FTSE 100 edges up after U.S. inflation data, Smiths Group rallies

1:18 pm Wednesday, November 13th, 2024

By Sruthi Shankar

(Reuters) -The UK’s FTSE 100 ended slightly higher on Wednesday as U.S. inflation data was in line with expectations, keeping hopes of rate cuts intact, while defence company Smiths Group rallied after upgrading its revenue outlook.

The blue-chip FTSE 100 edged up 0.1%, while the FTSE 250 index of midcap companies dipped 0.3%.

U.S. stocks pared early declines after consumer prices increased as expected in October, and did not change expectations that the U.S. central bank would deliver a third rate cut in December.

“We still think it is most likely the Federal Reserve will cut rates at the upcoming December meeting, but an outside possibility of a ‘skip’ still exists,” said Preston Caldwell, chief U.S. economist at Morningstar.

Meanwhile, persistently high inflation in Britain poses a risk that some drivers of price growth could be heading upwards, Bank of England interest rate-setter Catherine Mann said.

The BoE last week cut borrowing costs for only the second time since 2020 and said further reductions were likely to be gradual as it assessed the persistence of inflation pressures.

UK stocks have fluctuated since Donald Trump’s re-election as U.S. president, as investors fret over the possibility of a trade war hurting the European economy. Disappointment over China’s stimulus steps has also weighed on the mood.

Smiths Group rallied 10.5%, having touched a record high earlier, after the British engineering firm upgraded its annual organic revenue outlook following strong demand for its next-generation scanning and explosives detectors.

Babcock jumped 3% after the defence group said it was on track to meet forecasts for the full year as the backdrop of geopolitical instability drives demand for its defence equipment and services.

Automotive parts supplier Dowlais jumped 7% after it retained its full-year earnings outlook despite a decline in production and sales in China and North America.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Vijay Kishore and Ros Russell)