London open: Stocks edge lower after inflation data

London stocks edged lower in early trade on Wednesday as investors mulled an unexpected uptick in UK inflation.

At 0900 GMT, the FTSE 100 was 0.4% lower at 6,725.14, while sterling was down 0.1% against the dollar at 1.3888.

Data released earlier by the Office for National Statistics showed that consumer price inflation rose to 0.7% in January from 0.6% in December, with food and household goods the main drivers. Analysts had been expecting a nudge lower to 0.5%.

Core inflation - which strips out volatile food and energy prices - held steady at 1.4%, versus consensus expectations of 1.3%.

ONS deputy national statistician for Economic Statistics, Jonathan Athow, said: "Inflation rose slightly in January, with food prices increasing. Household goods also pushed up prices with less discounting this year on items such as bedding and settees.

"However, there were widespread January sales, with particular price cuts for clothing and footwear."

Paul Dales, chief UK economist at Capital Economics, said the rise in CPI inflation is trivial given that a leap to around 2.0% in April and to around 2.5% by the end of the year appears to be "baked in the cake".

"That would knock on the head any lingering hopes of more stimulus from the Bank of England, although we doubt it will prompt tighter monetary policy either," he said.

In equity markets, Hargreaves Lansdown was under the cosh after Peter Hargreaves sold £300m of shares, leaving him owning less than 20% of the company he co-founded 30 years ago.

British American Tobacco was also firmly in the red as it said full-year profits rose but the figure fell short of analysts’ expectations.

Plus500 lost ground after saying it would buy back up to $25m of shares and pay a special dividend as the trading platform announced record earnings driven by volatile markets during the Covid-19 crisis.

On the upside, Rio Tinto gained after it delivered a record dividend to shareholders as soaring iron ore prices and demand from China drove full-year profits sharply higher. Miners more generally were on the rise, with Antofagasta, BHP and Anglo American also higher.

Elsewhere, Ferrexpo rallied after an initiation at ‘buy’ at Peel Hunt, while Shaftesbury and Workspace were both boosted by upgrades to ‘buy’ at Jefferies.

Johnson Matthey was lifted by an upgrade to ‘reduce’ at AlphaValue.

Market Movers

FTSE 100 (UKX) 6,725.14 -0.35%
FTSE 250 (MCX) 21,292.57 -0.58%
techMARK (TASX) 4,131.18 -0.56%

FTSE 100 - Risers

Antofagasta (ANTO) 1,671.50p 2.17%
Rio Tinto (RIO) 6,366.00p 1.69%
BP (BP.) 282.40p 1.51%
Rolls-Royce Holdings (RR.) 101.30p 1.36%
B&M European Value Retail S.A. (DI) (BME) 598.00p 1.36%
BHP Group (BHP) 2,287.00p 1.17%
Royal Dutch Shell 'B' (RDSB) 1,384.40p 1.11%
Johnson Matthey (JMAT) 3,117.00p 1.07%
Anglo American (AAL) 2,846.50p 0.99%
DCC (DCC) 5,986.00p 0.74%

FTSE 100 - Fallers

Hargreaves Lansdown (HL.) 1,541.50p -6.75%
British American Tobacco (BATS) 2,591.00p -5.73%
Ocado Group (OCDO) 2,603.00p -2.18%
M&G (MNG) 193.40p -1.98%
Coca-Cola HBC AG (CDI) (CCH) 2,328.00p -1.85%
St James's Place (STJ) 1,226.50p -1.53%
InterContinental Hotels Group (IHG) 5,068.00p -1.52%
Compass Group (CPG) 1,448.00p -1.46%
Experian (EXPN) 2,597.00p -1.44%
Whitbread (WTB) 3,380.00p -1.43%

FTSE 250 - Risers

Ferrexpo (FXPO) 348.00p 4.00%
Indivior (INDV) 146.90p 3.38%
Workspace Group (WKP) 743.50p 2.76%
Shaftesbury (SHB) 609.50p 2.70%
Just Group (JUST) 85.90p 2.02%
Capital & Counties Properties (CAPC) 166.40p 1.77%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 435.50p 1.28%
Royal Mail (RMG) 485.10p 1.27%
RHI Magnesita N.V. (DI) (RHIM) 4,046.00p 1.05%
Fidelity China Special Situations (FCSS) 500.00p 1.01%

FTSE 250 - Fallers

AJ Bell (AJB) 440.00p -3.30%
Plus500 Ltd (DI) (PLUS) 1,336.50p -3.08%
XP Power Ltd. (DI) (XPP) 5,260.00p -2.95%
Sirius Real Estate Ltd. (SRE) 90.10p -2.91%
Lancashire Holdings Limited (LRE) 664.50p -2.57%
Hammerson (HMSO) 22.34p -2.23%
Capita (CPI) 39.50p -2.08%
Micro Focus International (MCRO) 432.10p -2.04%
Quilter (QLT) 154.45p -1.94%
WH Smith (SMWH) 1,668.00p -1.82%