FTSE 100 follows up yesterday’s strong gains with further progress as UK inflation comes in below forecasts, SSE ups capital investment plans and Experian posts strong profit

“The FTSE 100 maintained the head of steam it had built up on Tuesday afternoon as UK inflation followed yesterday’s US reading and came in below expectations,” says AJ Bell Investment Director Russ Mould.

“With confidence there will be no rate increases before the end of the year the market is now looking ahead to the prospect of rate cuts. Whether falls in inflation will stall and whether the Bank of England is as keen as Rishi Sunak to declare mission accomplished in the fight against rising prices remains to seen.

“What will encourage observers in Threadneedle Street is the fall in services inflation – further falls in this area could be the precursor to a pivot towards bringing rates down.

“For now, investors are in the mood to celebrate and the prospects of a big Santa Rally are building as we head towards December.”

SSE

“The latest update from SSE provided further evidence that its balanced integrated model, encompassing both transmission and distribution assets, is a winner, having resisted activist pressure to break the company up in 2021.

“Given the turbulence and volatility in the energy sector, SSE’s flexibility is a real strength and helped it absorb unfavourable weather conditions for its renewable energy assets.

“SSE is at the forefront of the UK’s efforts to build out renewable energy capacity and in this regard the company’s increases in capital investment expectations have wider relevance. This is underpinned by stronger than expected first half earnings.

“It also suggests that for all the rhetoric about pushing back on net zero there is confidence in the industry that the commitment from government is still there.

“The company’s planned investment will absorb cash flow and, while it was expected, confirmation of a rebasing of dividends is still a bitter pill for shareholders.”

Experian

“Credit data services outfit Experian’s first half numbers are particularly pleasing when you consider the disappointment served up by its sector peer TransUnion last month.

“It demonstrates the benefits of Experian’s more diversified model – the ability to translate a 5% increase in revenue to a near 50% increase in pre-tax profit is impressive and testament to just what an efficient and profitable operation this is.

“Ultimately data plays an increasingly critical role in the global economy and that is not something which is likely to change in the short, medium or long term. As long as Experian can continue to execute properly its prospects look pretty strong.”

These articles are for information purposes only and are not a personal recommendation or advice.