After a rally yesterday spearheaded by the FTSE 100’s cyclical stocks, it was the defensive sectors turn to take the index higher on Tuesday.
Telecoms, pharmaceuticals and the recently unloved UK retail sector helped the index higher by 0.4% as of 14.10.
AB Foods was the standout performer on Tuesday as investors digested strong food sales and robust like-for-like sales across Primark’s outlets. AB Foods shares were over 6% higher at the time of writing.
The mining stocks at the forefront of Monday’s rally were among the worst performers. Housebuilders fell as investors learned of soaring UK wage growth which threatens further rate hikes by the Bank of England.
Smurfit Kappa was the FTSE 100’s top faller after announcing they would merge with WestRock, creating packaging giant Smurfit WestRock. Investors were not impressed with the terms and shares sank 8%.
US CPI
All eyes will be on tomorrow’s US CPI print and whether US inflation has further its trend to the downside.
“Investors are expected to stay largely treading water on Wall Street rather than taking any ambitious strokes ahead of the key consumer inflation reading,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“Although Fed policymakers are expected to sit on their hands and keep interest rates on hold this month, the forecast for another hike ahead is uncertain. Sentiment keeps oscillating with expectations of another rate rise in November decreasing a little, with policymakers thought to be more nervous about doing too much and pushing the economy into a deeper slowdown.”
Expect fireworks tomorrow at 13.30 if CPI is materially out of line with the 3.6% consensus.