FTSE 100 lower with B&M leading the fallers while US inflation lower than expected

Proactive Investors -

• FTSE 100 down just 7 points
• Centrica (LON:CNA) boosted by update
• B&M falls back

US inflation has come in weaker than expected, easing some of the pressure for the Federal Reserve to hike interest rates more aggressively.

The consumer price index for October rose 7.7% year on year, compared to expectations of a figure of 7.9% and down on the previous month's 8.2%.

Core inflation was 6.3%, lower than the forecast 6.5%.

"The cautionary tale is that inflation data has had a habit of surprising with higher readings. Markets have been trading stronger going into today’s reading with 10Y Treasury yields dipping towards 4.05% yesterday, which could increase the impact of a disappointing inflation reading.

"However, we have the feeling that the market may still be too absorbed with the notion of a potential pivot. There are good reasons to slow the pace of tightening not least given policy lags involved after a phase of catching up.

"That does not mean that the Fed will want to signal that it is doing less tightening in sum. This should not be the case unless there is more compelling evidence of inflation being on a trajectory to return to target."

8.25am: Ex-divs hold back leading index

The blue chip index would be doing even better if not for a host of big names going ex-dividend, which automatically knocks around ten points off the index.

These include the biggest faller so far, Shell (LON:RDSa) PLC (LSE:SHEL, NYSE:SHEL), which is down 2.31%, Whitbread PLC (LSE:LON:WTB) down 2.08%, Airtel Africa PLC (LSE:AAF), which has lost 2.01%, BP PLC (LSE:LON:BP.), which is off 2% and J Sainsbury (OTC:JSAIY) PLC (LSE:SBRY), 1.74% lower.

Without the impact of these moves the FTSE 100 - which is down just 7.01 points now at 7289.24 - would be in postive territory.

8.14am: Footsie performs better than expected but still in the red

Following the late decline on Wall Street and weakness in Asian markets, leading shares have opened in negative territory.

The slide in the US came amid further disappointing corporate updates, as well as the move by cryptocurrency exchange Binance to pull out of a deal to take over rival FTX.

Meanwhile investors were also trying to interpret the outcome of the US midterm elections, where the Republicans did worse than expected.

In the wake of all that, the FTSE 100 is down 19.21 points or 0.26% at 7277.04, but the fall is not as much as expected after some well received trading statements.

British Gas owner Centrica PLC (LSE:CNA) has jumped 6.6% after it said in an unscheduled update that it expected full year adjusted earnings per share to be towards the top end of analysts' forecasts, and unveiled a share buyback programme.

Later today, US inflation numbers will be keenly watched for their impact on the Federal Reserve's interest rate policy.

Since the Fed unveiled a 75 basis point rise at its last meeting, the markets have come round to thinking it will not sanction another increase of this size in December but a more modest 50 basis points. A higher than expected rise in the consumer price index, however, could throw everything up in the air again.

Michael Hewson, chief market analyst at CMC Markets UK, said: "The real risk is an upside surprise as we look for headline CPI to show further weakness and slip back further from 8.2% to 7.9%. This would also be the 4th successive monthly decline after headline inflation peaked at 9.1% in June, however this isn’t the important number as far as markets are concerned.

"Core prices are the main focus and they accelerated in September, pushing up to a 40 year high of 6.6%, and they’ve been sticky all year. Markets will be looking for evidence of a slowdown here if the narrative of slowing inflation is to take hold. The rise in the US dollar does offer cause for optimism, given it acts as a brake on higher prices. Today we’ll find out whether core prices are giving any indication of slowing down."

7.46am: Sterling, euro fall against US dollar as red wave becomes a ripple

US election results continue to roll in, with the Democrats faring slightly better than expected, although both chambers are still up for grabs.

Equities were pricing in a gridlocked government – historically a positive outcome for the stock market – but with the red wave looking like a ripple, the indexes closed significantly down.

Turmoil in the risk-on cryptocurrency sector surely didn’t help.

That was good for the US Dollar Index though, which closed above 110 having added 0.74%.

There has been a slight pullback to 109.94 this morning.

Cable dipped 1.6% as a consequence; at the time of writing the pair is trading at US$1.137, and could potentially dip further to support at US1.115.

GBP/USD awaits election results and US CPI data – Source: capital.com

EUR/USD has (just) managed to stay above parity despite closing 60 pips weaker yesterday having failed to break through the US$1.001 point- which is where resistance last stepped in on October 27.

Euro’s position will be influenced by the US year-on-year inflation rate due this afternoon.

Inflation is expected to moderate slightly from 8.2% to 8.1%, but any hawkish indications from the Federal Reserve (which would be likely if inflation runs hotter than hoped) could see the greenback gain.

Sterling ceded a percentage point in the EUR/GBP pair yesterday, which is now changing hands at a four-week high of 87.97p.

7.00am: FTSE seen lower ahead of US CPI

The FTSE 100 is expected to make a weak start to the day following heavy falls in US and Asian markets and as investors look ahead to the latest US CPI numbers out later today.

Spread betting companies are calling the lead index down by around 40 points.

US markets fell sharply in late trading as the midterms pointed to political stalemate and after cryptocurrency exchange Binance backed out of the FTX takeover prompting a rout in cryptocurrencies in the process.

This jittery market backdrop prompted a sharp sell-off in US markets after Europe had closed, with the Nasdaq leading the losses, as well as the Dow and S&P 500.

By the close the Dow Jones Industrial Average was down 647 points, or 1.95%, to 32,514, the S&P 500 tumbled 80 points, or 2.1%, to 3,749, and the Nasdaq Composite slid 263 points, or 2.5%, to 10,353.

In London, results from National Grid PLC (LSE:LON:NG.) and Haleon PLC (LSE:HLN, NYSE:HLN) are amongst the companies updating on trading today.

Read more on Proactive Investors UK

Disclaimer