FTSE 100 remains flat as inflation declines to 10.5%

FTSE  A person views share prices on an Iphone, with London's Canary Wharf in the background.

FTSE traders responded in mixed ways to today’s slowdown of inflation. Photo: Getty

The FTSE 100 and European stock markets were flat on Wednesday due to mixed reactions from traders in the UK to today’s slowdown of inflation.

The FTSE 100 (^FTSE) opened flat at 7,849, while the CAC 40 (^FCHIParis, a correspondingly muted 7,082 points. The DAX (German Statistical Exchange) was a milder German index.^GDAXI) was flat at 15,190.

Ocado (OCDO.LThe biggest loser in the session was ) which has since rebounded and is leading gains at the open with shares up by 2.84%. SmithsSMIN.L) advanced 2.77% and International Consolidated Airlines (IAG.L) Gained 2.57%

Burberry GroupBRBY.LFollowing its most recent mixed update, shares of ) are up just 0.8%

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “Burberry’s shares had been climbing back towards pre-pandemic highs buoyed by expectations of higher demand due to China’s re-opening but this isn’t yet showing up in the figures, with sales growth overall disappointingly slowing to 1%.

Learn more Inflation eases slightly to 10.5% but cost of living crisis continues

“The pandemic continues to impact the Chinese market with store sales falling 23%. Investors will need to be patient before the well-heeled Chinese shoppers return in their boutiques and international retailers.

“But, festive sales rose across Europe, with double-digit growth being recorded. It is encouraging to see a rise in leather sales. The brand’s efforts to improve its image have paid off. This is because wealthy customers are more likely to be loyal and less susceptible to inflation.

Inflation measures the rate at which price increases are increasing. fell to 10.5% From 10.7% in November, the December year-end average was 10.7%

Daniel Casali, chief investment strategist at wealth management firm Evelyn Partners, said: ‘Another slowing in annual inflation – the second since October’s peak of 11.1% – will add to the newfound sense of optimism in the UK economy, triggered by last week’s surprisingly positive monthly GDP growth data.

These are not significant decelerations in price, but inflation is still high and this, along with likely negative annual GDP growth for 2023, remains a risk to both households and markets.

“The Bank of England will accept a moderated inflation, but rate-setters have some work to do before the pedal is lifted. This is especially true if growth continues on the upside or if wage increases prove to be successful.

Learn more UK households face £65bn increase in debt costs as interest rates jump

Brent crude oil (meanwhile)BZ=F) rose and was trading at around $86/barrel, amid the prospects of rising demand in China as the economy in the world’s biggest oil importer gradually bounces back.

In Asia, Tokyo’s Nikkei 225 (^N225) closed higher, jumping 2.50% to 26,791 points, while the Hang Seng (^HSI) in Hong Kong rose 032% to 21,645. The Shanghai Composite (000001.SS) finished flat at 3,224.

Stocks finished lower across the pond after Goldman Sachs (GS) missed quarterly profit estimates, worsening sentiment already dented by downbeat economic data from China earlier in the day.

The Dow Jones (^DJI) lost 1.14% to close at 33,910 points. The S&P 500 (^GSPC) slipped 0.20% to finish at 3,990 points and the tech-heavy NASDAQ (^IXIC) rose 0.14% to 11,095.

S&P 500 futures (ES=F), Dow futures (YM=F) and Nasdaq futures (NQ=FWhen trade started in Europe, all of them were in the green.

Goldman Sachs and Travelers pull Dow lower

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