London midday: Stocks stay down on US rate cut doubts

London stocks were still in the red by midday on Wednesday following a weaker close on Wall Street, amid growing doubts over US interest rate cuts following solid economic data.

The FTSE 100 was down 0.4% at 7,904.36.

Russ Mould, investment director at AJ Bell, said: "The FTSE 100 took its cue from selling in Asia and the US overnight to trade lower on Wednesday.

"Up until now the market has been remarkably sanguine about expectations on when the first interest rate cut will fall consistently being pushed back. But investors’ patience may finally be running thin.

"Recent releases from the US suggest both that inflation is proving stubborn but also that the economy is proving remarkably resilient. This is creating a situation where central bankers can arguably afford to keep policy tight to ensure they really have slain the inflation dragon.

"However, the Federal Reserve has to balance that with the inevitable lagged impact of the sharp rise in interest rate hikes since 2021, with companies and individuals still in the process of rolling over on to higher interest costs.

"Employment data today and on Friday, a reading from the US services sector and a scheduled talk at Stanford by Jerome Powell may all help clarify in people’s minds what the Fed is thinking and whether there is still hope for a June rate cut."

Data released early by Eurostat showed that inflation in the eurozone unexpectedly slowed in March, with the core rate dropping to its lowest in more than two years, as price pressures in the single-currency region continue to ease.

The year-on-year change in the eurozone's harmonised consumer price index fell to 2.4% last month, from 2.6% in February, surprising economists who had pencilled in no change.

This was the same rate recorded in November 2023, which was the lowest level seen since July 2021.

The core rate - which excludes volatile items like food and energy - also slowed, to 2.9% from 3.1%, coming in below expectations of 3.0% and the lowest reading since February 2022.

Investors were also mulling the latest data out of China, which showed that activity in the services sector grew as expected in March.

The Caixin services PMI ticked up to 52.7 from 52.5 in February, in line with expectations. A reading above signals expansion, while a reading below indicates contraction.

In equity markets, FTSE 250 engineer Renishaw slumped after Germany’s Siemens confirmed it was not planning to make an offer for the company.

Meat, seafood and meat alternatives group Hilton Foods reversed earlier gains to trade lower even as it said profits rose by a fifth in 2023 despite modest top-line growth, helped by the turnaround in its seafood business.

On the upside, precious metals miners Fresnillo shone as gold prices reached another record high.

Royal Mail parent IDS advanced as it proposed a series of operational changes - including delivering all non-first class and second class mail every other weekday - which are expected to cut costs by £300m. The proposals were made in response to Ofcom’s call for universal service reforms amid declining letter volumes.

Outside the FTSE 350, Topps Tiles lost ground as it cautioned that first-half profitability would be hit by a number of factors including a weaker market, and reported a fall in revenues.

Market Movers

FTSE 100 (UKX) 7,904.36 -0.39%
FTSE 250 (MCX) 19,688.86 -0.13%
techMARK (TASX) 4,437.74 -0.92%

FTSE 100 - Risers

Fresnillo (FRES) 516.50p 2.18%
Marks & Spencer Group (MKS) 266.20p 1.60%
Standard Chartered (STAN) 688.40p 1.44%
Airtel Africa (AAF) 106.00p 1.15%
HSBC Holdings (HSBA) 627.90p 1.05%
Rightmove (RMV) 537.00p 0.86%
NATWEST GROUP (NWG) 269.40p 0.86%
Barclays (BARC) 185.64p 0.83%
Imperial Brands (IMB) 1,772.50p 0.71%
Schroders (SDR) 373.20p 0.70%

FTSE 100 - Fallers

BT Group (BT.A) 106.75p -2.73%
Prudential (PRU) 726.80p -1.78%
AstraZeneca (AZN) 10,420.00p -1.74%
BAE Systems (BA.) 1,308.00p -1.73%
Smiths Group (SMIN) 1,630.00p -1.63%
Centrica (CNA) 124.85p -1.62%
Convatec Group (CTEC) 289.00p -1.50%
RS Group (RS1) 700.00p -1.48%
Experian (EXPN) 3,345.00p -1.41%
Spirax-Sarco Engineering (SPX) 9,745.00p -1.32%

FTSE 250 - Risers

Abrdn (ABDN) 144.00p 3.08%
International Distributions Services (IDS) 232.60p 2.65%
Close Brothers Group (CBG) 412.00p 2.44%
Watches of Switzerland Group (WOSG) 348.40p 2.23%
Pets at Home Group (PETS) 264.60p 1.85%
Bakkavor Group (BAKK) 112.50p 1.81%
Wood Group (John) (WG.) 129.70p 1.81%
Man Group (EMG) 270.60p 1.73%
Savills (SVS) 1,060.00p 1.73%
Petershill Partners (PHLL) 197.20p 1.65%

FTSE 250 - Fallers

Renishaw (RSW) 4,200.00p -3.45%
W.A.G Payment Solutions (WPS) 65.00p -3.27%
Quilter (QLT) 103.20p -3.01%
Hilton Food Group (HFG) 832.00p -2.58%
Ithaca Energy (ITH) 119.40p -2.45%
Moonpig Group (MOON) 165.20p -2.25%
Energean (ENOG) 1,042.00p -2.07%
Ferrexpo (FXPO) 43.65p -1.91%
Trustpilot Group (TRST) 186.00p -1.80%
Darktrace (DARK) 435.80p -1.74%