Smiths Group Rallies 10%, US CPI In Line

Smiths Group surged 10.5% after raising its revenue forecast, driven by strong demand for its advanced scanning and explosives detection technology. US CPI data met expectations, reinforcing hopes for a December interest rate cut by the Federal Reserve. Wall Street was little changed after the data release, though the dollar touched a fresh 1-year high over the euro and Bitcoin broke over $90,000.

Equities

The FTSE 100 edged up 0.1% on Wednesday, buoyed by steady US inflation data that bolstered hopes for an interest rate cut by the Federal Reserve in December. Meanwhile, the FTSE 250 slipped 0.3%.

Smiths Group rose 10.5% after it lifted its revenue outlook, citing strong demand for its advanced scanning and explosives detection technology. Babcock also gained 3%, supported by geopolitical tensions driving demand for its defence equipment. Dowlais, an automotive parts supplier, added 7% after retaining its full-year earnings outlook despite declining sales in China and North America.

In the US, the Dow Jones rose 0.11%, the S&P 500 gained a minimal 0.02%, and the Nasdaq slipped by 0.26% - all basically flat on the day - as October inflation data aligned with forecasts. The consumer price index increased by 0.2% for the month, marking the fourth consecutive month of moderate inflation growth, while core inflation rose 0.3%, matching economist predictions. As a result, traders raised their odds of a 25 basis-point cut to over 82%, up from 58.7% earlier in the week.

Rivian soared 13.7% following an increased investment from Volkswagen, reflecting optimism about the EV manufacturer’s future. Conversely, Spirit Airlines tumbled by a stark 59% after reports emerged that the airline might be preparing for bankruptcy.

In the bond market, yields on 2-year Treasury notes fell sharply following the inflation report, though the 10-year yield rebounded to 4.46% as investors focused on potential long-term inflation under the anticipated policies of the incoming US administration.

Forex & Commodities

The US dollar rose to a one-year high against major currencies on Wednesday, spurred by October inflation data that aligned with expectations.

The euro and yen weakened against the dollar, with the euro falling to a one-year low of $1.0556, weighed down by European political uncertainties and concerns over US trade policies. Meanwhile, the yen dropped below 155 per dollar.

Bitcoin also surged past $90,000, marking a new all-time high as investors speculated on potential regulatory benefits under the incoming Trump administration.

The strong greenback exerted pressure on gold, which dipped for the fourth consecutive session, as spot gold traded 0.7% lower at $2,580.39 per ounce, close to a two-month low.

Brent crude prices rose slightly by 0.5%, settling at $72.28 per barrel, after some support for prices emerged from news of the continued “close coordination” within OPEC+ following discussions between Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman.