FTSE crosses 7,100 despite anxious wait for inflation data

The FTSE 100 managed to inch past the 7,100 level despite investor anxiousness over upcoming US inflation data and today’s European Central Bank meeting.

The FTSE 100 sneaked past 7,100 this morning despite investors anxiously awaiting US inflation data for clues as to the direction of central banks’ monetary policy.

The blue-chip index was up 0.3%, or 21 points, at 7,102 by mid-morning, ahead of not only a European Central Bank (ECB) policy meeting but the latest inflation reading from the US.

The spectre of rising prices has been weighing on markets and the two events today may provide investors with a steer on whether central banks will start to tighten their monetary policy and when they might hike interest rates. 

Spreadex analyst Connor Campbell said there was an ‘air of anxiousness to the markets’ but not without good reason.

‘For [ECB president] Christine Lagarde and the gang, increased optimism of an economic recovery in the eurozone – to be backed by a new set of forecasts this afternoon – and a region-wide inflation reading that is now beyond the 2% target are the main points of focus,’ he said.

‘And that could cause the ECB to start talking about tapering its €1.85tn bond-buying programme.’

In the US, the Consumer Price Index readings could be ‘more market-friendly’ as inflation is expected to decline month-on-month. ‘It is worth noting however, that the same was expected last month, and instead we got a pair of recent highs,’ said Campbell.

Autotrader (AUTO) was the biggest riser among UK blue chips, up 5.9%, or 34p, to 612p despite the car classifieds website’s profits going into reverse, with pre-tax profit down 37% to £157m for the year. However, investor sentiment was buoyed by the company being ‘in pole position to capitalise on the shift to online car sales’, said Hargreaves Lansdown analyst Susannah Streeter.

BT (BT) was up 3% to 188p after French telecoms giant Altice took a 12% stake in the group, becoming its largest shareholder, but said it has no intention to make a takeover bid and instead sees BT as a ‘compelling opportunity’.

The mid-cap FTSE 250 index ticked 0.2%, or 38 points, lower to 22,721. Luxury car maker Aston Martin Lagonda (AML) slumped 5.2% to £19.79 a day after winning an engineering award for its DBX model. Restaurant Group (RTN) slipped 3.4% to 134p as it started a formal process to recruit a new chair after Debbie Hewitt announced she was leaving to join the English Football Association.

Gabelli going out on high

Gabelli Value Plus (GVP ) climbed 2.4% to 170p as Associated Capital Group, an affiliate of GVP’s manager, confirmed it would abstain from next month’s continuation vote. Its refusal to do so sparked a corporate governance dispute with the board last year which wanted to pursue a voluntary liquidation of the poorly performing North American fund, in line with the majority of its shareholders. Annual results showed a strong rebound from pandemic lows with net asset value (NAV) surging 64% in the year to 31 March.

In other investment trust news, Aquila European Renewables (AERS ) jumped 2.1% to 95p after it increased its commitment to the construction of The Rock wind farm in Norway by up to €35.6m.

Octopus Renewables Infrastructure (ORIT ) slipped 1.2% to 105.9p on plans to raise £100m with new shares priced 103.5p. The issue price represents a 6.3% premium to the latest NAV and a 3.5% discount to yesterday’s closing price.

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