FTSE hits 18-month high as US inflation data boosts mood

The FTSE 100 index closed up 59.10 points, or 0.8%, at 7,220.14 – the highest level since February 2020.

The FTSE 100 closed up at an 18-month high (Dominic Lipinski/PA) (PA Wire)

London’s leading index closed the day up at an 18-month high as traders rode the wave of confidence from the US with new figures suggesting talk of spiking inflation may be overplayed.

The FTSE 100 index closed up 59.10 points, or 0.8%, at 7,220.14 – the highest level since February 2020.

In the US, the consumer price index of inflation rose 5.4% in July from a year before, the same pace as June’s 13-year high last month.

A couple of years ago, that would have sounded like a pretty far-out number, but today it might ease some fears by suggesting inflation hasn't moved much higher than where it was a month ago

JJ Kinahan, TD Ameritrade

But analysts were pleased it had not grown further.

TD Ameritrade analyst JJ Kinahan said: “A couple of years ago, that would have sounded like a pretty far-out number, but today it might ease some fears by suggesting inflation hasn’t moved much higher than where it was a month ago.”

European markets followed the trend, with the German Dax 30 up 0.35% and the French Cac 40 up 0.55%.

The pound was flat against the euro and dollar as markets closed, at 1.174 and 1.387 respectively.

In company news, Deliveroo revealed orders hit 148.8 million in the first half of the year – double the 74.5 million in the same period last year. Gross transaction value also doubled to nearly £3.4 billion and pre-tax losses reduced from £128.4 million to £104.8 million over the period.

But shareholders remained unimpressed with the improved numbers, with shares dropping 22.1p, or 6.1%, to 341p – wiping out some of the gains made following the news Delivery Hero had bought a 5% stake in the firm.

PayPoint shareholders celebrated as Ofgem announced it was closing an investigation into whether the company broke competition laws over its energy top-up business.

The company made commitments to the regulator and has promised to pay £12.5 million into a voluntary fund administered by officials. Shares closed up 16p at 610p.

Insurance giant Prudential saw new business profits rise 25% in the first half of the year to 1.18 billion dollars (£850 million), beating analyst expectations. The Asia-focused life insurance firm saw shares close up 38p, or 2.6%, at 1,489.5p.

Rival insurance firm Admiral also reported strong numbers, with a three-quarters surge in profit in the first six months of the year. Bosses will also pay a record dividend, which pleased shareholders with shares closing up 135p, or 3.9%, at 3,584p.

UK defence business Meggitt saw its shares surge 16.1%, or 115p to 830p, after the board confirmed it had received a second, non-binding, offer for the firm.

The bid from TransDigm of 900p a share is now under consideration, after the company had previously recommended shareholders back a £6.3 billion bid from Parker-Hannifin.

And accommodation provider Hostelworld revealed a “modest” recovery following the easing of lockdown restrictions, with second-quarter revenue at two million euros (£1.7 million), compared with zero in the second quarter of 2020. Shares were flat at 95p.

The biggest risers on the FTSE 100 were Spirax-Sarco up 640p at 15,765p; Admiral up 135p at 3,584p; JD Sports up 33p at 972.8p; Glencore up 10.9p at 341.35p and LSEG up 248p at 8,098p.

The biggest fallers were Just Eat Takeaway down 262p at 6,271p; Phoenix down 15.4p at 684.6p; Rio Tinto down 63p at 6,101p; Scottish Mortgages down 13p at 1,357p and B&M down 4.8p at 556.2p.