London open: Stocks edge down as investors mull inflation data

London stocks edged lower in early trade on Wednesday as data showed that annual consumer price inflation eased to the Bank of England’s 2% target in May.

At 0825 BST, the FTSE 100 was down 0.2% at 8,174.97, while sterling was up 0.1% against the dollar at 1.2721.

Inflation fell from 2.3% in April, according to figures released earlier by the Office for National Statistics, in line with expectations. It marked the first time inflation has hit the Bank of England’s target since July 2021.

Inflation peaked at 11.1% in October 2022, hitting its highest level since 1981.

The largest downward contributions came from food and non-alcoholic beverages, recreation and culture, and furniture and household goods. The largest upward contribution was from transport.

The data showed that prices for food and non-alcoholic drinks rose 1.7%, down from 2.9% in April. This marked the lowest annual rate since October 2021. The ONS said the rate has eased for the 14th month in a row from a recent high of 19.2% in March 2023, which was the highest annual rate in more than 45 years.

Services inflation fell to 5.7% in May from 5.9% a month earlier, but missed expectations for a drop to 5.5%.

Meanwhile, core inflation - which strips out food, energy, alcohol and tobacco - eased to 3.5% from 3.9%, as expected.

The inflation data comes a day before the Bank of England is due to make its latest policy announcement.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "UK inflation finally hitting target may come as relief for companies and consumers, but given this descent was widely expected it’s not moved the dial much for London-listed stocks.

"The FTSE 100 has opened lower as investors digest the inflation reading which shows prices in the services sector remain hot, indicating a rate cut may not come until the Autumn. Fed policymakers are also staying cautious about the prospects for interest rate cuts."

In equity markets, housebuilder Berkeley was in the red despite lifting its earnings outlook for the current financial year by 5%.

Precision instrumentation and controls group Spectris tanked as it warned full-year profits will be at the bottom end of market forecasts as a result of weaker-than-expected demand at its lab equipment division in the first half. The news came as the company announced the appointment of Royal Mail’s chief financial officer Angela Noon as its new CFO.

Helios Towers was under the cosh after Newlight and RIT sold a combined 37.6m shares in the company in placing at 115p each, raising about £43.2m. This marked their first sale since the company’s IPO in 2019.

On the upside, Warhammer maker Games Workshop rallied after saying it expects a jump in annual pre-tax profits to at least £200m compared to £171m a year earlier.

Vodafone edged up after saying it had raised €1.7bn through the sale of 484.7m shares, or 18%, of Indus Towers, through an accelerated bookbuild.

Market Movers

FTSE 100 (UKX) 8,174.97 -0.20%
FTSE 250 (MCX) 20,386.69 -0.11%
techMARK (TASX) 4,801.66 -0.07%

FTSE 100 - Risers

Smurfit Kappa Group (CDI) (SKG) 3,664.00p 2.40%
Beazley (BEZ) 690.00p 1.32%
Anglo American (AAL) 2,414.00p 1.05%
Standard Chartered (STAN) 728.80p 0.94%
Prudential (PRU) 705.40p 0.77%
Pershing Square Holdings Ltd NPV (PSH) 4,334.00p 0.65%
Vodafone Group (VOD) 71.08p 0.62%
Rolls-Royce Holdings (RR.) 470.80p 0.62%
HSBC Holdings (HSBA) 690.70p 0.61%
Ashtead Group (AHT) 5,428.00p 0.52%

FTSE 100 - Fallers

AstraZeneca (AZN) 12,204.00p -1.71%
Diageo (DGE) 2,517.50p -1.58%
SEGRO (SGRO) 906.60p -1.33%
Ocado Group (OCDO) 350.30p -0.93%
Berkeley Group Holdings (The) (BKG) 4,964.00p -0.92%
Convatec Group (CTEC) 243.00p -0.82%
GSK (GSK) 1,599.00p -0.81%
B&M European Value Retail S.A. (DI) (BME) 469.60p -0.80%
Rentokil Initial (RTO) 451.80p -0.79%
RS Group (RS1) 725.50p -0.75%

FTSE 250 - Risers

Bridgepoint Group (Reg S) (BPT) 230.40p 4.25%
IP Group (IPO) 47.00p 3.52%
JTC (JTC) 930.00p 3.45%
Games Workshop Group (GAW) 9,700.00p 2.81%
Vesuvius (VSVS) 485.50p 2.43%
Crest Nicholson Holdings (CRST) 249.40p 1.96%
TUI AG Reg Shs (DI) (TUI) 583.00p 1.92%
NCC Group (NCC) 148.40p 1.92%
Telecom Plus (TEP) 1,890.00p 1.61%
NextEnergy Solar Fund Limited Red (NESF) 77.70p 1.44%

FTSE 250 - Fallers

Spectris (SXS) 2,934.00p -8.54%
Helios Towers (HTWS) 114.60p -6.98%
Wetherspoon (J.D.) (JDW) 717.00p -4.59%
Genuit Group (GEN) 433.00p -2.70%
Patria Private Equity Trust (PPET) 553.00p -2.47%
Quilter (QLT) 118.40p -2.39%
Baltic Classifieds Group (BCG) 225.00p -1.96%
TP Icap Group (TCAP) 203.00p -1.93%
Hammerson (HMSO) 27.52p -1.92%
Empiric Student Property (ESP) 92.50p -1.80%