US inflation figures will today provide Wall Street with a steer on the outlook for interest rate cuts in 2025.
November’s annual rate is set to edge up to 2.7%, from 2.6% the previous month.
The travel industry is also in focus after TUI posted results and Heathrow said it expects a record December for passenger numbers.
FTSE 100 Live Wednesday
- Resolution Life sold in $8.2bn deal
- IAG shares get “top pick” status
- Tobacco firm BAT on track
Market update: IAG rallies in downbeat FTSE 100, CEO return boosts Kainos
10:23 , Graeme EvansCity upgrades today made IAG and Reckitt Benckiser the best performing stocks in a session when the FTSE 100 index was held back by US economic jitters.
Inflation figures due later may help determine the path of interest rates in the world’s largest economy during 2025. Wall Street expects a slight uptick in November’s annual rate to 2.7%, from 2.6% previously.
The release meant a risk-averse session in London as the FTSE 100 index drifted 16.49 points to 8263.87 and the FTSE 250 index fell 42.46 points to 20,931.48.
British Airways owner IAG led the top flight, rising 5.5p to 287.5p after Deutsche Bank lifted its price target to 400p as one of its top picks in European transport.
The bank sees scope for further margin recovery at British Airways, while constrained supply on North Atlantic routes should help pricing.
Low-cost airline easyJet is also in favour, although Deutsche Bank’s price target of 715p failed to prevent shares easing 3.8p to 573.4p in today’s session.
Elsewhere in the sector, investors took a liking to the FTSE 250-listed shares of food travel business SSP.
It rose 4% or 7.4p to 194.2p after Heathrow forecast a record December for passenger demand. The London airport’s Terminal 5 is home to the UK’s busiest Starbucks, which is run in collaboration with SSP.
Among other risers in the FTSE 100, Reckitt Benckiser lifted 68p to 4771p after HSBC raised its estimate on the Strepsils and Harpic owner to 5550p.
British American Tobacco, whose portfolio includes Dunhill and the vaping business Vuse, improved 2p to 2991p after it reiterated 2024 and medium-term guidance in its year-end update.
Chief executive Tadeu Marroco said: “I am confident that we will deliver an improved underlying performance as we move from investment to deployment in 2025.”
In the FTSE 250 index, Kainos shares jumped 7% or 58p to 861p after the Belfast-based IT provider announced Brendan Mooney’s return as chief executive.
He led the group for 22 years before stepping down in September 2023. Chair Rosaleen Blair said: “Having overseen a hugely successful period of growth for Kainos, he needs very little introduction to anyone connected with the group.”
IAG shares rally on bank's “top pick” status
09:00 , Graeme EvansIAG shares were given a lift today after Deutsche Bank named the British Airways and Iberia owner as one of its top picks in European transport for 2025.
The bank upgraded IAG to a Buy recommendation and lifted its price target from 215p to 400p. The FTSE 100-listed stock rose 1.5% or 4.3p to 286.3p in today’s session.
The bank said it saw scope for margins to continue to recover at British Airways, supported by a £7 billion transformation programme. It also highlighted constrained supply on North Atlantic routes that should help pricing.
Low-cost airline easyJet is also in favour as Deutsche Bank believes the up-gauging of the fleet, lower winter losses and further growth in Holidays will help drive profits per passenger back towards historic peak levels.
The bank has an easyjet price target of 715p, but shares today fell 4.4p to 572.8p.
TUI earnings rise 33%, demand strengthens for next summer
08:45 , Graeme EvansFormer London-listed stock TUI has posted a 33% rise in underlying earnings to 1.3 billion euros (£1.1 billion) for the year to September 30 as revenues lifted 12%.
The travel group, which recently ditched its listing on the London stock market to focus solely on Frankfurt, expects further growth in the new financial year.
However, this will be at a slower pace as revenues are forecast to rise by between 5% and 10% and underlying pre-tax earnings to increase by 7% to 10% against a backdrop of higher costs.
