London close: Stocks manage small gains ahead of US inflation

(Sharecast News) - London markets managed modest gains by the close on Wednesday, as investor sentiment remained cautious ahead of a crucial US inflation report later in the week.

The FTSE 100 index inched up 0.01% to reach 7,931.98, while the FTSE 250 saw a slightly stronger performance, rising 0.17% to settle at 19,810.66.

In currency markets, sterling was last 0.02% stronger on the dollar to trade at $1.2631, while it rose 0.13% against the euro to change hands at €1.1674.

"The FTSE 100 continues to consolidate around one-year highs, leaving it well-placed for additional gains," said IG chief market analyst Chris Beauchamp.

"Sterling weakness has played a key role in the short-term move, but in the longer-term it looks like we could see further gains as international fund flows continue to return to UK markets thanks to the better outlook for the UK economy.

"European markets have made further strides too, with investors still keen to pile in even after the huge gains thanks to the more attractive valuations on offer. "

Beauchamp noted that the Dow "charged out of the gate" on Wall Street earlier in the afternoon, but had slowed after a couple of hours while tech stocks continued to struggle.

"Quarter-end and Friday's inflation reading are likely to keep any bullishness in check, but the fundamentals point towards further gains in April and beyond."

Eurozone businesses increasingly optimistic, yen reaches fresh lows

In economic news, businesses in the eurozone were expressing increased optimism about future prospects, according to a closely watched survey.

The sentiment index rose to a three-month high of 96.3 in March, making for a notable uptick from February's revised figure of 95.5.

"Just as the mood couldn't get more downbeat about European competitiveness, the economy is starting to show more green shoots in terms of economic activity," said ING senior eurozone economist Bert Colijn.

"Of course, structural and cyclical factors are very different, but the current mood may be overstating Europe's economic misery a bit.

"After a long period of economic stagnation following the energy crisis, the eurozone economy is expected to see growth pick up over the coming quarters."

Meanwhile, the Japanese yen was in focus after it experienced a significant decline, reaching its lowest level against the dollar in about 34 years.

The yen breached its previous record low of JPY 151.95, set in October 2022.

Japanese authorities responded to the development with assertive language, with finance minister Shunichi Suzuki saying the nation was prepared to implement measures to address any disruptive fluctuations in the foreign exchange market, as reported by CNBC.

Diploma and DS Smith jump, TI Fluid Systems slides

On London's equity markets, Diploma surged 9.46% after announcing its acquisition of Peerless Aerospace Fastener for £236m.

The move was aimed at bolstering Diploma's presence in the US and European aerospace markets.

DS Smith also saw strong gains, rising 9.15% after confirming talks with International Paper regarding a possible takeover offer.

Under the proposed terms, DS Smith shareholders could receive 0.1285 shares in International Paper for each of theirs, representing a premium of 45% to the closing DS Smith share price on 7 February.

IAG, the owner of British Airways and Iberia, climbed by 1.96% after JPMorgan Cazenove placed the shares on 'positive catalyst watch' ahead of first-quarter results.

Analysts anticipated potential upgrades to consensus 2024 earnings given a more favourable pricing backdrop.

CMC Markets leapt 13.3% after forecasting that its 2024 net operating income would exceed the previously-guided range.

On the downside, TI Fluid Systems declined 15.37% after BC Omega Holdco sold 50 million ordinary shares in the company in a placing.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,931.98 0.01%

FTSE 250 (MCX) 19,810.66 0.17%

techMARK (TASX) 4,500.34 -0.42%