Tuesday evening in London.
In London, luxury fashion retailer Burberry reported annual results in line with market expectations and has maintained its outlook for the year ahead.
In the financial year that ended April 2, operating profit rose 4% to GBP543 million from GBP521 million. Adjusted operating profit jumped 32% year on year to GBP523 million from GBP396 million, matching company-compiled consensus.
Revenue was up 21% to GBP2.83 billion from GBP2.34 billion, which was again in line with company-compiled consensus.
Retail comparable store sales were up 18%, with full-price comparable store sales up 24%.
Burberry declared an annual dividend of 47.0 pence, lifted 11% from 42.5p the prior year.
Looking ahead, the fashion retailer maintained its guidance of high single-digit revenue growth.
British Land outperformed analyst expectations in its annual results, with profit getting a boost from its "strong" rent collection.
Underlying profit in the year ended March 31 rose 25% to GBP251 million from GBP201 million the year before. Company compiled consensus from 18 analysts had underlying profit reaching GBP230 million.
Net tangible assets per share ended March 31 at 727 pence, rising from 648p, and was again ahead of expectations, which forecast a 703p figure.
The firm's rent collection hit 97% in the period, nearing pre-pandemic levels and allowed British Land to "significantly reduce provisions".
Chief Executive Simon Carter said: "Over the past year we have delivered a strong performance across all parts of our business as we continue to execute against our strategy. Our total accounting return for the year was 15% driven by a 6.8% increase in the valuation of our portfolio."
In the US, the Federal Reserve wants to see economic growth slowing and "clear" evidence of inflation decelerating before it pulls back on its efforts to tamp the brakes on the economy, Chair Jerome Powell said on Tuesday.
The Fed earlier this month announced the biggest interest rate increase since 2000 as it combats the highest US inflation in four decades, and Powell said policymakers agree another aggressive increase is "on the table" in June and July.
"What we need is to see...growth moving down from the very high levels that we saw last year, moving down to a level that's still positive" but allows supply to catch up with demand," Powell said at an event with the Wall Street Journal.
In Asia on Wednesday, the Japanese Nikkei 225 index closed up 0.9%. In China, the Shanghai Composite was 0.1% lower, while the Hang Seng index in Hong Kong was down 0.1%. In Sydney, the S&P/ASX 200 closed up 1.0%.
Japan's economy shrank slightly in the first quarter of 2022, official data showed Wednesday, hit by Covid-19 restrictions and higher prices.
The world's third-largest economy shrank 0.2% quarter-on-quarter in the January to March period, slightly less than the market expectations of a 0.4% contraction.
It followed a modest rebound in the final three months of 2021 that proved short-lived after Japan put Covid restrictions in place as an outbreak fuelled by the Omicron coronavirus variant took hold in January.
Growth also was hit by the rising cost of imports with energy prices surging and the yen falling to its lowest level against the dollar in 20 years.
Economists expect Japan's economy to recover again in the April to June quarter now that virus restrictions have been lifted.
Against the yen, the dollar was trading at JPY129.13, soft from JPY129.29.
Brent oil was quoted at USD112.02 a barrel Wednesday morning, down from USD115.10 late Tuesday. Gold stood at USD1,811.30 an ounce, lower against USD1,820.68.
By Paul McGowan; paulmcgowan@alliancenews.com
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