London midday: Stocks little changed after unexpected jump in inflation

London stocks were still little changed by midday on Wednesday amid growing tensions between the US and China, as investors digested an unexpected jump in UK inflation.

The FTSE 100 was up 0.1% at 6,080.14.

Sino-US trade relations remained in focus after US President Donald Trump told reporters on Tuesday that he had cancelled talks between the two.

"I don’t want to talk to them now," Trump told reporters in Yuma, Arizona . "If you know what they’ve done to this country and the world, I don’t want to talk to China just yet. So yes, I cancelled the talks."

Spreadex analyst Connor Campbell said this was "another inflammatory comment from the President, further stoking the fires of conflict given it comes only a day or two after the most recent Huawei restrictions announcement".

On home shores, figures from the Office for National Statistics showed consumer price inflation increased to 1% in July from 0.6% in June, versus expectations for it to remain unchanged. This marked the highest level since March.

Meanwhile, core inflation - which strips out volatile energy, food, alcohol and tobacco prices - rose to 1.8% in July from 1.4% in June. Economists had expected the rate to dip to 1.3%.

ONS deputy national statistician for Economic Statistics, Jonathan Athow, said: "Inflation has risen, in part, due to the largest monthly pump price increase in nearly a decade, as international oil prices rose from their lows earlier this year.

"The largest upward movement came from clothing where prices fell on the month but by less than a year ago, partly due to different sales patterns throughout the year so far.

"In addition, prices for private dental treatment, physiotherapy and haircuts have increased with the need for PPE contributing to costs for these businesses.

"Our new experimental numbers, taking into account changing spending patterns throughout the pandemic, show prices rising only a little higher than our headline inflation figures."

IG said: "Today’s rise in UK inflation does highlight a pickup in demand despite pandemic ill-effects that had dragged on prices worldwide. While a significant degree of the headline inflation figure could be explained away by the rebound in energy prices, the fact that core inflation is now back at a lofty 1.8% does highlight some optimism for the UK economic picture."

In equity markets, British Airways and Iberia parent IAG flew higher following two days of losses, with traders pointing to an upbeat note from Redburn.

Morrisons rallied as it emerged that the supermarket’s customers can now do their grocery shopping on Amazon.

Capita surged a day after suffering heavy losses on the back of its first-half results, amid speculation there has been some interest in the outsourcer’s education software solutions business.

Primark owner Associated British Foods was boosted by an upgrade to ‘outperform’ from ‘sector perform’ at RBC Capital Markets, which said ABF has been left behind in the recent sector rally even though the prospects for its two main businesses are improving.

South America-focused miner Hochschild was in the red after it reported a sharp fall in interim profits as operations were shuttered during the coronavirus lockdown.

Market Movers

FTSE 100 (UKX) 6,080.14 0.06%
FTSE 250 (MCX) 17,577.84 -0.26%
techMARK (TASX) 3,834.27 0.00%

FTSE 100 - Risers

International Consolidated Airlines Group SA (CDI) (IAG) 191.15p 2.33%
Smith (DS) (SMDS) 282.30p 2.21%
Morrison (Wm) Supermarkets (MRW) 199.65p 1.76%
Mondi (MNDI) 1,549.50p 1.44%
Associated British Foods (ABF) 1,999.00p 1.37%
Smurfit Kappa Group (SKG) 2,774.00p 1.31%
London Stock Exchange Group (LSE) 8,788.00p 1.27%
Johnson Matthey (JMAT) 2,373.00p 1.24%
AstraZeneca (AZN) 8,582.00p 1.06%
Intermediate Capital Group (ICP) 1,349.00p 0.97%

FTSE 100 - Fallers

Persimmon (PSN) 2,752.00p -2.48%
Compass Group (CPG) 1,150.50p -2.33%
Evraz (EVR) 342.70p -2.09%
Barratt Developments (BDEV) 524.00p -1.95%
JD Sports Fashion (JD.) 667.80p -1.88%
Land Securities Group (LAND) 546.40p -1.55%
Aveva Group (AVV) 4,285.00p -1.38%
Aviva (AV.) 283.20p -1.32%
Royal Dutch Shell 'B' (RDSB) 1,091.80p -1.28%
Melrose Industries (MRO) 100.90p -1.22%

FTSE 250 - Risers

Capita (CPI) 31.44p 9.55%
Law Debenture Corp. (LWDB) 548.00p 3.59%
Frasers Group (FRAS) 291.20p 2.97%
Avon Rubber (AVON) 3,530.00p 2.92%
FirstGroup (FGP) 39.70p 2.74%
Just Group (JUST) 51.20p 2.61%
Scottish Inv Trust (SCIN) 759.00p 2.57%
PPHE Hotel Group Ltd (PPH) 1,080.00p 2.37%
Softcat (SCT) 1,360.00p 2.33%
TI Fluid Systems (TIFS) 186.20p 2.31%

FTSE 250 - Fallers

Hochschild Mining (HOC) 256.40p -7.77%
National Express Group (NEX) 133.00p -6.07%
Countryside Properties (CSP) 311.60p -4.00%
Cairn Energy (CNE) 134.90p -3.64%
Go-Ahead Group (GOG) 627.00p -3.54%
GCP Student Living (DIGS) 132.20p -3.50%
Aston Martin Lagonda Global Holdings (AML) 64.30p -3.31%
Morgan Advanced Materials (MGAM) 240.00p -2.83%
Sabre Insurance Group (SBRE) 262.50p -2.78%
Capital & Counties Properties (CAPC) 121.80p -2.72%