Market report

US inflation dips | Pru rises | Deliveroo setback


US headline consumer prices index inflation has surprised on the downside as data today showed the annual rate at 8.5% for July, compared to consensus expectations of 8.7%. The July rate is down from the 9.1% recorded in June. 

Rob Clarry, Investment Strategist at UK wealth manager Evelyn Partners, comments: “Falling commodity prices, deteriorating consumer confidence, and slowing growth could tempt the Fed to take its foot off the gas in upcoming meetings.

“While today’s downside surprise is likely to be welcomed by investors, the data does not change our view that US interest rates will continue to increase. More substantial falls in inflation and a softer labour market will probably be required before we get any signs of the Fed changing course.”

Danni Hewson AJ Bell financial analyst said: “The bigger than expected drop in US inflation will go a long way to calming market jitters and soothing cash strapped consumers.

“A sustained decrease in prices at the pump is the main factor behind today’s falling CPI number and there’s evidence that inflation may have finally reached its post-pandemic peak.”

The FTSE 100 ticked up on the announcement and closed 18.96 points higher at 7,507.11.

In London, Aviva surged to the top of the FTSE 100 index, up 50.60p (12.21%) at 464p as the insurer reported a 14% increase in first-half operating profit and said it expects to announce a share buyback with its full-year results. Full story here

Admiral rallied even as the insurer posted a drop in first-half profit, pointing to a “more turbulent cycle than usual” and high inflation.

In the six months to 30 June, pre-tax profit fell 48% to £251.3m. Versus the same period in pre-pandemic 2019, however, pre-tax profit was ahead 19%. Shares closed 248.5p (12.63%) higher at 2204.5p.

Prudential was up 5p (0.51%) to 993.3p after it reported an 8% rise in its first-half operating profit, but the Asia-focused insurer warned of challenging conditions for the rest of the year as Covid curbs persist in some markets.

Adjusted operating profit from continuing operations of the London and Hong Kong dual-listed company was $1.66bn against $1.57bn a year earlier. This was below a consensus forecast.

Meals delivery service Deliveroo was up 6.76p (7.41%) to 97.9p despite posting higher half-year losses and revealing that Next boss Lord Wolfson has stepped down from its board.

H1 2022 revenue was up 12% and orders up 10% but the loss before tax rose to £147m from £95m in H1 2021.

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