Inflation fell to 3.6% last month as official figures today provided a pre-Budget boost for Rachel Reeves.
The annual rate’s decline from 3.8% was in part driven by smaller increases in energy prices than a year ago.
Meanwhile, WH Smith said its chief executive has stepped down in the wake of accounting errors in the retailer’s North American division.
FTSE 100 Live Wednesday
- WH Smith quits after probe
- Inflation dip lifts rate cut hopes
- Lloyds acquires fintech Curve
Market update: FTSE 100 steady ahead of Nvidia results, WH Smith recovers
10:31 , Graeme EvansThe possibility of a pre-Christmas cut in UK interest rates today provided London traders with a welcome distraction ahead of tonight’s Nvidia results.
The FTSE 100 index extended its losing run but the fall of 7.37 points to 9544.93 marked an improvement on the volatility felt by global markets in recent days.
Tech valuation jitters have left the S&P 500 lower in the four sessions leading up to Nvidia’s third quarter earnings, which are released after tonight’s closing bell.
AJ Bell investment director Russ Mould said: “Nvidia reports tonight and the slightest bit of news to disappoint investors has the potential to whip up a tornado across global markets.
“Investors will be hanging on chief executive Jensen Huang’s every word and looking for clues that big investment in AI is worth it.”
One of London’s few tech plays took centre stage in the FTSE 100 today, with Sage shares up 30p to 1106p after announcing strong annual results.
Fourth quarter revenues were better than expected as the accounting software group posted operating profit growth of 17% to £600 million. It also unveiled a buyback programme worth up to £300 million.
Sage was beaten to the top of the FTSE 100 by Fresnillo and Endeavour Mining as higher gold and silver prices helped their shares rally by about 4%.
Defensive stocks were out of favour as United Utilities lost 14.5p to 1163.5p and BAE Systems faded 16p to 1789p.
Severn Trent failed to benefit from improved guidance in its half-year results as shares slipped 22p to 2693p. The water supplier added that long-serving CEO Liv Garfield is to step down at the end of the year.
The FTSE 250 index held firm at 21,412.17, with sentiment boosted by more signs that the Bank of England base rate could be cut to 3.75% next month.
The speculation followed October’s dip in inflation rate to 3.6% from 3.8%.
Big risers in the FTSE 250 included Ceres Power, which rallied 12.2p to 357.2p after Berenberg analysts lifted their price target on the clean energy firm to 530p.
Mid-cap fallers included British Land, which dipped 6.6p to 372p after the release of interim figures met the guidance given in a trading update last month.
WH Smith shares opened below 600p for the first time in more than a decade after it said chief executive Carl Cowling had resigned in the wake of serious accounting errors in the retailer’s North American division.
An investigation by Deloitte said the failings in relation to supplier income reflected “a limited level of group oversight of the finance processes in North America”.
WH Smith now expects profits in its US business to be in the range of £5 million to £15 million – down from the £55 million originally expected and the £25 million revised guidance when the shortcomings were first disclosed in August.
The shares, which traded above 1100p in the summer, steadied during today’s session to stand 3% or 20p higher at 633.5p.
Severn Trent boss to stand down, lifts annual guidance
09:45 , Graeme EvansSevern Trent boss Liv Garfield is to step down after 11 years at the helm.
She will be succeeded in the new year by James Jesic, who is currently the water supplier’s capital and commercial services director.
The group, which provides water and sewage services to more than 4.7 million premises in the Midlands and Wales, also announced half-year results.
These showed pre-tax profits jumped by 60% to £307.8 million in the six months to September 30.
The group hiked its annual outlook, saying it now expects performance incentives of at least £40 million against previous guidance for at least £25 million.
Sage shares rally amid AI optimism and £300m buyback
09:37 , Graeme EvansSage Group was today among the best performing of the FTSE 100 index after the accounting software group’s shares rallied 3% on annual results.
Chief executive Steve Hare hailed “another good performance” amid margin expansion and broad-based revenue growth in the year to 30 September.
He added: "AI is opening up new possibilities for businesses and creating a significant opportunity for Sage, enabling us to enhance and accelerate the benefits our software provides.”
Underlying revenues of £2.5 billion rose by 9% on an organic basis, slightly better than City expectations amid a strong finish to the financial year.
Operating profit grew by 17% to £600 million as Sage improved its margin by 150 basis points to 23.9%.
A final dividend of 14.4p a share increases the total for the year by 7% to 21.85p, while Sage also announced a share buyback programme of up to £300 million.
Shares lifted 28.5p to 1104.5p, which compares with more than 1300p in January.
