FTSE 100 Live March 23: inflation rate up to 6.2%, Chancellor announces spring statement

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FTSE 100 up as robust trading continues

Wall Street’s tech giants set the tone for another robust session today as investors showed no signs of losing their temper in the face of further interest rate hikes.

Apple, Amazon and Netflix were among stocks up 2% last night, although Federal Reserve Chairman Jerome Powell signaled this week that half a percentage point rate hikes may be needed to bring inflation under control.

Investors hailed the central bank’s determination to fight inflation, even though rate hikes will depress the value of future cash flows.

The rebound in high-growth New York stocks spread to London as tech investor Scottish Mortgage Investment Trust rebounded 1% and grocery warehouse tech firm Ocado rose 2% .

Their performance was overtaken by further strong gains in the energy sector, with the price of Brent rising to $118 a barrel. BP led the FTSE 100 riser chart with a jump of 3% or 11.95p to 383.25p while Shell was close behind after a surge of 60.5p to 2068p.

Heavy stocks allowed the FTSE 100 index to trade above 7500 for the first time in a month before settling 19.68 points higher at 7496.40. West Africa-focused Endeavor Mining, which joined the elite in this week’s reshuffle, also rose 2% or 40p to 1905p.

Reckitt Benckiser was the biggest loser, down 3% after analysts at Jefferies downgraded the household products giant to an “underperforming” rating.

Shares are down about 10% this year, although the maker of Dettol and Air Wick has reassured its profit margin is expected to rise despite pressures on commodity prices. The stock today fell 201p to 5680p after Jefferies cut its price target to 5000p from 6150p.

The FTSE 250 index fell 67.59 points to 21,045.04, despite a 3% rebound for consumer reviews firm Trustpilot after yesterday’s 15% drop in results.

Dealer Rolex Watches of Switzerland was one of the best performers in the second tier, rising 2% or 22p to 1170p after Societe Generale unveiled a ‘buy’ recommendation.

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BP leads the FTSE 100 higher

European markets are trading higher despite the latest inflationary pressures, with the FTSE 100 index crossing the 7500 threshold after gaining 29 points.

London’s rise was led by the oil sector, with shares of BP up 3% and Shell up 2%. Last night’s strong session for Wall Street-listed tech stocks also trickled down to Scottish Mortgage Investment Trust, which added more than 1%.

Reckitt Benckiser was the biggest loser, down 3% after analysts at Jefferies downgraded the household products giant to an “underperforming” rating.

The FTSE 250 index edged up 21.13 points to 21,133.73, helped by a 6% rally for Trustpilot shares after yesterday’s slump in results.

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Inflation spike adds upward pressure on rates

On a monthly basis, the 0.8% jump in consumer prices in February was the biggest increase since 2011.

Transportation was the largest contributor to the current annual rate increase, with an 11.5% increase. However, there were big gains across the board, with the furniture and household equipment sector and the clothing and footwear sector both up around 9%.

The figures add to pressure on the Bank of England to step up the pace of interest rate hikes, after last week predicting “further modest tightening” in the coming months.

His approach contrasts with comments this week by Federal Reserve Chairman Jerome Powell, which fueled Wall Street expectations for half-point hikes in U.S. rates to tame inflation.

Debapratim De, Senior Economist at Deloitte, said: “With commodity markets still reeling from the war in Ukraine, the likelihood of inflation rising above the peak projected by the Bank of England has increased, indicating a rise additional and potentially faster interest rates”.

He added: “Despite growing at a faster pace than before the pandemic, wages are expected to lag well behind the price spike. Consumer confidence is expected to weaken further, alongside continued pressure on household purchasing power.

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Apple shares up 2%, FTSE 100 to open higher

The FTSE 100 Index is expected to post further gains today, supported by Wall Street’s relaxed response to the possibility of larger than usual interest rate hikes.

Shares of Apple, Amazon and Netflix all ended up 2%, with the tech-laden Nasdaq up 2% and the S&P 500 up 1%.

The rebound came despite Federal Reserve Chairman Jerome Powell signaling that half-point interest rate hikes may be needed to bring inflation under control.

Stephen Innes, Managing Partner of SPI Asset Management, said: “Given the high macroeconomic uncertainty, investors are likely shifting their investments towards stocks offering a higher level of predictability.

“High quality, growth and momentum tend to outperform periods of surprisingly high inflation.”

Expectations of aggressive interest rate hikes boosted financial stocks in London yesterday as the FTSE 100 index added another 34 points, leaving the elite close to where it was before the Ukraine invasion.

CMC Markets expects the FTSE 100 to open 30 points higher at 7506. Oil prices, meanwhile, were little changed this morning, with Brent trading at $116 a barrel.

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