Homebuilders and Utilities paced gains on Thursday following the release of a weaker-than-expected reading for US inflation in the month of June that weighed on longer-term government bond yields on either side of the Atlantic.
Headline CPI gains in the States slowed from an annual pace of 3.3% in May to 3.0% (consensus: 3.1%) in June.
That was the slowest pace of increase since one year before and left Fed funds futures pricing in 93% odds of a 25bp rate cut for when the US central bank next met on 18 September
On home shores, the Office for National Statistics announced that UK gross domestic product expanded at a month-on-month pace of 0.4% in May (consensus: 0.2%). A 0.3% rise in services output was one of the key drivers of growth, alongside a 1.9% jump in construction output.
The stronger-than-expected UK GDP data, together with similarly strong readings on wage growth in a couple of surveys and hawkish speeches from BoE officials, meant that an August reduction in Bank Rate was now a close call, said economists at Bank of America.
Nonetheless, BofA was still anticipating a rate cut in the UK come August.
Worth noting, Sterling was higher in the background, tacking on a further 0.49% to 1.2912.
The FTSE 100 ended the day up by 0.36% to 8,223.34, with the upside capped by gains in the exchange rate, whilst the second-tier index added 1.25% to 21,188.91.
Water utilities meanwhile were boosted by the release of Ofwat’s draft determinations on the industry’s five-year investment plans.
Both Severn Trent and Pennon were lauded by the regulator for their “outstanding” business plans.
Top performing sectors so far today
Automobiles & Parts 1,161.99 +3.46%
Real Estate Investment & Services 2,358.05 +2.50%
Household Goods & Home Construction 13,925.93 +2.22%
Industrial Transportation 3,911.06 +2.16%
Gas, Water & Multiutilities 6,107.08 +2.11%
Bottom performing sectors so far today
Media 12,500.68 -0.79%
Non-life Insurance 3,659.47 -0.74%
Telecommunications Service Providers 2,055.80 -0.67%
Oil, Gas and Coal 9,050.90 -0.58%
Tobacco 28,802.38 -0.09%