London close: Stocks fall as inflation beats forecasts again

London stocks closed in negative territory on Wednesday, after the latest UK inflation data which showed consumer prices climbed at their fastest clip in 40 years in July.

The FTSE 100 ended the session down 0.27% at 7,515.75, and the FTSE 250 was off 1.52% at 20,027.04.

Sterling was also in the red, last trading down 0.47% on the dollar at $1.2039, and weakening 0.41% against the euro to €1.1844.

“After the gains of the last few sessions we have seen a bout of profit-taking creep back in, although it is relatively orderly so far,” said IG chief market analyst Chris Beauchamp.

“The UK’s CPI reading and ongoing concerns about Europe’s seemingly-inevitable winter energy crunch have been behind the risk-off move, with investors tempering their optimism about the next few months as they fret about recessions in both the UK and the rest of Europe.”

In economic news, UK inflation hit a fresh 40-year high in July and surpassed analysts’ expectations as food and energy prices jumped, according to data from the Office for National Statistics.

Consumer price inflation rose to 10.1% from 9.4% in June, marking the highest rate since February 1982 and topping analysts’ expectations of 9.8%.

Core inflation, which strips out food and energy costs, increased to 6.2% from 5.8% a month earlier, coming in above forecasts of 5.9%.

Food inflation rose in July to 12.6% - its highest rate since August 2008 - from 9.8%.

“A wide range of price rises drove inflation up again this month,” said ONS chief economist Grant Fitzner.

“Food prices rose notably, particularly bakery products, dairy, meat and vegetables, which was also reflected in higher takeaway prices.

“Price rises in other staple items, such as pet food, toilet rolls, toothbrushes and deodorants also pushed up inflation in July.”

Fitzner said the price for package holidays also rose, driven by higher demand, after falling at the same time last year, while airfares also increased.

“The cost of both raw materials and goods leaving factories continued to rise, driven by the price of metals and food respectively.”

Earlier this month, the Bank of England lifted interest rates by 50 basis points - the biggest rate rise in 27 years - and warned that inflation would peak at 13.3% in October, up from a previous forecast of 11% and driven by energy prices.

On the continent, the euro area's economy expanded at a slightly slower pace than previously estimated over the three months to June, alongside steady growth in employment.

According to Eurostat, gross domestic product within the single-currency bloc expanded at a quarter-on-quarter pace of 0.6% in the second quarter after the 0.5% gain recorded during the first quarter.

The former was one tenth of a percentage point less than the preliminary estimate and consensus forecast.

In comparison to a year ago, GDP was ahead by 3.9% in the second quarter.

Across the pond, Americans spent at a slightly lower than expected pace last month, although the details of the report were stronger.

According to the Department of Commerce, total US retail sales volumes were flat in July at $682.8bn, following a 0.8% jump during the month before and compared to consensus forecasts for a 0.2% rise.

June's increase had previously been reported at 1.0%.

In equity markets, banks were rising amid the prospect of more Bank of England rate hikes, with Lloyds Banking Group up 0.12% and NatWest Group ahead 0.69%.

Construction firm Balfour Beatty gained 10.51% after it upgraded full-year guidance after interim profits more than doubled and new orders rose 10%.

On the downside, Ladbrokes owner Entain retreated 1.67% after it was fined £17m by the Gambling Commission for social responsibility and anti-money laundering failures.

Housebuilder Persimmon dropped 7.84% after it posted a fall in interim profits, but reiterated completion guidance and said price rises were offsetting cost inflation.

Cineworld Group crashed 60.38% after saying it was mulling a restructure of its finances as a lack of blockbuster films from Hollywood had hit ticket sales.

Essentra fell 7.66% even after the company reported a “strong” first-half performance from its continuing operations, with revenue up 17% on a constant currency basis to £340.8m, and adjusted operating profit up 44% to £35.3m.

Asos slumped 11.2% after the online fashion retailer said that chief operating officer and chief financial officer Mat Dunn would step down from his roles as the company restructures its executive team.

Reporting by Josh White at Sharecast.com. Additional reporting by Michele Maatouk, Frank Prenesti and Alexander Bueso.

Market Movers

FTSE 100 (UKX) 7,515.75 -0.27%
FTSE 250 (MCX) 20,027.04 -1.52%
techMARK (TASX) 4,334.05 -1.33%

FTSE 100 - Risers

Diageo (DGE) 3,888.50p 1.05%
BP (BP.) 430.90p 1.03%
British American Tobacco (BATS) 3,440.50p 1.00%
Flutter Entertainment (CDI) (FLTR) 10,815.00p 0.93%
Reckitt Benckiser Group (RKT) 6,612.00p 0.82%
Glencore (GLEN) 486.70p 0.79%
Admiral Group (ADM) 2,306.00p 0.79%
London Stock Exchange Group (LSEG) 8,434.00p 0.74%
Burberry Group (BRBY) 1,819.50p 0.72%
NATWEST GROUP PLC ORD 100P (NWG) 262.80p 0.69%

FTSE 100 - Fallers

Persimmon (PSN) 1,704.00p -7.84%
Aveva Group (AVV) 2,295.00p -5.40%
International Consolidated Airlines Group SA (CDI) (IAG) 117.10p -4.80%
Prudential (PRU) 949.60p -3.98%
Hikma Pharmaceuticals (HIK) 1,490.50p -3.84%
Barratt Developments (BDEV) 463.70p -3.80%
Abrdn (ABDN) 166.00p -3.77%
Schroders (SDR) 2,876.00p -3.75%
Melrose Industries (MRO) 147.60p -3.69%
Mondi (MNDI) 1,575.50p -3.20%

FTSE 250 - Risers

Balfour Beatty (BBY) 319.60p 10.51%
Darktrace (DARK) 540.60p 4.93%
Bank of Georgia Group (BGEO) 1,974.00p 2.60%
Energean (ENOG) 1,270.00p 2.25%
NCC Group (NCC) 217.00p 1.64%
Ibstock (IBST) 205.00p 1.49%
4Imprint Group (FOUR) 4,045.00p 1.38%
Polymetal International (POLY) 220.10p 1.36%
Vesuvius (VSVS) 367.60p 1.27%
TBC Bank Group (TBCG) 1,758.00p 1.03%

FTSE 250 - Fallers

ASOS (ASC) 852.00p -11.20%
Hochschild Mining (HOC) 74.95p -7.81%
Essentra (ESNT) 235.00p -7.66%
Chrysalis Investments Limited NPV (CHRY) 86.90p -7.16%
Mitchells & Butlers (MAB) 175.70p -6.99%
Wizz Air Holdings (WIZZ) 2,422.00p -6.77%
Liontrust Asset Management (LIO) 996.00p -6.39%
TUI AG Reg Shs (DI) (TUI) 145.20p -6.17%
Micro Focus International (MCRO) 287.20p -5.93%
Jupiter Fund Management (JUP) 112.40p -5.86%