London close: Stocks end down on rate cut worries; IDS bucks trend

London stocks ended in the red on Wednesday as investors pushed back US rate cut expectations, but IDS bucked the trend after the Royal Mail owner accepted a takeover offer.

The FTSE 100 closed down 0.9% at 8,183.07.

Dan Coatsworth, investment analyst at AJ Bell, said: "Global equities shuddered at the prospect of interest rates staying higher for longer. Despite plenty of earlier signals that central banks were in no rush to cut rates until inflation had fallen further, investors are only now coming to terms with the idea that monetary policy will stay tight for just a bit longer.

"All things considered, the scale of the equity market sell-off was only minor. The S&P 500 dipped around 0.6% in early trading for Wall Street, less than European indices which included a 0.85% sell-off for the FTSE 100 and a 1.5% decline in the CAC 40.

"Investor unease means that Friday’s US inflation data has the potential to move the market in a big way. Core PCE prices, which exclude food and energy, were steady at 0.3% on a month-on-month basis for February and March and the consensus estimate is for this trend to remain intact for April. Investors might start the weekend in a very bad mood if that figure comes in hotter than expected."

In equity markets, online supermarket Ocado tumbled ahead of its expected demotion from the top-flight index in next week’s reshuffle. St James’s Place was in the same boat, while National Express owner Mobico fell as it faced relegation from the FTSE 250.

Anglo American lost ground as it rejected BHP's request to extend its 'put up or shut up' offer deadline, advising shareholders to take no action in response to the latter's latest attempt to sway the mining group into a £39bn takeover deal.

IWG was under the cosh after chief executive after chief executive Mark Dixon sold 35m shares in the flexible workspace provider.

Wood Group nudged lower as it said it was evaluating a fourth and final "unsolicited, preliminary and conditional" takeover proposal from Dubai-based engineering and consulting firm Sidara at 230p a share.

Pets at Home reversed earlier gains to end sharply lower as it posted a jump in annual sales but saw profits fall back, hit by availability issues.

On the upside, Fresnillo shone as JP Morgan Cazenove sounded a confident note on the outlook for the precious metals miner and kept its rating on the shares at ‘overweight’.

Royal Mail owner International Distribution Services rallied after saying it had reached an agreement with Czech billionaire Daniel Kretinsky on a takeover of the 500 year old company worth up to £5.28bn.

Kretinsky’s EP Group is offering 360p a share along with the 2p final dividend for the year to March 31 and a special 8p dividend to be paid if the deal becomes unconditional. He has also pledged to maintain Royal Mail’s guarantee of services six days a week for five years.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "There is still some caution about whether the deal will go ahead, given that the government has the power under the National Security and investment act to potentially block the deal. IDS comes with a lot of Royal Mail baggage, particularly the obligation to deliver letters six days a week as the UK’s universal postal service, at a time when volumes are in sharp decline.

"But group’s international arm GLS has long been considered the jewel in the company’s crown, enjoying a level of success which Royal Mail has found elusive and EP Group will have been eyeing up the long-term opportunities here, particularly if inflation subsides further which should help margin growth."

Market Movers

FTSE 100 (UKX) 8,183.07 -0.86%
FTSE 250 (MCX) 20,436.34 -1.30%
techMARK (TASX) 4,769.27 -0.91%

FTSE 100 - Risers

Fresnillo (FRES) 626.00p 1.95%
Beazley (BEZ) 670.00p 1.28%
Next (NXT) 9,310.00p 1.11%
Associated British Foods (ABF) 2,667.00p 0.98%
United Utilities Group (UU.) 990.80p 0.92%
B&M European Value Retail S.A. (DI) (BME) 543.20p 0.85%
Shell (SHEL) 2,801.50p 0.76%
Admiral Group (ADM) 2,709.00p 0.63%
Frasers Group (FRAS) 825.00p 0.55%
BP (BP.) 489.10p 0.43%

FTSE 100 - Fallers

Ocado Group (OCDO) 360.10p -12.26%
RS Group (RS1) 721.50p -4.51%
National Grid (NG.) 838.40p -4.36%
Anglo American (AAL) 2,480.00p -3.05%
Entain (ENT) 654.40p -2.91%
International Consolidated Airlines Group SA (CDI) (IAG) 168.90p -2.76%
Mondi (MNDI) 1,554.00p -2.75%
WPP (WPP) 808.20p -2.70%
SSE (SSE) 1,704.00p -2.52%
Barratt Developments (BDEV) 495.50p -2.31%

FTSE 250 - Risers

Ithaca Energy (ITH) 126.60p 8.39%
International Distribution Services (IDS) 335.00p 4.30%
TP Icap Group (TCAP) 214.50p 3.37%
Jlen Environmental Assets Group Limited NPV (JLEN) 87.00p 2.35%
Mitchells & Butlers (MAB) 303.00p 1.85%
Lancashire Holdings Limited (LRE) 611.00p 1.66%
CMC Markets (CMCX) 284.00p 1.43%
Apax Global Alpha Limited (APAX) 155.80p 1.30%
Elementis (ELM) 149.80p 1.22%
Me Group International (MEGP) 170.00p 1.19%

FTSE 250 - Fallers

IWG (IWG) 184.00p -11.11%
Mobico Group (MCG) 55.35p -6.66%
Ibstock (IBST) 163.00p -5.67%
Tritax Eurobox (GBP) (EBOX) 53.50p -5.48%
Moonpig Group (MOON) 154.00p -4.94%
Bridgepoint Group (Reg S) (BPT) 217.60p -4.81%
Endeavour Mining (EDV) 1,673.00p -4.67%
Trainline (TRN) 302.40p -4.67%
Senior (SNR) 157.40p -4.49%
Trustpilot Group (TRST) 205.50p -4.42%