London midday: FTSE maintains gains after UK inflation, ahead of Fed

London stocks were still firmer by midday on Wednesday as in-line UK inflation data added to expectations the Bank of England will hold rates this week, and as investors eyed a policy announcement from the Federal Reserve.

The FTSE 100 was up 0.2% at 8,209.59, while sterling was flat against the dollar at 1.2711, paring earlier losses.

Data released earlier by the Office for National Statistics showed that consumer price inflation reached 2.6% in November, the second consecutive rise.

CPI rose in the 12 months to November to 2.6%, up from 2.3% in October.

Largely in line with expectations, it was the highest print since March.

The ONS said the prices of motor fuel and clothing had driven the increase, although that had been partially offset by a bigger-than-normal fall in air fares.

Although fares traditionally dip around this time of year, the decline was the largest drop in November since records began.

On a monthly basis, CPI rose by 0.1%, compared with a fall of 0.2% a year previously.

Core CPI, which strips out the more volatile elements of energy, food alcohol and tobacco, rose by 3.5% in the 12 months to November, up from 3.3% in October.

The Bank of England meets tomorrow to make its latest decision on interest rates and is widely expected to keep the cost of borrowing on hold.

The Monetary Policy Committee has trimmed rates twice this year, but remains hesitant about sticky services inflation.

The ONS said the CPI services annual rate was unchanged in November at 5.0%.

Russ Mould, investment director at AJ Bell, said: "UK inflation at an eight-month high sounds dramatic yet the annual 2.6% rate is bang in line with expectations and core inflation, which excludes food and energy, at 3.5% came in lower than the 3.6% consensus figure.

"As such, we haven’t had what the market would describe as an ‘inflation shock’. That explains why shares in interest rate-sensitive sectors like housebuilding haven’t retreated on the latest figures.

"Later today we’ll get the US interest rate decision from the Federal Reserve. Traders are pricing in a 96.6% probability of a cut - it would be more of a shock if the Fed didn’t lower rates than if it did. The most important thing from the Fed’s meeting will be comments on monetary policy in 2025 as the market is starting to fret about future rate cuts being less frequent."

The Fed announcement is due at 1900 GMT.

In equity markets, equipment rental firm Ashtead - which generates most of its revenue from the US - was the biggest riser on the FTSE 100, benefitting from earlier weakness in the pound.

BA and Iberia owner IAG flew higher after Jefferies hiked its price target on the stock to 350p from 270p, saying it expects the fourth quarter to deliver similar trends to Q3, driving confidence in the short-term macro and travel environment.

DIY group Kingfisher gained as it announced the sale of its Brico Dépôt business in Romania to retailer Altex Romania for €70m.

IntegraFin slid after full-year results, as the Transact owner reported a robust full-year financial performance, but flagged rising costs and lower fees for some of its services going forward.

Outside the FTSE 350, discount shoe retailer Shoe Zone tanked nearly 40% as it warned on profits and said it would be forced to close some stores due to changes announced in the Budget.

Market Movers

FTSE 100 (UKX) 8,209.59 0.18%
FTSE 250 (MCX) 20,613.01 0.34%
techMARK (TASX) 4,631.12 0.16%

FTSE 100 - Risers

Ashtead Group (AHT) 5,186.00p 1.97%
International Consolidated Airlines Group SA (CDI) (IAG) 302.80p 1.85%
Frasers Group (FRAS) 616.50p 1.65%
Lloyds Banking Group (LLOY) 55.10p 1.62%
Melrose Industries (MRO) 546.20p 1.52%
Rolls-Royce Holdings (RR.) 588.40p 1.27%
Sage Group (SGE) 1,321.00p 1.23%
BP (BP.) 384.75p 1.22%
NATWEST GROUP (NWG) 404.10p 1.20%
HSBC Holdings (HSBA) 766.80p 1.20%

FTSE 100 - Fallers

Entain (ENT) 733.80p -2.42%
Beazley (BEZ) 817.50p -1.68%
Hiscox Limited (DI) (HSX) 1,102.00p -1.52%
Severn Trent (SVT) 2,547.00p -1.05%
National Grid (NG.) 928.80p -0.83%
Vodafone Group (VOD) 67.06p -0.80%
AstraZeneca (AZN) 10,424.00p -0.78%
Centrica (CNA) 125.55p -0.75%
United Utilities Group (UU.) 1,062.00p -0.75%
Whitbread (WTB) 2,895.00p -0.72%

FTSE 250 - Risers

PureTech Health (PRTC) 168.00p 5.00%
Bank of Georgia Group (BGEO) 4,755.00p 3.03%
TBC Bank Group (TBCG) 3,150.00p 2.44%
Jupiter Fund Management (JUP) 85.00p 2.41%
CMC Markets (CMCX) 261.00p 2.35%
The European Smaller Companies Trust (ESCT) 168.80p 2.18%
RIT Capital Partners (RCP) 1,932.00p 2.01%
Close Brothers Group (CBG) 237.20p 1.98%
SThree (STEM) 267.00p 1.91%
Baltic Classifieds Group (BCG) 324.00p 1.89%

FTSE 250 - Fallers

IntegraFin Holding (IHP) 359.50p -7.82%
OSB Group (OSB) 393.40p -6.20%
Victrex plc (VCT) 1,098.00p -2.14%
Ocado Group (OCDO) 299.70p -1.83%
Quilter (QLT) 150.70p -1.82%
Watches of Switzerland Group (WOSG) 574.00p -1.29%
Johnson Matthey (JMAT) 1,362.00p -1.16%
AO World (AO.) 102.80p -1.15%
Ruffer Investment Company Ltd Red PTG Pref Shares (RICA) 267.50p -1.11%
PZ Cussons (PZC) 83.30p -1.07%