LONDON MARKET MIDDAY: London up ahead of US Fed and inflation data

(Alliance News) - Stock prices in London were higher at midday Wednesday, ahead of an interest rate decision and inflation data from the US.

Amongst individual stocks, Rentokil led the FTSE 100 higher, as investor Nelson Peltz built a stake in the company. Financial stocks were also faring well ahead of the interest rate decision.

The FTSE 100 index was up 54.55 points, 0.7%, at 8,202.36. The FTSE 250 was up 22.69 points, 0.1%, at 20,289.54, and the AIM All-Share was up 2.14 points, 0.3%, at 783.65.

The Cboe UK 100 was down 0.7% at 817.12, the Cboe UK 250 was down 0.1% at 17,741.22, and the Cboe Small Companies was down 0.4% at 16,704.18.

In European equities on Wednesday, the CAC 40 in Paris was up 0.4%, while the DAX 40 in Frankfurt was up 0.6%.

It is a big day in the economic calendar for the US.

It will begin with US inflation, which is due out at 1330 BST, and will end with the latest interest rate decision from the US Fed at 1900 BST.

"Each of these events are typically a source of volatility in their own right and together they promise an eventful North American session," said analysts at Bannockburn.

Starting with inflation, according to FXStreet, the annual rate of consumer price inflation is expected to have remained unmoved at 3.4% in May, where it stood in April. The annual rate of core inflation is expected to have ebbed to 3.5% from 3.6%.

The data may impact the tone of the evening's interest rate decision.

The Fed is expected to maintain interest rates at the current level once again, and the focus Wednesday will be on what it reveals in its latest projections, with the prospect of a hat-trick of cuts this year all but over.

Following the decision, a press conference with Powell will follow half an hour later.

"The Fed is almost certain to keep rates on hold at today's meeting so the focus will be on any commentary that provides insight into the future trajectory of rates. Expectations for rate cuts have been pushed back, particularly in light of last week's hotter than expected US jobs data," said AJ Bell's Russ Mould.

Friday's eagerly awaited US jobs report had showed the pace of hiring picked up by more than expected in May.

According to the Bureau of Labor Statistics, nonfarm payroll employment rose by 272,000 in May. This was ahead of a FXStreet consensus of 185,000 and higher than the average monthly gain of 232,000 over the prior 12 months.

Stocks in New York were called higher, as investors shake off Fed nerves. Both the Dow Jones Industrial Average and the S&P 500 index were called up 0.1%, and the Nasdaq Composite up 0.2%.

London's financial stocks were doing well ahead of the decision. Standard Chartered, Lloyds, and NatWest were up 2.9%, 2.0%, and 1.8%, respectively.

The pound was quoted at USD1.2757 at midday on Wednesday in London, up compared to USD1.2722 at the equities close on Tuesday. The euro stood at USD1.0758, higher against USD1.0727. Against the yen, the dollar was trading at JPY157.35, up compared to JPY157.26.

In the FTSE 100, Rentokil led the charge, jumping 12%.

The activist investment firm of billionaire investor Nelson Peltz has become a major stakeholder in Rentokil Initial PLC, Bloomberg reported on Tuesday.

Trian Fund Management LP is now a top 10 shareholder in the Crawley, England-based pest control and hygiene firm, Bloomberg said, adding it isn't clear the exact size of the stake.

On the other hand, Legal & General lost 3.8%, making it the worst performing FTSE 100 stock at midday.

L&G announced plans for a "simpler and better-connected business", focused on three core divisions, alongside a share buyback, as new Chief Executive Antonio Simoes attempts to make his mark on the London-based insurer.

"Over the last five months we have rigorously reviewed our business, listening to investors, customers, partners and employees. This work has deepened my belief in our strong foundations and excellent potential," Simoes commented.

In the FTSE 250, Molten Ventures jumped 14%.

The London-based venture capital firm reported that net asset value per share declined 15% to 662 pence per share as at March 31 from 780p a year prior.

Despite this, pretax loss narrowed to GBP49.8 million in the year ended March 31 from GBP246.7 million a year earlier. Molten posted an unrealised loss on the revaluation of investments of GBP29.0 million, sharply narrowed from GBP240.1 million a year prior.

Amongst London's small-caps, DFS Furniture lost 4.0%, after it warned of a weak trading environment and Red Sea shipping delays.

The sofa retailer now expects an adjusted pretax profit of between GBP10 million and GBP12 million, down from a previous guidance back in March of GBP20 million to GBP25 million. It anticipates revenue between GBP995 million and GBP1.00 billion, lower than GBP1.00 billion to GBP1.02 billion it had previously expected.

On London's AIM, Tungsten West jumped 30%.

The miner said the Environment Agency has granted the company a permit to operate its mineral processing facility, within the limits previously agreed between the company and the Environment Agency.

This is the last of the key permits required to further progress the Hemerdon tungsten and tin mine project in Devon, UK.

Brent oil was quoted at USD82.79 a barrel at midday in London on Wednesday, up from USD81.74 late Tuesday. Gold was quoted at USD2,313.30 an ounce, higher against USD2,312.47.

By Sophie Rose, Alliance News senior reporter

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