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FTSE 100 Down, Sterling Rises After Above-Forecast Inflation Data

07/14/2021 | 02:02am EDT

Sterling Rises After Above-Forecast UK Inflation Data

Sterling rises after data showed U.K. annual CPI inflation rose to 2.5% in June, beating the consensus forecast in a WSJ poll for a reading of 2.2% and remaining above the Bank of England's 2.0% target for the second month running. The currency's gains are limited, however, as the BOE has already said it expects inflation to rise above the 2% target for a period but that this will be temporary. "Markets appear to have swallowed their inflationary concerns for now," says Laith Khalaf, financial analyst at AJ Bell, adding that price rises came mainly in pandemic-hit sectors such as transport, clothing and hospitality. GBP/USD rises 0.3% to 1.3843, while EUR/GBP falls 0.1% to 0.8518.

 
Companies News: 

Liontrust 1Q Assets Under Management Increased

Liontrust Asset Management PLC said Wednesday that assets under management rose in the first quarter of fiscal 2022 compared with the previous quarter.

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Knights Group FY 2021 Pretax Profit Rose on Higher Revenue; No Final Dividend

Knights Group Holdings PLC said Wednesday that pretax profit rose on higher revenue in fiscal 2021, but that it isn't declaring a final dividend given the cost-cutting measures taken throughout the year.

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Alpha FX 1H Revenue Rose

Alpha FX Group PLC said Wednesday that revenue nearly doubled for the first half of the year, adding that all its divisions were profitable and delivered strong growth.

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SIG PLC Sees Strong 1H Revenue, Profit; Raises 2021 Profit Guidance

SIG PLC said Wednesday that its first half had strong revenue growth and better-than-expected underlying operating profit, and it raised its full-year profit outlook.

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DP Eurasia 1H Sales Rose on Strong Turkish Level of Demand

DP Eurasia NV said Wednesday that sales for the first half rose 58% due to the unprecedented level of demand in Turkey, and against weak comparables for the first half of 2020 both in Turkey and Russia.

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Portmeirion Group 1H Revenue Rose, Confident on Outlook

Portmeirion Group PLC said Wednesday that revenue for the first half of 2021 rose and it is confident in its outlook for the rest of the year despite supply chain-related challenges.

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Intelligent Ultrasound Expects Widened 1H Operating Loss, Higher Sales

Intelligent Ultrasound Group PLC said Wednesday that it expects to report a widened operating loss for the first half of 2021, despite an increase in revenue driven by a strong recovery in its simulation division.

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Mission Group Says 1H Performance Exceeded Board's Expectations

Mission Group PLC said Wednesday that despite pandemic lockdown restrictions, it has experienced a sequential on-quarter recovery in revenue and profit over the first half of the year, with business exceeding the board's expectations.

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eBay Sells 125 Mln Shares in Adevinta to Private Equity Firm Permira for $2.25 Bln

E-commerce company eBay Inc. said Wednesday that it has agreed to sell around 125 million of its shares in Adevinta ASA to private equity firm Permira for $2.25 billion.

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Allergy Therapeutics Expects to Beat FY 2021 Revenue Forecasts

Allergy Therapeutics PLC said Wednesday that it expects to report market beating revenue for fiscal 2021 as it benefited from a strong euro.

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PRS REIT 4Q Completions, Rental Value Rose

PRS REIT PLC said Wednesday that it completed more homes in the fourth quarter of fiscal 2021 than the prior year and that its estimated annual rental value rose.

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Hurricane Energy Says 2Q Revenue Was Strong, Net Free Cash Rose

Hurricane Energy PLC said Wednesday that second-quarter revenue was strong, and that its net free cash increased.

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Coats Group 1H Sales Rose

Coats Group PLC said Wednesday that group sales for the first half rose, and that it expects its performance for the year to be moderately ahead of the board's previous expectations.

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Challenger Energy Completes Saffron Well Study in Trinidad & Tobago, Signs Loan Term Sheet

Challenger Energy Group PLC said Wednesday that logging of the Saffron-2 well in Trinidad & Tobago has been completed, and entered a term sheet for a $10 million loan.

 
Market Talk: 

UK Inflation May Be More Than Transitory

0738 GMT - While the consensus appears to be that the rise in U.K. inflation will be transitory, higher consumer prices may be sustained and spell trouble, says Richard Carter, head of fixed interest research at Quilter Cheviot. "The danger to the transitory [inflation] narrative comes from the potential impact of this short-run inflation on wage growth," he says. If higher prices seep into the labor market on a sustained basis due to labor shortages, inflationary pressures could stay, and if inflation expectations become ingrained among consumers and producers, this could spell trouble, he says. "It is in this situation that the Bank of England will be compelled to act swiftly to remove the inflationary pressures," he says.

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Above-BOE Target UK Inflation May Bring Forward Tighter Policy

0732 GMT - U.K. inflation running above the Bank of England's 2% target for a second consecutive month in June may add pressure on the Bank of England to scale back pandemic-era stimulus, says J.P. Morgan Asset Management. "With growth rebounding impressively and inflation hotting up, the Bank will likely feel that the time is rapidly approaching to dial down the level of support they are providing to the economy," says global market strategist Hugh Gimber. "For the Bank of England, the size of the inflationary spike is not the main issue, it's for how long inflation will remain above target that really matters," he says. Policymakers will be noting that while the contribution from more volatile parts of the inflation basket such as transport remains large, there are also now signs of inflationary pressures broadening across many parts of the economy, Gimber says.

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Investors Advised to Hedge Against UK Inflation

0712 GMT - Investors should have one eye on inflation risks and hold some sensible hedges as part of their diversified portfolio, says Richard Carter, head of fixed interest research at Quilter Cheviot, commenting on the latest U.K. inflation data. U.K. inflation breached the Bank of England's 2% inflation target for the second consecutive month in June, with annual CPI hitting 2.5% after increases in the cost of petrol, food, second-hand cars and eating out. But the uptick may still be temporary as price increases are being driven by the sectors that have struggled since the start of the pandemic, he says.

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Boohoo's Middle East Deal with Alshaya Seen as Encouraging

0708 GMT - It is encouraging to see Boohoo's brands enter Debenhams stores in the Middle East from the fourth quarter through a new agreement with Alshaya Group, Jefferies says. The U.S. bank sees "significant scope for Boohoo to build its international presence and raise brand awareness in key territories through the wholesale channel". There's clear upside for the online fashion retailer, Jefferies adds. Jefferies has a buy recommendation on the stock, and a target price of 500 pence a share. Shares are up 0.07% at 291.60 pence.

Contact: London NewsPlus, Dow Jones Newswires; +44-20-7842-931

(END) Dow Jones Newswires

07-14-21 0402ET

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