London close: Stocks soar on lower-than-expected CPI numbers

London’s stock markets saw an impressive rise on Wednesday, with housebuilders surging after a decrease in consumer price inflation, lessening the burden on the Bank of England to continue with rate hikes.

The FTSE 100 jumped 1.8% to close at 7,588.20, while the FTSE 250 gained an even stronger uplift, soaring 3.78% to settle at 19,322.52.

In currencies, sterling was last down 1.1% on the dollar to trade at $1.2893, as it fell 0.84% against the euro to change hands at €1.1512.

“UK investors have watched enviously as US markets recover as CPI on the far side of the Atlantic dropped, but today they have had plenty of reason to celebrate following the CPI print this morning,” said IG chief market analyst Chris Beauchamp.

“The FTSE 100 is enjoying its best day of the year so far, led by housebuilders and other real estate stocks.

“After weeks of declines, it looks like the FTSE 100 has found a low.”

Inflation in UK eases as house price growth slows

In economic news, there was some relief on Wednesday as the UK's consumer price index (CPI) for June saw a more significant dip than predicted, easing the burden on the Bank of England to perpetuate interest rate increases.

Figures from the Office for National Statistics (ONS) showed that annual inflation rate receded to 7.9% in June from May's 8.7%, making for the smallest increase since March last year.

This figure was, however, still considerably above the BoE’s 2% target, but fell short of the 8.2% rise markets had pencilled in.

The ONS noted the substantial role of dwindling fuel prices in this CPI reduction.

At the same time, core inflation, which discounts volatile elements like energy, food, alcohol, and tobacco, also exhibited a modest drop from 7.1% to 6.9%, countering predictions of it remaining steady.

“Inflation slowed substantially to its lowest annual rate since March 2022, driven by price drops for motor fuels,” said ONS chief economist Grant Fitzner.

“Meanwhile, core inflation also fell back after hitting a 30-year high in May.”

Fitzner added that food price inflation eased slightly, although it remained at “very high” levels.

“Although costs facing manufacturers remain elevated, especially for construction materials and food items, the pace of growth has fallen across the last year, with the overall cost of raw materials falling for the first time since late 2020.”

Alongside the cooling inflation, the UK housing market also showed signs of deceleration in May, with the ONS' official house price index reported a 1.9% annual increase in house prices, down from the revised 3.2% growth recorded in April.

The average price of a house was now pegged at £286,000, a £6,000 year-on-year rise, but a £7,000 decline from the peak last September peak.

ONS data also indicated a 5.1% hike in private rental prices over the year to June 2023, marking the most substantial annual percentage increase since the initiation of this data series in January 2016.

On the continent, the eurozone also experienced an inflation decrease, with June's annual inflation confirmed at 5.5%, down from May's 6.1%, according to Eurostat.

The figure contrasted starkly with the 8.6% recorded in June last year.

Looking at the entire European Union, annual inflation dropped to 6.4% in June from 7.1% in May - significantly lower than the 9.6% seen a year prior.

In another development, Eurostat reported a 0.2% increase in the construction sector's seasonally adjusted production in May for both the eurozone and the EU, compared with April, pointing to a moderate recovery in this sector.

Housebuilders and property plays lead robust performance for UK equities

On London’s equity markets, housebuilders dominated the leaderboard on Wednesday, with Redrow rising 10.23%, closely followed by Crest Nicholson which gained 11.04%.

Persimmon also experienced a significant increase, climbing 8.61%.

Other prominent names in the property sector including Taylor Wimpey, Berkeley Group, Land Securities Group, Derwent London, and Great Portland Estates all reported considerable gains of between 5% and 10%.

Elsewhere, investment service company Hargreaves Lansdown was another big winner, soaring 8.37% after it reported an increase in fourth-quarter net new business and assets under administration.

Luxury carmaker Aston Martin Lagonda enjoyed a healthy increase of 8.95% after Goldman Sachs upgraded the firm from 'neutral' to 'buy'.

On the downside, Chile-focussed copper miner Antofagasta fell 1.19% after announcing that it had reduced its full-year copper production forecast.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,588.20 1.80%
FTSE 250 (MCX) 19,283.95 3.58%
techMARK (TASX) 4,460.90 2.15%

FTSE 100 - Risers

Hargreaves Lansdown (HL.) 914.00p 8.78%
Persimmon (PSN) 1,186.50p 8.65%
Land Securities Group (LAND) 661.40p 7.65%
Barratt Developments (BDEV) 454.00p 7.00%
Taylor Wimpey (TW.) 116.30p 6.80%
SEGRO (SGRO) 790.80p 6.40%
Unite Group (UTG) 966.00p 5.34%
Berkeley Group Holdings (The) (BKG) 4,300.00p 5.16%
Rightmove (RMV) 568.20p 4.95%
Admiral Group (ADM) 2,178.00p 4.66%

FTSE 100 - Fallers

WPP (WPP) 860.00p -1.58%
Antofagasta (ANTO) 1,486.50p -1.36%
Weir Group (WEIR) 1,799.50p -1.15%
Ocado Group (OCDO) 683.80p -1.13%
Prudential (PRU) 1,064.00p -1.02%
Centrica (CNA) 122.90p -0.36%
Anglo American (AAL) 2,303.00p -0.35%
Rio Tinto (RIO) 5,096.00p -0.27%
Glencore (GLEN) 453.45p -0.12%
Associated British Foods (ABF) 2,105.00p 0.10%

FTSE 250 - Risers

Crest Nicholson Holdings (CRST) 215.60p 11.25%
Future (FUTR) 867.50p 11.22%
Workspace Group (WKP) 531.50p 10.87%
Helios Towers (HTWS) 96.05p 10.34%
Redrow (RDW) 515.00p 10.23%
Digital 9 Infrastructure NPV (DGI9) 61.50p 10.22%
Derwent London (DLN) 2,248.00p 10.09%
Synthomer (SYNT) 80.30p 9.85%
Shaftesbury Capital (SHC) 124.00p 9.54%
Grainger (GRI) 251.20p 9.12%

FTSE 250 - Fallers

Vanquis Banking Group 20 (VANQ) 183.00p -0.22%
Senior (SNR) 169.20p -0.12%
Baltic Classifieds Group (BCG) 199.00p 0.20%
Network International Holdings (NETW) 387.00p 0.42%
Dechra Pharmaceuticals (DPH) 3,720.00p 0.49%
Hill and Smith (HILS) 1,564.00p 0.64%
Discoverie Group (DSCV) 835.00p 0.72%
Morgan Advanced Materials (MGAM) 277.50p 0.73%
FirstGroup (FGP) 144.90p 0.84%
Centamin (DI) (CEY) 93.90p 0.91%