Bookings and prices are ahead across the group for winter and summer, including signs of momentum in the UK over the past month.
FTSE 100 lower despite IAG and Reckitt upgrades, Ashtead selling continues
08:21 , Graeme EvansThe FTSE 100 index is 30.61 points lower at 8249.75, driven by weaker mining stocks after Rio Tinto and Anglo American fell by more than 1%.
Ashtead lost another 3% on top of yesterday’s 14% fall after Goldman Sachs cut its price target to 6600p in the wake of yesterday’s profit warning. The shares of the Sunbelt owner fell 170p to 5222p.
IAG shares lifted 1.4% or 4p to a fresh post-pandemic high of 286p after Deutsche Numis gave the British Airways owner a Buy recommendation and 400p target price.
Reckitt Benckiser also benefited from City support, lifting 39p to 4742p after HSBC raised its estimate on the consumer products business to 5550p.
The shares of British American Tobacco rose 15p to 2984p after it reiterated guidance in a year-end update.
Resolution Life sold to Nippon Life in $8.2bn deal
08:05 , Graeme EvansResolution Life, which was founded two decades ago by Sir Clive Cowdery as a cosolidator of in-force life and annuity policies, has been bought by Nippon Life in a deal worth $8.2 billion (£6.4 billion)
Since 2003, Resolution Life and previous vehicles have deployed $19 billion in the acquisition, reinsurance, consolidation and management of life insurance companies.
They have served the needs of 13 million policyholders while managing over $385 billion of assets.
Sir Clive said: "For 22 years, Resolution Life and prior Resolution companies have raised our capital from institutional investors and the public markets.
“I am delighted that we are now going forward under the single ownership and capital support of Nippon Life, an institution I admire and respect.”
Nippon, which was founded 130 years ago and is the biggest Japanese life insurer by revenue, is one of Resolution’s earliest investors as well as its largest.
The parties said the move will accelerate growth for both Resolution Life and Nippon Life “in the highly active, multi-trillion-dollar global life and annuity consolidation sector”.
Resolution Life's institutional business in the US, the UK, Bermuda and Singapore will become a subsidiary of Nippon Life, while Resolution Life will continue to be led by Sir Clive as chairman and chief executive.
Tobacco giant BAT on track for mid-term guidance
07:28 , Graeme EvansBritish American Tobacco today reiterated full-year expectations after reporting an acceleration in revenues growth over the second half of 2024.
The FTSE 100-listed company, whose portfolio includes Dunhill, Kent, Lucky Strike and the vaping brand Vuse, said it benefited from factors including the phasing of innovation in newer categories.
Chief executive Tadeu Marroco added: "We are on track to deliver our 2024 guidance, demonstrating the strength and resilience of our business.”
The company’s 2024 forecasts show a 2% decline in global tobacco industry volumes and for its constant currency revenues and adjusted profits to deliver growth in the low-single digits.
BAT continues to target mid-term guidance of 3-5% revenue growth and mid-single digit adjusted profit growth from operations by 2026.
Marroco added: “As previously highlighted, we do not expect the journey to our mid-term guidance to be linear.
“Building on the strong foundations we have established, I am confident that we will deliver an improved underlying performance as we move from investment to deployment in 2025.”
FTSE 100 seen lower ahead of US inflation reading
07:00 , Graeme EvansThe FTSE 100 index is set for another disappointing session after falling 0.9% yesterday on the back of weakness in the heavyweight mining sector.
Futures trading is pointing to a fall of 19 points to 8261, a performance driven by uncertainty ahead of today’s US inflation reading.
Wall Street expects an uptick in November’s annual rate to 2.7% from last month’s 2.6%.
A stronger number than this may cause the US Federal Reserve to review the pace of next year’s anticipated interest rate cuts.
The inflation jitters yesterday led to weaker performances for key US benchmarks, with the Dow Jones Industrial Average down 0.4%.
