European and US stocks mixed as US inflation meets expectations

Head over to our US site for more market moving updates. Happy Friday!

A take from Chris Beauchamp, chief market analyst at online trading platform IG:

A company called Goodlord has the stats:

• Average rent is up by 1.4% month-on-month for May, with rental growth hitting the highest levels seen since October

• Year-on-year rents for May are up 6.4%

• While rents continue to outpace both inflation and earnings, there are signs of pressures easing

Alex Kuptsikevich, the FxPro senior market analyst said:

The travel retailer was hit hard during COVID but has made a strong comeback with a “good” start to the financial year. However, its share price has plummeted 44% over half a decade and investors might be questioning their decision to hold.

“WH Smith last reported that strong trading momentum had continued into the second half. That was just a month ago and, with the peak summer period still to come, investors aren’t expecting too many changes. First half profit growth was slower than revenue, so investors will be looking to see if moderating inflation is giving margins a boost,” Derren Nathan, head of equity research at Hargreaves Lansdown, said.

While the broader market gained around 12% in the last year, WH Smith shareholders lost 26%, including dividends. However, there are growth opportunities for the company.

“The market’s not expecting a huge acceleration in growth in the second half, despite the growing travel hub footprint, so there is some potential scope for upside as the year progresses," said Nathan.

"There’s a substantial opportunity to take market share overseas, particularly in North America, so analysts will be looking at site openings, which were last thought to be around 110 in the current financial year. The estate totals around 1,300 travel stores, of which just under half are in the UK. Travel is now the dominant arm, with more than double the number of stores seen on the high street.”

For those looking to invest, the retailer is seen as a bargain FTSE 250 stock, with its shares commanding a price-to-earnings growth (PEG) ratio of just 0.9.

READ MORE: Stocks to watch next week: WH Smith, B&M, BAT and Inditex

There were just 123 fewer mortgages approved in April than in March, but 12,553 more than during April 2023. Mortgage approvals are tracking at 5% below the five-year average.

Anthony Codling from RBC Capital Markets breaks it down:

Eurozone inflation rose more than expected in May, as consumer prices were up an annual 2.6%. The print had expected to come in at 2.5% after staying stable in the last couple of months at 2.4%,

Core inflation — a measure that strips out the volatile elements of the data — was expected to be steady at 2.7%, according to a Reuters poll. The official reading came in slightly hotter at 2.9%.

The data compounds worries about when the European Central Bank (ECB) will look to start cutting rates, softening predictions for an aggressive cutting cycle.

Up to May's reading, inflation had been trending downward, towards the ECB's preferred 2% target.

A Bloomberg survey of economists found that economists were already dialling back their expectations for how far the European Central Bank will lower interest rates after the first scheduled cut next week, which is still expected to go ahead.

Yahoo Finance UK reporter Pedro Goncalves has the latest on house price data:

UK house prices rose for the first time in three months, with the housing market showing signs of "resilience" against high mortgage rates.

Nationwide said house prices were up 0.4% in May, compared to April, putting the average cost of a home at £264,249. Compared with May last year, prices were 1.3% higher.

While interest rates have remained at their highest levels in over a decade, consumer confidence has been growing and wages are rising.

Nationwide's chief economist, Robert Gardner, said: "The market appears to be showing signs of resilience in the face of ongoing affordability pressures following the rise in longer-term interest rates in recent months."

JD Sports was among the top fallers in the FTSE 100 on Friday, as its adjusted profit missed expectations.

Profit before tax and adjusting items fell 8% to £917.2m, which was slightly below the guided range of £915-935m.

Sales, meanwhile, matched broker expectations at £10.5bn for the 2024 financial year.

Stock was down around 10% by mid-morning in London.

Asian stocks were relatively unshaken by the previous day of losses in the US on Friday, also rising despite a weak Chinese data release.

The Nikkei (^N225) in Japan closed 1.14% higher for the session, due to rumours of plans for major investments by government-backed pension funds and other big institutional investors.

Meanwhile Hong Kong's Hang Seng (^HSI) was just above a flatline.

New government data showed that the US economy grew at a slower pace than initially thought during the first quarter. The Bureau of Economic Analysis's second estimate of first quarter US gross domestic product (GDP) showed the economy grew at an annualized pace of 1.3% during the period, down from a first reading of 1.6% growth in April.

Coming up:

On deck for investors is a key inflation reading on Friday. The personal consumption expenditures price index, which includes the Fed's closely watched "core" PCE measure, will offer potential clues on the path of interest rates less than two weeks ahead of the Fed's next meeting.

From our team in the US:

US stocks endured more losses on Thursday as lingering concerns about higher-for-longer interest rates and a Salesforce (CRM) sell-off dampened investors' spirits.

The Dow Jones Industrial Average (^DJI) sank nearly 0.9%, or more than 350 points, after shedding over 400 to lead Wednesday's stock market slide. The S&P 500 (^GSPC) fell 0.6%, while the tech-heavy Nasdaq Composite (^IXIC) dropped about 1%.

Stocks have lost steam amid renewed gloom about the odds for rate cuts, stoked by data showing less cooling in inflation than the Federal Reserve wants. At the same time, hopes that Nvidia's (NVDA) blockbuster earnings would spur a broader stock rally were disappointed.

Hello! It's another grey day here in London. We have some interesting data going into the weekend. Coming up today:

Nationwide house price index

UK consumer credit (Bank of England)

Eurozone inflation