London Stocks Edge Up as Miners Lead; U.S. Inflation Data Awaited
London's FTSE indices show modest gains, with mining stocks leading. Investors cautiously await U.S. inflation data as UK economy stagnates. Rentokil plans job cuts, while WH Smith reports revenue growth.
On September 11, 2024, London's stock markets displayed a cautious upward trend, with the FTSE 100 and FTSE 250 indices registering slight gains of 0.1% and 0.2% respectively. This modest performance comes as investors maintain a watchful stance ahead of the release of crucial U.S. inflation data.
The mining sector emerged as the primary driver of growth, with industrial and precious metal miners experiencing increases of 1.8% and 1.4%. This uptick can be attributed to a softer dollar and optimism surrounding potential interest rate cuts, which positively impacted copper and gold prices. Copper, often referred to as "Dr. Copper" due to its ability to predict economic trends, saw increased demand.
Energy shares also contributed to the positive momentum, rising by 1.2%. This increase was fueled by concerns over Hurricane Francine potentially disrupting oil production in the United States, the world's largest oil producer. The impact of these production concerns outweighed worries about weak global demand.
However, not all sectors shared in the day's gains. Industrial support services experienced a 2.4% decline, largely due to Rentokil Initial's announcement of impending job cuts to address cost overruns. This news caused Rentokil's stock to plummet by 17.8%.
Economic data released on the same day revealed that the UK economy showed no growth in July 2024, continuing the stagnation observed in June. This lack of economic expansion has raised questions about the Bank of England's future monetary policy decisions.
"The figures are not bad enough to change the course the BoE is sailing on. An unexpected (cut) or a cut that's too large might be a signal to investors that the economic prognosis is significantly worse."
Investors are now turning their attention to the upcoming release of the U.S. Consumer Price Index (CPI) data. This report is expected to provide insights into the Federal Reserve's stance on potential interest rate adjustments for the remainder of the year.
In corporate news, Rightmove, the UK's largest online real estate portal, declined a £5.6 billion takeover proposal from Australia's REA Group. This decision resulted in a 2% drop in Rightmove's share price. Conversely, WH Smith, a prominent British retailer, reported an increase in annual revenue and announced a £50 million share buyback plan, leading to a 12% surge in its stock price.
As the day progresses, market participants remain cautious, balancing positive sector performances against economic uncertainties and awaiting further clarity from the U.S. inflation report.
