London midday: Stocks in the red as inflation hits decade high
London stocks were still on the back foot by midday on Wednesday as the latest inflation data reinforced expectations of a rate hike.
The FTSE 100 was down 0.3% at 7,308.90, while the pound was 0.2% higher versus the dollar and the euro at 1.3454 and 1.1887, respectively.
Data released earlier by the Office for National Statistics showed that consumer price inflation rose to 4.2% in October from 3.1% the month before, hitting its highest level in a decade as energy and fuel costs rose, and coming in above expectations of 3.9%. It also marked the highest level since November 2011 and was well above the Bank of England's 2% target.
The ONS said the "main upward pressure" came from electricity, gas and other fuels after the energy cap was increased by 12% in October. Restaurants and hotels, education, furniture and household goods, and food and non-alcoholic beverages also contributed.
Core CPI inflation - which strips out volatile elements such as food and fuel - rose to 3.4% in October from 2.9% in September, versus expectations of 3.1%.
ONS chief economist Grant Fitzner said: "Inflation rose steeply in October to its highest rate in nearly a decade. This was driven by increased household energy bills due to the price cap hike, a rise in the cost of second-hand cars and fuel as well as higher prices in restaurants and hotels.
"Costs of goods produced by factories and the price of raw materials have also risen substantially, and are now at their highest rates for at least 10 years."
Chris Beauchamp, chief market analyst at IG, said: "Just weeks after the disappointment of the last BoE meeting, it looks like markets are prepared to get dressed up and think about meeting Andrew Bailey for a UK rate hike. It should be a case of ‘once bitten, twice shy’ but today’s inflation data and recent comments from the governor (apparently we do still listen to hum) have once again raised hopes of a change in UK policy.
"The pound managed to make headway against a euro that has been talked down all week by the ECB, but against the dollar it is finding it much harder to have any impact. US economic performance, higher inflation and still-rampant bets that the Fed will have to move sooner than it thinks have conspired to keep the dollar index moving higher, a situation that seems unlikely to change. Will the BoE really be the first to move? It still seems far-fetched, but hope, it seems, springs eternal where UK monetary policy is concerned."
In equity markets, Spirax-Sarco slumped as it flagged supply issues but maintained its overall guidance.
SSE was lower even as the energy company reported a rise in interim profit as its gas storage operation helped to offset a fall in renewables earnings.
Experian was weaker despite upgrading its full-year guidance as the consumer data group reported strong growth in a first half boosted by markets reopening from the pandemic.
CMC Markets fell as the online trading platform reiterated its full-year guidance but reported a decline in first-half profit amid subdued market volatility.
Marks & Spencer was knocked lower by a downgrade to ‘hold’ from ‘buy’ at Jefferies.
On the upside, Sage was the top gainer even as the software group said annual operating profits fell 10% as margins were squeezed.
Market Movers
FTSE 100 (UKX) 7,308.90 -0.25%
FTSE 250 (MCX) 23,522.76 -0.07%
techMARK (TASX) 4,588.23 0.27%
FTSE 100 - Risers
Sage Group (SGE) 772.40p 5.95%
Aveva Group (AVV) 3,447.00p 2.56%
Anglo American (AAL) 2,886.00p 1.57%
Darktrace (DARK) 552.00p 1.47%
Lloyds Banking Group (LLOY) 50.63p 1.32%
Compass Group (CPG) 1,546.50p 1.31%
Ocado Group (OCDO) 1,812.00p 1.20%
WPP (WPP) 1,115.50p 1.18%
Rightmove (RMV) 741.40p 0.95%
NATWEST GROUP PLC ORD 100P (NWG) 225.50p 0.94%
FTSE 100 - Fallers
Spirax-Sarco Engineering (SPX) 16,000.00p -5.91%
SSE (SSE) 1,587.50p -4.25%
Vodafone Group (VOD) 114.68p -2.75%
London Stock Exchange Group (LSEG) 6,940.00p -2.17%
Experian (EXPN) 3,440.00p -2.05%
Johnson Matthey (JMAT) 2,285.00p -2.02%
Smurfit Kappa Group (CDI) (SKG) 3,892.00p -1.94%
Informa (INF) 512.80p -1.84%
Coca-Cola HBC AG (CDI) (CCH) 2,530.00p -1.67%
Hargreaves Lansdown (HL.) 1,510.50p -1.50%
FTSE 250 - Risers
Indivior (INDV) 240.40p 3.62%
Hammerson (HMSO) 32.11p 3.18%
Spire Healthcare Group (SPI) 248.00p 2.69%
Ninety One (N91) 265.20p 2.00%
Genus (GNS) 5,575.00p 1.92%
Safestore Holdings (SAFE) 1,285.00p 1.90%
Caledonia Investments (CLDN) 3,820.00p 1.87%
Drax Group (DRX) 549.50p 1.67%
Renishaw (RSW) 5,190.00p 1.67%
Auction Technology Group (ATG) 1,346.00p 1.51%
FTSE 250 - Fallers
CMC Markets (CMCX) 247.50p -8.84%
Wizz Air Holdings (WIZZ) 4,512.00p -2.91%
IG Group Holdings (IGG) 770.00p -2.65%
Restaurant Group (RTN) 90.20p -2.59%
TP Icap Group (TCAP) 140.20p -2.53%
Ferrexpo (FXPO) 288.40p -2.17%
Bridgepoint Group (Reg S) (BPT) 553.00p -2.12%
JTC (JTC) 878.00p -1.79%
Marks & Spencer Group (MKS) 228.10p -1.77%
Tyman (TYMN) 398.00p -1.73%