London midday: FTSE extends losses after UK inflation print

London stocks had fallen further into the red by midday on Wednesday as investors mulled a higher-than-expected UK inflation print, and a lack of progress in US debt ceiling negotiations.

The FTSE 100 was down 1.8% at 7,626.18.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said "positive sentiment is being restrained by shackles of uncertainty as the US debt ceiling negotiations continue without agreement".

"President Joe Biden and House Republican Speaker Kevin McCarthy need to find compromise on taxes and spending but are conscious any deal needs also to garner the support of congressional colleagues to pass," she said.

On home shores, figures from the Office for National Statistics showed that inflation fell less than expected in April, and food prices remained near record highs.

Consumer price inflation declined to 8.7% from 10.1% in March, versus expectations for a fall to 8.2%. Nevertheless, it was the first time consumer price inflation came in below 10% since August last year, as energy prices eased off their highs. Inflation is now at its lowest level since March 2022.

The ONS said electricity and gas prices contributed 1.42 percentage points to the fall in annual inflation as last April’s rise dropped out of the annual comparison.

Food inflation remained close to its highest level in 45 years, however, at 19.1% in April, down just a touch from 19.2% the month before.

Core inflation, which strips out energy, food, alcohol and tobacco, rose to 6.8% in April from 6.2% in March, marking the highest rate since March 1992.

Capital Economics said the smaller-than-expected fall in CPI inflation "means it is now very hard to imagine the Bank of England not raising interest rates from 4.50% to 4.75% in June".

In equity markets, housebuilders tumbled amid concerns that higher interest rates will dent the housing market. Persimmon, Taylor Wimpey, Barratt , Berkeley, Vistry, Redrow, Crest Nicholson and Bellway all slumped.

Promotional products marketer 4imprint Group lost ground as it said trading was in line with expectations, but warned rises in order activity would moderate over the rest of the year.

Bulmers and Magners owner C&C Group retreated despite posting a jump in full-year profit and revenues amid higher volumes and prices, and reinstating its dividend.

B&Q and Castorama owner Kingfisher was on the back foot as it backed its full-year guidance but reported a decline in first-quarter sales, hit by poor weather in the UK and France.

On the upside, Intertek gained after the testing company held annual guidance as revenues rose 11% in the first four months of the year.

SSE rallied as it reported a rise in full-year profit and announced plans to invest up to £40bn over the next decade on clean energy projects.

Retailer Marks & Spencer surged as it delivered a forecast-busting annual profit driven by a major improvement in its food division and said it would reinstate a "modest" dividend in November. Adjusted pre-tax profit came in at £482m, down from £522m last year, but better than expectations of £431m. The prior year’s figure was also boosted by almost £60m in business rate relief.

Market Movers

FTSE 100 (UKX) 7,626.18 -1.76%
FTSE 250 (MCX) 18,952.95 -1.33%
techMARK (TASX) 4,614.77 -1.40%

FTSE 100 - Risers

Intertek Group (ITRK) 4,330.00p 3.29%
SSE (SSE) 1,874.50p 0.27%
Fresnillo (FRES) 657.60p 0.24%
Endeavour Mining (EDV) 2,028.00p 0.20%
B&M European Value Retail S.A. (DI) (BME) 466.60p 0.19%
Ocado Group (OCDO) 402.40p -0.05%
Admiral Group (ADM) 2,297.50p -0.11%
Melrose Industries (MRO) 476.80p -0.23%
Bunzl (BNZL) 3,098.00p -0.26%
Airtel Africa (AAF) 116.80p -0.34%

FTSE 100 - Fallers

Persimmon (PSN) 1,217.00p -5.37%
Informa (INF) 688.80p -5.28%
Taylor Wimpey (TW.) 116.80p -5.12%
Aviva (AV.) 402.70p -4.98%
Barratt Developments (BDEV) 470.70p -4.89%
Prudential (PRU) 1,117.00p -4.61%
Berkeley Group Holdings (The) (BKG) 4,034.00p -4.07%
Legal & General Group (LGEN) 228.00p -4.00%
Phoenix Group Holdings (PHNX) 558.60p -3.95%
Burberry Group (BRBY) 2,176.00p -3.63%

FTSE 250 - Risers

Marks & Spencer Group (MKS) 183.05p 11.89%
Network International Holdings (NETW) 367.40p 1.77%
Bytes Technology Group (BYIT) 456.00p 1.33%
Victrex plc (VCT) 1,561.00p 1.04%
UK Commercial Property Reit Limited (UKCM) 53.50p 0.94%
Harbour Energy (HBR) 246.20p 0.94%
PureTech Health (PRTC) 220.50p 0.92%
Tullow Oil (TLW) 25.22p 0.88%
W.A.G Payment Solutions (WPS) 99.80p 0.81%
Caledonia Investments (CLDN) 3,550.00p 0.57%

FTSE 250 - Fallers

4Imprint Group (FOUR) 4,520.00p -7.85%
Carnival (CCL) 759.20p -4.93%
Redrow (RDW) 499.60p -4.93%
TUI AG Reg Shs (DI) (TUI) 524.00p -4.41%
SSP Group (SSPG) 260.40p -4.41%
Crest Nicholson Holdings (CRST) 246.20p -4.35%
LondonMetric Property (LMP) 180.10p -4.20%
Vistry Group (VTY) 757.00p -4.18%
Bellway (BWY) 2,326.00p -4.12%
C&C Group (CDI) (CCR) 131.20p -4.09%