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MARKET REPORT: Footsie nears all-time high as fall in US inflation improves outlook for global economy
The FTSE 100 posted its third highest closing price in its history as a fall in US inflation boosted the outlook for the global economy.
On a great trading day, it rose 0.9 percent, or 69.06 points, to 7794.04, just below the 7800 mark it had been above only twice before.
It is now within reach of the record of 7877.
Rally: On a great trading day, the FTSE 100 rose 0.9%, or 69.06 points, to 7794.04, just short of the 7800 it had reached only twice before.
The gains were reflected in the FTSE 250, which added 1.6 percent or 319.43 points to 19841.13.
The rally came in a growing hope that the worst of the inflationary crisis is over, allowing central banks to slow the pace of rate hikes.
In the US, the inflation rate fell for the sixth straight month, to 6.5 percent in December – the lowest rate since October 2021. That was down from 7.1 percent in November and 9.1 percent in June.
Analysts said the numbers could convince the US Federal Reserve to slow the rate at which it raises rates after the strongest increases since the 1980s.
An increase of 0.25 percentage point is now on the agenda for next month after a series of increases of 0.5 and 0.75 percentage point.
Danni Hewson, a financial analyst at AJ Bell, said: ‘December’s increase was the smallest in more than a year and if you look at the month in isolation, the picture is even rosier.
“All in all, this should be seen as a glass-half-full moment and with investors looking ready to commit themselves fully to a New Year’s rally, the optimists are likely to outnumber the pessimists today.”
Back in London, Persimmon was the latest homebuilder to warn that rising mortgage rates are hitting demand.
The FTSE 100 giant revealed that sales fell to 0.3 per outlet per week in the fourth quarter, compared to 0.77 in the same period last year.
Concerns about the economy, mortgage rates and the cost of living “weighed heavily on consumer confidence,” Persimmon said.
The comments echoed those made by rival Barratt a day earlier.
Persimmon shares rose 8.3 percent, or 108p, to 1404.5p, while Barratt climbed 6.7 percent, or 28.3p, to 451.2p.
Strong demand for budget hotels over the Christmas period boosted Premier Inn.
Owner Whitbread said the chain’s UK sales in the five weeks to January 5 were 25 percent higher than in the same period a year earlier.
It followed a 23.8 percent increase in the 13 weeks to December 1. Whitbread was up 5.8 percent, or 165p, to 3020p.
At Savills, the broker warned that the first half of this year will be “more challenging” than the previous 12 months.
But there was much to cheer about, with the group beating expectations for 2022. Shares rose 4.8 percent, or 42 pence, to 912 pence. Trustpilot had a great day following the positive view of the customer review website’s earnings.
Sales for 2022 are likely to be up 13 per cent to around £122 million. Profit must be above expectations. It jumped 24.9 percent or 23.25p to 116.6p.
Pub group Mitchells & Butlers had a fruitful holiday season as the All Bar One owner’s sales rose 10.4 percent in the 15 weeks to January. It rose 4.9 percent or 8 pence to 170.7 pence.
There was good news for ProCook. Cookware sales were up 4 percent, or 1.15 pence, to 29.65 pence, despite sales falling 2.5 percent to £22.4 million in the 12 weeks to January.
But in the last four weeks, sales rose 2.9 percent over the previous 12 months.
Hurricane Energy emerged victorious after its largest shareholder Crystal Amber withdrew calls for a general meeting to oust the oil and gas company’s board.
Crystal Amber, which has a nearly 29 percent stake, pulled out after Hurricane said this week it was making real progress in finding a buyer. Shares rose 1 percent, or 0.08 pence, to 8.27 pence.