London open: Stocks fall after UK inflation data
London stocks fell at the open on Wednesday after figures showed UK inflation more than doubled in April.
At 0840 BST, the FTSE 100 was down 0.9% at 6,969.65 as the inflation data sparked fears of monetary policy tightening by the Bank of England.
Figures released earlier by the Office for National Statistics showed inflation hit its highest level in more than a year in April amid higher household utility bills and clothes prices.
The consumer price inflation rate rose to 1.5% in the 12 months to April from 0.7% in March, coming in above expectations of 1.4% and marking the highest reading since March 2020. The rate of core inflation - which strips out volatile elements such as food and energy prices - increased to 1.3% from 1.1%.
On a monthly basis, CPI rose by 0.6% in following a 0.3% increase in March.
ONS chief economist Grant Fitzner said: "Inflation rose in April, mainly due to prices rising this year compared with the falls seen at the start of the pandemic this time last year. This was seen most clearly in household utility bills and clothing prices.
"As the price of crude oil continues to rise, this has fed through to the cost of motor fuels, which are now at their highest since January 2020."
Capital Economics economist Ruth Gregory said: "Admittedly, inflation looks set to rise above the Bank’s 2% target later this year for the first time since July 2019. But we doubt it will stay there long, as energy-related effects go into reverse next year, ‘reopening’ inflation eases and the stronger pound to pushes down on inflation.
"While upside risks remain, we suspect that it will only be in 2023 that the effects of a strong economic recovery will have a more sustained influence on inflation. As such, we think the MPC won’t start tightening policy until 2024, much later than the markets expect."
In equity markets, miners were under the cosh as copper and iron prices fell back, with Antofagasta, BHP, Anglo American and Rio Tinto all weaker.
On the upside, plumbing and heating products distributor Ferguson was sitting pretty at the top of the FTSE 100 as it lifted its full-year guidance after better-than-expected third-quarter results.
Infrastructure group John Laing rallied after saying it had agreed to a £2bn takeover by US buyout firm KKR. The two firms said KKR would pay 403p a share for Laing, a hefty premium to Tuesday’s closing price of 360p, and the UK company’s board planned to recommend the deal to shareholders.
Media group Future advanced as it said annual results would be well ahead of market expectations after profit more than doubled in the first half.
Dunelm gained after the homeware retailer said annual pre-tax profit was set to be "significantly" ahead of analysts’ expectations, as it hailed a strong performance in the five weeks since reopening.
Industrial thread manufacturer Coats Group also rose after saying its full-year performance would be "slightly ahead" of its previous expectations as it reported a return to organic revenue growth.
Mr Kipling and Bisto owner Premier Foods pushed higher as it reinstated its dividend after 13 years and hailed an "outstanding" year, underpinned by more at-home food consumption during the pandemic.
Market Movers
FTSE 100 (UKX) 6,969.65 -0.92%
FTSE 250 (MCX) 22,264.56 -0.30%
techMARK (TASX) 4,246.22 -0.62%
FTSE 100 - Risers
Ferguson (FERG) 9,628.00p 3.86%
DCC (CDI) (DCC) 6,076.00p 1.44%
Imperial Brands (IMB) 1,618.00p 0.25%
Sainsbury (J) (SBRY) 264.50p 0.19%
Vodafone Group (VOD) 129.32p 0.19%
Flutter Entertainment (CDI) (FLTR) 12,425.00p 0.12%
Hargreaves Lansdown (HL.) 1,683.00p 0.00%
RSA Insurance Group (RSA) 684.20p 0.00%
Entain (ENT) 1,566.00p -0.10%
Tesco (TSCO) 231.55p -0.11%
FTSE 100 - Fallers
Antofagasta (ANTO) 1,558.00p -3.47%
BHP Group (BHP) 2,168.50p -3.21%
Anglo American (AAL) 3,212.50p -2.95%
Evraz (EVR) 662.40p -2.53%
Rio Tinto (RIO) 6,109.00p -2.26%
Glencore (GLEN) 317.50p -2.19%
Scottish Mortgage Inv Trust (SMT) 1,122.00p -2.09%
InterContinental Hotels Group (IHG) 4,796.00p -1.86%
Royal Dutch Shell 'A' (RDSA) 1,396.20p -1.69%
WPP (WPP) 963.60p -1.67%
FTSE 250 - Risers
John Laing Group (JLG) 401.20p 11.14%
Future (FUTR) 2,616.00p 9.27%
Dunelm Group (DNLM) 1,559.00p 6.78%
C&C Group (CDI) (CCR) 310.00p 5.44%
Wickes Group (WIX) 258.00p 2.79%
Coats Group (COA) 60.20p 2.03%
Greencore Group (CDI) (GNC) 172.10p 1.83%
4Imprint Group (FOUR) 2,590.00p 1.77%
Premier Foods (PFD) 104.20p 1.76%
Great Portland Estates (GPOR) 728.00p 1.61%
FTSE 250 - Fallers
Ferrexpo (FXPO) 474.20p -3.34%
Network International Holdings (NETW) 389.70p -2.43%
Biffa (BIFF) 268.50p -2.36%
Allianz Technology Trust (ATT) 252.00p -2.33%
Tullow Oil (TLW) 52.58p -2.23%
Hammerson (HMSO) 35.46p -1.96%
Trainline (TRN) 428.60p -1.79%
Murray Income Trust (MUT) 888.00p -1.77%
Kainos Group (KNOS) 1,410.00p -1.74%
Carnival (CCL) 1,631.20p -1.70%