FTSE 100 Index: UK stocks edge higher ahead of CPI announcement

FTSE 100 closes up seven points, UK stocks edge higher ahead of CPI announcement

The FTSE 100 index (UK100) ended Tuesday’s trading session with minimal movement, adding merely seven points to close at 7,660.20.

Throughout most of the day, the index maintained a positive trajectory, but it struggled to surpass the 7,680 mark as investors were in a wait-and-see mode, as they looked forward to the release of domestic inflation data on Wednesday and the Bank of England's interest rate decision on Thursday.

Financial services provider Hargreaves Lansdown emerged as the top gainer, bolstered by reporting its most profitable year ever to close at 806.20p. Multinational retailer Kingfisher's shares plummeted by 11% following the issuance of a profit warning.

Financial markets were leaning towards the anticipation of a 25-basis-point rate hike by the central bank, mainly due to forecasts of increased inflation in August. However, concerns arose over declining demand for mortgages and reports of growth worries among members of the Monetary Policy Committee (MPC). These concerns led some traders to position themselves for signals suggesting a more dovish stance, which in turn supported equities in London.

FTSE 100 latest: Kingfisher sinks as finance, energy firms up on Tuesday

Expectations of a more accommodative monetary policy in the coming quarters alleviated fears of reduced lending activity. This optimism drove banking giants Lloyds (LLOY) and HSBC (HSBA) to achieve gains of over 1%.

Energy corporations BP (BP) and Shell (SHEL) both closed with nearly 1% gains, as market unease persisted regarding supply and demand imbalances following Saudi Arabia and Russia’s decision to extend output cuts until the end of the year. Markets expect further growth for crude oil, with with Brent topping $95 and WTI futures for October trading above $92 on Tuesday.

Home improvement group Kingfisher saw a decline of 12.2% after revising its profit forecasts downward for the current year.

Kingfisher now anticipates a pretax profit of approximately £590 million ($730 million), representing a substantial reduction from its earlier estimate of about £634 million.

This downward revision follows a difficult first half of the year, characterized by diminished consumer expenditures in Poland and historically low consumer confidence levels in France. These factors have put pressure on Kingfisher's performance, leading to the release of the profit warning.

FTSE 100 companies: Index constituents and selection

The Financial Times-Stock Exchange 100 Share Index, commonly known as the FTSE 100, or more informally, the “Footsie” is an index that monitors the performance of the 100 largest publicly traded companies based on their market capitalization and listed on the London Stock Exchange (LSE). The name "FTSE" is an acronym derived from the Financial Times and the LSE, its original parent organizations.

Today, ownership and maintenance of the FTSE 100 index rest with the London Stock Exchange Group. It holds a comparable significance in London's financial landscape as the U.S. Dow Jones Industrial Average and S&P 500 do in the United States. The FTSE 100 serves as a significant gauge of the broader market's performance.

The FTSE 100's level is calculated by using the total market capitalization of its constituent companies and the index value. The total market capitalization is subject to change throughout the trading day, as individual share prices of the indexed companies fluctuate, consequently affecting the index value.

When the FTSE 100 is reported as moving up or down, it is compared to the previous day's closing market value. This calculation takes place continuously during each trading day, commencing at 8:00 AM at the market opening and concluding at the LSE's 4:30 PM closing time. A decline in the FTSE 100 indicates a decrease in the combined value of the largest companies listed in the United Kingdom, whereas a new high suggests that the overall worth of these indexed companies has increased.

Inclusion in the FTSE 100 is contingent on a company’s listing on the LSE rather than its country of registration — a country doesn’t have to be based in the UK to be considered as a potential index constituent. Many of the listed firms are international in scope, conducting a significant portion of their business overseas, which means the exchange rate of the British pound plays a role in their valuation. A weaker pound may increase the value of a dollar-based company when translated into pounds, while a stronger pound can reduce the earnings of companies primarily operating in Europe or other countries.

To make sure the FTSE 100's composition stays relevant, a quarterly review is conducted to ensure it includes the companies with the highest market capitalization.

As of September 19, 2023, the top 10 largest companies by market capitalization included in the FTSE 100 are as follows:

• Shell (SHEL)
• Astrazeneca (AZN)
• HSBC (HSBA)
• Unilever (ULVR)
• BP (BP)
• Diageo (DGE)
• Rio Tinto (RIO)
• GSK
• British American Tobacco (BATS)
• Glencore (GLN)

When considering indices or shares for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.

Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.