9.40am: BP and Shell head higher

OIl companies are giving some support to a UK market which looks in a bit better shape than on Tuesday.

The FTSE 100 is currently up 38.87 points or 0.57% at 6898.74.

BP PLC (LON:BP.) is 2.06% or 6p better at 297.75p while Royal Dutch Shell PLC (LON:RDSA) is up 24.4p or 1.81% at 1374.6p.

The moves come despite a 0.32% slip in Brent crude to $66.36 a barrel, but on the whole the oil price is holding up despite renewed worries about a rise in the number of COVID-19 cases worldwide hitting travel and the prospects of economic recovery. Concerns about supply disruption from Libya is also in investors’ minds.

Meanwhile the news that petrol prices helped fuel UK inflation in March is probably helping the keep the oil giants buoyant.

AJ Bell investment director Russ Mould.said: “After suffering its most substantial fall in two months, investors will be relieved to see the FTSE 100 dust itself off and get fight back on Wednesday as it looks to regain some of the big losses.

“The move higher comes despite one of the market’s big fears – inflation – ticking up in the UK. It probably helps that the CPI measure came in short of expectations and it is also worth remembering that a modest climb in prices is a sign of the economy getting back on its feet…

“Shares linked to the reopening, including airlines and other travel-related businesses, managed a bit of a rebound but we will almost certainly see more swings in sentiment as we move from spring into summer.”

Another factor is when central banks decide to act on the nascent signs of inflationary pressures, despite the US Federal Reserve consistently playing down the idea it is worried about rising prices.

Neil Wilson at Markets.com said: “How markets respond over the coming weeks will depend a lot on the vaccine programme and the path of new cases, as well as signals from central banks. The ECB meeting [on Thursday] carries some degree of risk for markets, particularly if the governing council or [president Christine] Lagarde offers any hints of hawkishness – it’s too easy to underestimate the strength of the hawks and the ECB’s willingness to exit pandemic emergency mode before the Fed.”

8.29am: Will leading index hit 7000 again any time soon?

Like a goal disallowed by VAR with all the attendant emotional stress, the planned European Super League came and went in a flash.

So too the 7000 level on the FTSE 100, although most people will be hoping we see that again rather sooner than any more football break-away plans.

After Tuesday’s 140 point fall, the leading index is at least heading in the right direction in early trading.

With UK inflation figures causing little surprise, the FTSE 100 is up 21.59 points or 0.31% at 6881.46.

 

Richard Hunter, head of markets at interactive investor, said: “A marginal upswing in inflation will keep the bears at bay for the moment. Investors have been questioning the longer term impact of such an accommodative monetary environment for some time, but there is little in the UK number to accelerate such concerns. Fuel and transport costs inevitably rose following a strong spike in the oil price this year, with the overall figure held back by declining food prices, some of which are below pre-pandemic levels.

“More broadly, general investor caution has also made its way to the FTSE100, which has dipped over the last couple of trading sessions. however, the index remains ahead in the year to date by 6.4%, and will also be subject to a busy corporate reporting season next week which may determine any shorter term progress.”

Antofagasta PLC (LON:ANTO) has just reported and its shares have not progressed, quite the reverse. They are down 0.84% or 15.5p at 1825.5p. It said copper production was down 5.7% in the first quarter, as expected, with gold production down 9.2%.

It said second half production is forecast to be slightly stronger than the first, and full year guidance was unchanged.

But it added: “Guidance assumes COVID-19 restrictions will remain in place for all of 2021. However, because of the new wave of COVID-19 cases and the nationwide lockdown imposed in late March, major maintenance at Los Pelambres originally planned for Q2 and which requires a large number of additional workers on-site is under review so that some of the non-critical activities can be rescheduled to later in 2021.”

Among the risers Avast PLC (LON:AVST) is leading the way. The cybersecurity firm has climbed 2.66% or 12.7p to 490.3p on further consideration of Tuesday’s results.

And British Airways owner International Consolidated Airlines PLC (LON:IAG) has recovered some of the losses incurred when reports of new COVID-19 variants hit travel shares, and is uup 2.06% or 3.98p at 197.08.

7.56am: Fuel and clothing prices rise

The UK’s inflation rate has risen in March, but marginally less than expected.

The consumer prices index rose to 0.7% from 0.4% in February, compared to forecasts of an increase to  0.8%.

 

Fuel costs helped push the figure higher, as anyone who has filled up with petrol recently can probably attest. Clothing prices were also higher, with food prices falling.

