London midday: Stocks turn lower on Ukraine worries; UK inflation in focus

London stocks had fallen into the red by midday on Wednesday as investors mulled the latest comments from Russian Foreign Minister Sergei Lavrov, with UK inflation figures also in focus.

The FTSE 100 was down 0.2% at 7,278.53.

Stocks had started the session on the front foot, underpinned by some well-received earnings in the US from the likes of Netflix and Halliburton, and by reports that Russian gas flows via the Nord Stream 1 pipeline were set to resume on time on Thursday following scheduled maintenance.

But the mood turned following reports that Lavrov said the geographical objectives of Moscow's "special military operation" in Ukraine were no longer limited to the eastern Donbas region, and now include a number of other territories.

On home shores, meanwhile, data out earlier from the Office for National Statistics showed that consumer price inflation hit a fresh 40-year high of 9.4% in June as the cost-of-living crisis intensified. This was up from 9.1% in May and above consensus expectations of 9.3%.

Food and fuel prices drove the increase. The ONS said that food and non-alcoholic drinks rose by 9.8% in the year to June, up from 8.7% in May and the highest since March 2009, while petrol and diesel prices surged 42.3%, the highest rate since before the start of the historical series in January 1989. Transport costs overall were 15.2% higher.

Danni Hewson, financial analyst at AJ Bell, said: “The latest UK inflation figures had a bit of everything, whether you’re a sunny optimist who thinks inflationary pressures are close to peaking, or a cautious Cassandra who thinks we’re a long way from escaping the cycle of rising prices.

“The headline number reached a new 40-year high of 9.4%, slightly higher than expected, and factory gate prices, often a leading indicator for consumer prices as manufacturers pass on costs, hit their highest level in 45 years.

"However, more encouragingly if you strip out volatile energy and food prices then core inflation actually eased back a touch.

“The FTSE 100 seemed to take the release in its stride despite speculation building that there will be a 50-basis point increase in interest rates when the Bank of England next meets in early August."

In equity markets, Royal Mail was under the cosh as it said that revenue fell 11.5% year-on-year in the first quarter, reflecting weakening retail trends, lower test kit volumes and a return to a structural decline in letters.

Going the other way, online supermarket Ocado was sitting pretty at the top of the FTSE 100, while WPP gained following well-received second-quarter results from US media and marketing group Omnicom.

Market Movers

FTSE 100 (UKX) 7,278.53 -0.24%
FTSE 250 (MCX) 19,366.20 0.43%
techMARK (TASX) 4,353.06 0.16%

FTSE 100 - Risers

Ocado Group (OCDO) 800.80p 6.09%
Ashtead Group (AHT) 4,051.00p 2.84%
Scottish Mortgage Inv Trust (SMT) 819.00p 2.38%
B&M European Value Retail S.A. (DI) (BME) 417.00p 2.16%
WPP (WPP) 851.20p 1.92%
Entain (ENT) 1,148.00p 1.91%
Aveva Group (AVV) 2,284.00p 1.78%
Sage Group (SGE) 686.80p 1.54%
Glencore (GLEN) 425.80p 1.51%
Informa (INF) 577.20p 1.51%

FTSE 100 - Fallers

Smith (DS) (SMDS) 289.20p -1.93%
Persimmon (PSN) 1,781.00p -1.68%
Rolls-Royce Holdings (RR.) 92.32p -1.63%
Prudential (PRU) 1,006.50p -1.56%
BAE Systems (BA.) 798.80p -1.53%
Reckitt Benckiser Group (RKT) 6,330.00p -1.46%
Rentokil Initial (RTO) 506.60p -1.40%
Burberry Group (BRBY) 1,693.50p -1.31%
AstraZeneca (AZN) 11,088.00p -1.28%
Smurfit Kappa Group (CDI) (SKG) 2,834.00p -1.25%

FTSE 250 - Risers

JTC (JTC) 686.00p 5.05%
ASOS (ASC) 1,086.00p 4.52%
Ferrexpo (FXPO) 127.60p 4.16%
Aston Martin Lagonda Global Holdings (AML) 540.00p 4.01%
Liontrust Asset Management (LIO) 924.00p 3.94%
Playtech (PTEC) 474.80p 3.89%
Baltic Classifieds Group (BCG) 150.20p 3.87%
Darktrace (DARK) 364.70p 3.76%
Future (FUTR) 1,858.00p 3.74%
Volution Group (FAN) 363.00p 3.71%

FTSE 250 - Fallers

Polymetal International (POLY) 226.00p -3.87%
Currys (CURY) 71.50p -3.51%
Jupiter Fund Management (JUP) 140.40p -2.77%
easyJet (EZJ) 383.80p -2.49%
Royal Mail (RMG) 278.30p -2.35%
Abrdn Private Equity Opportunities Trust (APEO) 429.00p -2.05%
Hochschild Mining (HOC) 77.35p -1.84%
Indivior (INDV) 303.20p -1.81%
Moonpig Group (MOON) 199.40p -1.77%
Just Group (JUST) 67.50p -1.75%