London midday: Whitbread leads the risers as inflation slowdown lifts stocks

(Sharecast News) - A drop in UK inflation to its lowest in more than three years gave London's FTSE 100 a boost on Wednesday, as hopes increased that the Bank of England would resume interest-rate cuts at its next meeting. The Footsie was up 0.6% at 8,297 by the midday mark, with gains from mining stocks, housebuilders and leisure and hospitality giant Whitbread providing a lift.

The Office for National Statistics said that the annual change in the UK consumer price index (CPI) slowed to just 1.7% last month, down from 2.2% in August. This was well below the 1.9% expected by economists and the first time below the 2% mark since April 2021. The report follows data released on Tuesday which showed that UK earnings growth fell to its lowest level for more than two years.

"All-in-all this helped further the case that the Bank of England is behind the curve, with markets increasingly confident that we will see rates cut across the final two meetings of the year," said Joshua Mahony, chief market analyst at Scope Markets.

The pound dropped below the $1.30 mark for the first time since August following the data, as markets began to price in rate cuts in the coming months.

"The somewhat cautious approach to easing taken by the BoE may start to adjust from here, highlighting a case for a weaker pound after a period of relative strength," Mahony said.

Looking ahead to next month's Monetary Policy Committee meeting, Danni Hewson, AJ Bell's head of financial analysis, said: "A quarter percentage point cut is pretty much nailed on, and expectation of a second rate cut in December has also jumped up today with markets thinking there's a better than 80% chance we will end the year with rates down at 4.5% [from 5% currently]."

In other news, UK house price inflation accelerated in August, according to ONS data, as buyer confidence returned to the market following the first cut in interest rates in four years. Average house prices increased by 2.8% year-on-year to £293,000, rising sharply from the 1.8% annual growth seen in July.

European markets were mostly lower, with luxury stocks providing a drag as industry bellwether LVMH disappointed with a 3% drop in organic revenues in the third quarter owing to ongoing weakness in China. Meanwhile, US stock futures were pointing to a flat start on Wall Street.

Whitbread and mining stocks rise

Premier Inn owner Whitbread was the high riser of the morning after lifting its half-year dividend by 7% and saying it would buy back an additional £100m in shares, despite a fall in earnings. The company held annual guidance as pre-tax profit for the six months to 29 August fell 22% to £309m on flat revenue of £1.5bn.

Antofagasta and Rio Tinto were also in favour after the mining giants reiterated full-year production guidance in their third-quarter results. Antofagasta reported a 15% increase in third-quarter production, while Rio Tinto said iron ore output rose 1%. Sector peers Anglo American and Fresnillo also gained.

Asset manager Ninety One declined after reporting a slight fall in assets under management in its second quarter. AuM totalled £127.4bn by 30 September, up from £123.1bn last year but down from £128.6bn at the end of June.

Housebuilders were mostly higher after the UK economic data was released, brightening the outlook for demand amid an anticipated reduction in mortgage rates. Taylor Wimpey and Barratt Redrow were among the FTSE 100's top performers.

Burberry was weaker as shares in the British luxury brand fell in sympathy with European peer LVMH.

Market Movers

FTSE 100 (UKX) 8,296.64 0.57% FTSE 250 (MCX) 20,888.69 0.45% techMARK (TASX) 4,771.57 0.30%

FTSE 100 - Risers

Whitbread (WTB) 3,221.00p 4.85% Fresnillo (FRES) 674.50p 3.06% Antofagasta (ANTO) 1,848.50p 2.89% Severn Trent (SVT) 2,697.00p 2.86% Taylor Wimpey (TW.) 163.85p 2.31% Barratt Redrow (BTRW) 482.70p 2.27% Centrica (CNA) 125.40p 2.24% DCC (CDI) (DCC) 5,135.00p 1.88% Anglo American (AAL) 2,263.00p 1.75% United Utilities Group (UU.) 1,090.50p 1.73%

FTSE 100 - Fallers

Admiral Group (ADM) 2,690.00p -3.10% Vistry Group (VTY) 944.50p -2.63% Rentokil Initial (RTO) 340.90p -2.60% Beazley (BEZ) 784.50p -2.18% Diageo (DGE) 2,558.50p -0.81% Convatec Group (CTEC) 229.20p -0.78% Mondi (MNDI) 1,392.00p -0.71% Aviva (AV.) 477.50p -0.71% Intertek Group (ITRK) 5,070.00p -0.69% Hiscox Limited (DI) (HSX) 1,128.00p -0.62%

FTSE 250 - Risers

Marshalls (MSLH) 340.50p 10.19% XPS Pensions Group (XPS) 336.00p 9.09% Moonpig Group (MOON) 248.50p 8.75% Quilter (QLT) 149.20p 5.37% Bytes Technology Group (BYIT) 497.80p 5.07% Oxford Instruments (OXIG) 2,035.00p 5.01% AO World (AO.) 112.40p 4.27% CMC Markets (CMCX) 330.00p 3.29% W.A.G Payment Solutions (WPS) 80.20p 2.82% Endeavour Mining (EDV) 1,790.00p 2.76%

FTSE 250 - Fallers

Mony Group (MONY) 199.50p -5.90% Direct Line Insurance Group (DLG) 173.30p -4.52% Wizz Air Holdings (WIZZ) 1,211.00p -3.58% RS Group (RS1) 753.00p -2.21% Ninety One (N91) 182.60p -2.20% Tate & Lyle (TATE) 731.00p -1.88% Renishaw (RSW) 3,345.00p -1.62% Close Brothers Group (CBG) 374.20p -1.42% Aston Martin Lagonda Global Holdings (AML) 107.50p -1.38% Lancashire Holdings Limited (LRE) 659.00p -1.20%