FTSE 100 holds firm, WH Smith shares down 2%
08:34 , Graeme EvansThe FTSE 100 index is 6.42 points lower at 9545.88 amid calmer trading in London.
Heavyweights BP and Shell offered support to the blue-chip index, which was topped by gains of more than 2% for miners Endeavour Mining and Fresnillo.
Accounting software group Sage rose 9.5p to 1085.5p after reporting annual results, while Severn Trent fell 24p to 2691p on the back of half-year figures.
In the FTSE 250, WH Smith shares fell 2% or 14.25p to 599.25p after it said CEO Carl Cowling had stepped down in the wake of Deloitte’s review of overstated US profits.
Inflation figure clears path to December rate cut
08:12 , Graeme EvansThe fall in CPI inflation from 3.8% to 3.6% in October has boosted chances that the Bank of England will cut interest rates from 4% to 3.75% on 18 December.
Capital Economics said that disinflationary forces appear to be building, with the unemployment rate up to 5%, wage growth easing and GDP subdued.
And while November’s inflation rate is likely to rebound, the consultancy forecasts a return to the Bank of England’s 2% target by the end of next year.
It added: “At this stage, it wouldn’t take much (if anything) for us to conclude the next interest rate cut will be in December rather than our current forecast of February.
“The Budget and the labour market, GDP and inflation releases between now and the policy meeting on 18 December will be the last pieces of that particular puzzle.
“Either way, our confidence in our forecast that Bank Rate will fall from 4% now to 3% next year is growing.”
Deutsche Bank added that the Bank of England monetary policy committee now has a clearer path to a December cut.
Lloyds acquires digital wallet platform
07:58 , Graeme EvansLloyds Banking Group today announced the acquisition of digital wallet platform Curve.
Authorised and regulated in the UK and Europe, Curve processes billions in payments annually.
It brings all cards and alternative payment sources into one platform while adding money-saving and loyalty features.
Lloyds said the addition will provide its customers with greater control and personalised ways to manage their money.
The acquisition for an undisclosed sum is expected to complete in the first half of next year, subject to regulatory approval. Sky News reported last week that the deal is worth £120 million.
WH Smith CEO steps down after US review
07:22 , Graeme EvansWH Smith chief executive Carl Cowling had stepped down in the wake of a review into the retailer’s previously announced profit overstatement in North America.
Deloitte found that the accounting treatment for supplier income adopted by the North America division was not consistent with the group's accounting policy.
It said today that the issue arose against a backdrop of a target-driven performance culture and decentralised divisional structure, combined with a limited level of group oversight of the finance processes in North America.
Cowling, who has been in charge for six years, said: “Whilst the issues identified in the Deloitte review arose in our North American division, I recognise the seriousness of this situation and as group CEO feel it is only right that I step down from my position.”
The retailer said North American headline profit for the 2024/2025 financial year is expected to be in the range of £5 million-£15 million.
This compares with the revised expectation of around £25 million when it disclosed the issues in August and previous market expectations of £55 million.
Andrew Harrison, chief executive of the group's UK division, will assume Cowling’s role on an interim basis.
Inflation dips to 3.6% despite higher food prices
07:08 , Graeme EvansThe UK’s annual rate of inflation today fell in line with market expectations to 3.6%.
October’s consumer prices index figure is the lowest since June, having fallen from the previous month’s better-than-expected reading of 3.6%.
ONS chief economist Grant Fitzner said: “Inflation eased in October, driven mainly by gas and electricity prices, which increased less than this time last year following changes in the Ofgem energy price cap.
“The costs of hotels was also a downward driver, with prices falling this month. These were only partially offset by rising food prices, following the dip seen in September.
“The annual cost of raw materials for businesses continued to increase, while factory gate prices also rose.”
FTSE 100 steadies, US market jitters continue
07:00 , Graeme EvansUS market jitters in the run-up to Nvidia results continued last night as the S&P 500 index fell for a fourth consecutive session, down 0.8%.
Nvidia’s third quarter earnings, which are released after tonight’s closing bell, are a major test of Wall Street technology valuations.
The Dow Jones Industrial Average retreated 1.1% and the Nasdaq Composite lost 1.2%, although futures trading points to a steadier session today.
The FTSE 100 index yesterday closed down 1.3% or 123.13 points at 9552.30, having traded near the 10,000 milestone last week.
The top flight is seen opening 0.1% higher in today’s session after Asia markets posted a resilient performance. Bitcoin has steadied above $90,000 after falling below the threshold in trading yesterday.
