London close: Stocks weaker as debt ceiling talks drag on

London stocks closed in negative territory on Wednesday, with investor sentiment clouded by ongoing talks in Washington over the US federal debt ceiling, with a deadline swiftly approaching.

The FTSE 100 ended the session down 0.36% at 7,723.23, and the FTSE 250 dipped 0.3% to 19,215.45.

On the currency front, sterling was mixed, last slipping 0.05% on the dollar to trade at $1.2482, while it strengthened 0.26% against the euro to change hands at €1.1523.

“Today’s market session has been more akin to watching paint dry with little in the way of strong direction in the underlying indexes, with the FTSE 100 slipping back, while the DAX has edged higher,” said CMC Markets chief market analyst Michael Hewson.

“The focus today, as it has been for most of this week has been on individual company trading updates which have prompted some of the main decliners today on the London market.”

Bank of England still open to further hikes, US debt ceiling talks drag on

In economic news, the Bank of England said it remained committed to reining in inflation, with governor Andrew Bailey announcing earlier that further interest rate hikes would be in the pipeline if necessary.

His comments followed the Monetary Policy Committee's 12th consecutive decision last week to boost borrowing costs, to 4.5%, in an effort to combat persistent price rises.

The UK was currently grappling with an inflation rate of 10.1% - a significant overshoot of the BoE's 2% target.

Current interest rates, the highest since 2008, could rise further, Bailey warned in his address to the annual conference of the British Chambers of Commerce.

“I can assure you that the MPC will adjust bank rate as necessary to return inflation to target sustainably in the medium term, in line with its remit,” he said.

“If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required.

“Our commitment to the 2% inflation target is unwavering."

Bailey also acknowledged the impact of second-round effects, including wage increases.

“Some of the strength in core inflation reflects the indirect effects of higher energy prices.

“But it also reflects second-round effects as the external shocks we have seen interact with the state of the domestic economy.

“And as headline inflation falls, these second-round effects are unlikely to go away as quickly as they appeared.”

On the continent, inflation in the eurozone reached 7% in April according to official data, aligning with projections.

Eurostat reported an increase in the harmonised index of consumer prices from 6.9% in March.

April's data validated both consensus and previous forecasts, while the overall annual inflation rate in the wider European Union eased slightly to 8.1%, from March's 8.3%.

Across the Atlantic, optimism emerged from Republican congressional leadership over averting a default on the debt ceiling.

House speaker Kevin McCarthy expressed confidence in a CNBC interview, saying: “I think at the end of the day we do not have a debt default”.

Meanwhile, US housebuilding activity saw a minor uptick in April, although it started from a lower base than initially anticipated.

The US Department of Commerce reported a 2.2% month-on-month increase in housing starts, reaching an annual pace of 1.401 million.

That figure surpassed economists' prediction of a fall to 1.396 million, due in part to a downward revision of the March housing starts rate from 1.42 million to 1.371 million.

Building permits, however, dropped 1.5% month-on-month to 1.416 million.

JD Sports tumbles despite record result, Sage Group up on encouraging numbers

In equities, JD Sports Fashion fell 4.26% even after the company projected an annual profit exceeding £1bn, following a record result for the year ended 28 January.

British Land Company tumbled 5.66%, after it disclosed a 12.3% decrease in its portfolio value for the year through March.

The firm attributed the decline to rising interest rates impacting property yields.

Credit-checking firm Experian dipped 0.18% after reporting a 19% fall in its full-year pre-tax profit.

London Stock Exchange Group lost 2.69% after a consortium including Blackstone and Thomson Reuters sold 33 million shares in a placing.

Despite reporting a strong full-year performance with record revenues and profitability, Watches of Switzerland Group slid 5.81%.

The company warned of a predicted sales decline in the first quarter.

Meanwhile, estate agent Savills saw its shares slide 4.48% after it suggested the first half would be “materially impacted” by the ongoing “recalibration of global investment markets”.

On the upside, software firm Sage Group saw its shares rally by 2.66% after releasing encouraging first-half results and raising its full-year recurring revenue growth outlook.

Shares in Auction Technology Group, Mitchells & Butlers, and Keller Group also climbed following their results, by 7.92%, 2.05% and 5.66%, respectively.

Finally, online fashion retailer Asos jumped 7.8% after Mike Ashley's Frasers Group increased its voting rights to 7.4%, from a previous 5.1%.

Reporting by Josh White for Sharecast.com.

FTSE 100 -27.85 (-0.36%) 7.723.23

RISERS
Melrose Industries +4.41% 488p
Rolls-Royce Holdings +3.17% 152.85p
Sage Group +2.66% 842.8p
International Consolidated Airlines Group +2.28% 159.25p
Antofagasta +1.6% 1,426.5p
DCC +1.53% 4,858p
Ashtead Group +1.5% 4,799p
Pershing Square Holdings +1.48% 2,742p
Auto Trader Group +1.34% 637.4p
Lloyds Banking Group +1.3% 46.29p

FALLERS
British Land Company -5.66% 356.5p
Croda International -5.06% 6,342p
JD Sports Fashion -4.26% 163p
London Stock Exchange Group -2.69% 8,244p
Mondi -2.61% 1,267p
Airtel Africa -2.07% 113.5p
Haleon -1.95% 339.8p
Smurfit Kappa Group -1.87% 2,938p
National Grid -1.81% 1,140.5p
Severn Trent -1.67% 2,879p

FTSE 250 -57.27 (-0.3%) 19,215.45

RISERS
Auction Technology Group +7.91% 723p
Asos +7.8% 430p
Aston Martin Lagonda Global Holdings +7.24% 231.2p
Keller Group +5.66% 672p
Carnival +4.05% 765.2p
easyJet +2.89% 520.4p
Wizz Air Holdings +2.57% 3,158p
Ascential +2.49% 247p
Mitchells & Butlers +2.05% 199.1p
TUI +2.04% 539.6p

FALLERS
Ninety One Group -6.96% 160.4p
Coats Group -6.44% 68.3p
Watches of Switzerland Group -5.81% 697.5p
Savills -4.48% 896p
International Distributions Services -4.06% 222.2p
Telecom Plus -3.73% 1,754p
Bank of Georgia Group -3.7% 3,250p
TP ICAP Group -3.67% 162.8p
Ferrexpo -3.62% 101.1p
Capricorn Energy -3.53% 197.86p