London Close: Cooler US factory prices boost FTSE sentiment

Stock market sentiment received a further boost on Thursday as cooler US factory prices were reported, strengthening the case for the Federal Reserve to pause its rate hike. The FTSE 100 index closed up 0.3% at 7,440.21 points, recording a 2.5% increase for the week so far, driven by the subdued US inflation figures.

Meanwhile, the FTSE 250 closed up 0.3% at 18,631.71 points, and the AIM All-Share saw a 0.5% gain, closing at 750.29 points.

According to the US Bureau of Labor Statistics, producer price inflation in June cooled more than anticipated. The producer price index rose by 0.1% on an annual basis, a significant decrease from the 0.9% increase seen in May. Market expectations projected a cooling to just 0.4% for June.

Furthermore, Wednesday’s data revealed that the US consumer price index rose by 3.0% annually in June, down from a 4.0% rise in May. The consensus forecasted a cooling to 3.1% for the headline inflation figure.

These moderate inflation readings provide hope that the Federal Reserve’s rate hike cycle is nearing its end, fostering optimism for a soft landing of the US economy. There are also expectations that the US can avoid a “hard landing,” wherein inflation decreases at the expense of economic growth.

In the FTSE 100, housebuilders faced declines as Barratt Developments predicted a significant drop in home completions for the next year. Barratt’s shares fell by 1.5%, while Taylor Wimpey and Berkeley Group saw negative impacts with declines of 2.1% and 1.0% respectively.

Domino’s Pizza in the FTSE 250 experienced a 4.7% increase. The company announced the appointment of Andrew Rennie, former head of multiple Domino’s franchises, as its new CEO effective from August 7. Rennie’s extensive experience within the Domino’s Pizza Enterprises makes him a safe choice for the position, providing stability amidst the UK franchise’s recent challenges.

Trustpilot ended the day with a 12% gain. The online consumer reviews platform expects to report a 15% increase in revenue for the first half of the year, reaching $85 million, or 18% at constant currency. It reiterated its guidance for mid-teens percentage revenue growth at constant currency for the entire year of 2023.

Looking ahead this week, Burberry, the luxury fashion brand, is set to release a trading statement on Friday.