London midday: Stocks in the red after inflation data

London stocks were still in the red by midday on Wednesday as investors continued to fret over a hotter-than-expected US inflation print, with the latest UK CPI data also in focus.

The FTSE 100 was down 0.7% at 7,332.47.

Stocks on Wall Street tumbled on Tuesday after figures released from the US Labor Department showed that inflation eased to 8.3% on the year in August from 8.5% in July, but came in above consensus forecasts of 8.1%. The data fuelled expectations of another big rate hike from the Federal Reserve.

On home shores, meanwhile, data out earlier from the Office for National Statistics showed that UK inflation eased in August but remained close to a 40-year high.

Consumer price inflation slowed to 9.9% from 10.1% in July, coming in below consensus expectations for an increase to 10.2%. Most of the decline was down to a drop in fuel inflation to 32.1% form 43.7%.

"A fall in the price of motor fuels made the largest downward contribution to the change in both the CPIH and CPI annual inflation rates between July and August 2022," the ONS said. "Rising food prices made the largest, partially offsetting, upward contribution to the change in the rates."

The figures also showed that food price inflation rose to 13.4% in August from 12.8% the month before, while clothing price inflation edged up to 7.9% from 6.9% to 7.9%.

Core inflation - which strips out food, alcohol and tobacco and energy - ticked up to 6.3% on the year, from 6.2%.

Paul Dales, chief UK economist at Capital Economics, said the easing in CPI inflation "is a bit of a relief after yesterday’s US CPI shocker, but overall and core UK CPI inflation haven’t peaked yet". As such, he reckons the Bank of England "will have to continue turning the screws".

Dales added: "Overall, we think CPI inflation will peak around 11.0% just before the end of the year and that core inflation will continue to edge higher too. That means the Bank will have to continue raising interest rates, from 1.75% now to 3.00% if not higher."

In equity markets, Abrdn slumped after a downgrade to ‘sell’ at Deutsche Bank, while budget airline easyJet flew lower after a downgrade to ‘sell’ at Stifel.

Aston Martin Lagonda was under the cosh following a Financial Times report it is facing a lawsuit from two former dealers who claim they are owed around £150m for underwriting the development of its Valkyrie hypercar.

C&C Group was weaker after the Bulmers maker said it expects to deliver a 35% jump in first-half net revenues but that it has seen a slowdown in on-trade momentum over the second quarter.

On the upside, Croda was sitting pretty at the top of the FTSE 100 after an upgrade to ‘buy’ at Jefferies.

Homeware retailer Dunelm surged to the top of the FTSE 250 as it reported record full-year results in a "challenging" environment.

Market Movers

FTSE 100 (UKX) 7,332.47 -0.72%
FTSE 250 (MCX) 19,057.48 -0.57%
techMARK (TASX) 4,278.12 -0.83%

FTSE 100 - Risers

Croda International (CRDA) 6,888.00p 1.00%
Next (NXT) 5,886.00p 1.00%
Harbour Energy (HBR) 494.20p 0.65%
Fresnillo (FRES) 740.80p 0.57%
Barratt Developments (BDEV) 419.50p 0.55%
Haleon (HLN) 267.90p 0.49%
Taylor Wimpey (TW.) 107.15p 0.47%
BP (BP.) 463.55p 0.43%
Admiral Group (ADM) 2,239.00p 0.40%
B&M European Value Retail S.A. (DI) (BME) 354.20p 0.40%

FTSE 100 - Fallers

Ocado Group (OCDO) 653.60p -3.77%
Abrdn (ABDN) 143.75p -3.65%
United Utilities Group (UU.) 1,033.00p -3.59%
Rolls-Royce Holdings (RR.) 75.60p -3.41%
Severn Trent (SVT) 2,695.00p -3.27%
Melrose Industries (MRO) 118.10p -2.88%
Centrica (CNA) 83.00p -2.28%
National Grid (NG.) 1,055.50p -2.27%
Airtel Africa (AAF) 140.90p -1.95%
RS Group (RS1) 1,071.00p -1.92%

FTSE 250 - Risers

Network International Holdings (NETW) 289.60p 4.40%
Countryside Partnerships (CSP) 258.40p 3.44%
Dunelm Group (DNLM) 737.00p 1.94%
National Express Group (NEX) 195.30p 1.88%
Computacenter (CCC) 2,172.00p 1.78%
Redrow (RDW) 483.60p 1.55%
FirstGroup (FGP) 125.20p 1.38%
CLS Holdings (CLI) 177.00p 1.37%
Fidelity China Special Situations (FCSS) 239.00p 1.27%
Dr. Martens (DOCS) 259.80p 1.17%

FTSE 250 - Fallers

Aston Martin Lagonda Global Holdings (AML) 147.85p -5.98%
Wizz Air Holdings (WIZZ) 2,037.00p -5.39%
Abrdn Private Equity Opportunities Trust (APEO) 403.00p -4.05%
C&C Group (CDI) (CCR) 167.00p -3.97%
Bridgepoint Group (Reg S) (BPT) 248.80p -3.79%
Ferrexpo (FXPO) 152.10p -3.49%
Petrofac Ltd. (PFC) 119.60p -3.39%
888 Holdings (DI) (888) 118.00p -3.20%
NCC Group (NCC) 229.00p -3.17%
Serco Group (SRP) 166.30p -3.03%