Laith Khalaf, financial analyst at AJ Bell, said: “The spike in inflation is nothing to worry about – yet. We always knew inflation was going to rise once we started lapping the beginning of the pandemic, in particular the steep falls in energy prices witnessed in the spring of last year. Petrol prices were 4.3p higher in March than a year ago, when they stood at 119.4p. In May 2020, they dropped to 106.2p, so this upward pressure on inflation will continue to grow in the coming months, even if fuel prices are relatively stable now.

“But CPI is still way below target, and this isn’t the kind of embedded, long term inflation that will cause sleepless nights for anyone at the Bank of England. The Bank has looked through much higher inflation before, so interest rate rises remain very much in the long grass. The big question is whether the economic recovery, combined with fiscal and monetary stimulus, will start to foster a more sustained, inflationary trend that has the potential to get out of hand. This risk isn’t likely to come home to roost anytime soon, with unemployment expected to rise later this year, thereby acting as a drag on rising wages. But beyond that, the worry is that the powder keg of cheap money could ignite an inflationary spiral.”

6.33am: Leading shares set to open higher

The FTSE 100 is expected to add a few points at the start of Wednesday’s session as investors await the latest batch of inflation data for the UK.

Spread-betters IG expect the blue-chip index to open up around 4 points after ending Tuesday’s session down 140 points at 6,859.

The market seems to be struggling to recover from its recent sell-off as investors consider whether the post-pandemic economic recovery will be as smooth as initially expected amid surges in cases in multiple countries and the increased fear of new variants potentially upending vaccine efforts.

The downward trend was evident on Wall Street overnight, with the Dow Jones Industrial Average closing 0.75% lower at 33,821, while the S&P 500 dropped 0.68% to 4,134 and the Nasdaq fell 0.92% to 13,786.

It was a similar picture in Asia this morning, with Japan’s Nikkei 225 down 1.99% while Hong Kong’s Hang Seng dropped 1.84%.

Meanwhile, the latest UK inflation data will give investors some clarity on whether to expect a sharp rise in inflationary pressures in the coming months as the British economy recovers from lockdown.

This could mean more rises from UK bond yields, which in turn will provide additional downward pressure on equities.

On currency markets, the pound was down 0.07% against the dollar at US$1.392, although the inflation data later could provide some catalysts for movement.

Around the markets:

Sterling: US$1.392, down 0.08%

Brent crude: US$66.09 a barrel, down 0.72%

Gold: US$1,783 an ounce, up 0.72%

Bitcoin: US$55,593, up 0.71%

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were mostly lower on Wednesday as the World Health Organization warned that the COVID-19 global infection rate is approaching its highest level ever.

The Hang Seng index in Hong Kong fell 1.66% while the Shanghai Composite in China gained 0.10%.

In Japan, the Nikkei 225 slipped 1.96% and South Korea’s Kospi dipped 1.45%.

Shares in Australia fell, with the S&P/ASX 200 trading 0.59% lower.

READ OUR ASX REPORT HERE

Proactive Australia news:

Antipa Minerals Ltd (ASX:AZY) has received binding commitments for a non-underwritten placement to raise $22 million and will undertake a share purchase plan (SPP) of up to $3 million, resulting in a total capital raising of up to $25 million.

Emyria Ltd (ASX:EMD) has received firm commitments from sophisticated and strategic investors in a well supported $5 million placement.

Imugene Ltd (ASX:IMU) (OTCMKTS:IUGNF) has achieved a clinical milestone for its HER-Vaxx cancer immunotherapy in Phase 2 gastric cancer clinical trial.

Alta Zinc Ltd (ASX:AZI) (FRA:8EE) continues to be encouraged by exploration at Gorno Project in northern Italy with multiple high-grade zinc and lead intersections, along with silver, received from drilling the Ponente area of the Gorno Mine.

Musgrave Minerals Ltd (ASX:MGV) (OTCMKTS:MGVMF) (FRA:6MU) has received further strong results at its flagship Cue Gold Project in Western Australia with regional aircore drilling at Target 14 within the new gold corridor west of Lena returning up to 12 metres at 8.7 g/t from 66 metres.

Matador Mining Ltd (ASX:MZZ) (OTCMKTS:MZZMF) (FRA:7MR) has generated multiple new priority geophysical gold targets near the Window Glass Hill (WGH) deposit within the Cape Ray Gold Project in Newfoundland, Canada.

EcoGraf Ltd’s (ASX:EGR) proposed Kwinana Battery Anode Materials Facility has been granted major project status, which recognises the importance of the development and supports the Australian Government’s Critical Minerals Strategy and Western Australia’s Future Battery Industry Strategy.

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