The FTSE 100 reversed early losses and exploded higher after US CPI inflation missed expectations.
US October Consumer Prices rose only 0.4% month-on-month versus expectations of 0.6% and Core consumer price rose 0.3% vs 0.5%.
The immediate market reaction saw US bond yields fall with the dollar and US equity futures surge. NASDAQ futures were 3.3% higher at the time of writing. The FTSE 100 spiked around 60 points in the minutes after the announcement.
Markets were also marking down expectations of another 75 bps hike in December. If this starts a trend of lower inflation numbers, perceptions of when the Fed will ‘pivot’ will adjust and support equities.
FTX collapse
European markets had started the day on the back foot after the FTX crypto exchange effectively became worthless.
The bankruptcy of FTX had dragged on US exchanges overnight as markets accessed the wider implications of the severe losses it would mean for individuals and businesses. Although crypto is seen as an alternative to mainstream finance, crypto has become embedded into the financial system as such dramatic losses will see a huge loss of wealth for many across the world.
“It has been a wild week in Cryptoland, with the implosion of the FTX crypto exchange, which is now reported to have an $8bn black hole at the heart of it. At the beginning of the week its founder Sam Bankman-Freid was reportedly worth $16bn, Bloomberg reckon 95% of that disappeared in a single day, the fastest pace of one person losing money in history.” said Steve Clayton, Head of Equity Funds, Hargreaves Lansdown.
FTSE 100 Corporate Results
It was again a busy day for the FTSE 100 in terms of corporate updates. Companies reporting today included AstraZeneca, Centrica, Haleon and National Grid.
Centrica was the FTSE 100’s top gainer after the utility company said they expected results for the 2022 FY to be at the top end of sell side analyst expectations.
“British Gas owner, Centrica, who recently reopened the rough gas storage facility announced that trading has been strong and the company steered analysts toward upgrading their numbers. The strength is coming from their upstream oil and gas production operations, whilst retail profitability is struggling. The company announced a further £25m of funding for customer assistance as people struggle with their rising energy bills,” said Steve Clayton
AstraZeneca shares built up steam during the session and helped add a notable number of points to the FTSE 100. AstraZeneca shares added 3.5% after reporting a whopping 37% increase in nine month revenue to $33.1bn.
“This was a strong performance by AstraZeneca reflecting good growth from its higher value medicines. But what’s really exciting is its continuing high hit rate in terms of R&D successes. 19 Major regulatory approvals since the last update help underpin the outlook for sustainable long-term growth, and there is likely to be more to come with 18 Phase III read-outs expected in 2023,” said Derren Nathan, Head of Equity Research at Hargreaves Lansdown.
