London open: Stocks edge lower after inflation data

London stocks edged lower in early trade on Wednesday after data showed that UK inflation surged in November to its highest level in more than a decade.

At 0845 GMT, the FTSE 100 was down 0.2% at 7,207.34, while sterling was 0.3% firmer versus the dollar at 1.3271.

Richard Hunter, head of markets at Interactive Investor, said: "Investor apprehension is growing as rising prices, a fast-spreading Omicron variant and a likely hardening of the Federal Reserve’s attitude to monetary tightening all conspire to undermine sentiment.

"Generally higher prices, supply chain bottlenecks and a tight labour market are themes which will clearly spill over to the New Year, all of which will put further pressure on companies in considering whether to pass on these higher costs to consumers. With the current variant also impacting the hospitality and tourism industries, pressure is likely to remain on share prices for the time being."

Figures released earlier by the Office for National Statistics showed annual inflation surged to 5.1% in November from 4.2% the month before, coming in above consensus expectations of 4.8% and the Bank of England’s forecast for 4.5%. It was the highest annual rate since September 2011.

A number of segments drove the hike, with motor fuel CPI surging to 28.5% from 21.5% after the price of crude oil jumped. Tobacco also rose, following an increase in duties in late October, while food CPI rose to 2.5% from 1.2% in October.

The price of second-hand cars rose, as did clothing CPI, increasing to 3.5% from -0.4% in October.

Including occupiers’ housing costs, CPIH rose by 4.6% in the 12 months to November, up from 3.8% a month previously and the highest since September 2008.

Core consumer price inflation, which strips out volatile elements such as energy, food and alcohol, also came in above estimates, rising to 4.0% from 3.4% in October, the highest since 1992. Most analysts were expecting core CPI of around 3.7%.

The BoE’s rate-setting Monetary Policy Committee is due to meet on Thursday. However, economists are still not expecting rates to rise.

Looking ahead to the rest of the day, investors will be eyeing a policy announcement from the US Federal Reserve after the London close.

In equity markets, miners fell, with Rio Tinto, Anglo American, Antofagasta, Glencore and BHP all lower as metals prices retreated.

Cineworld tumbled more than 30% after it was ordered to pay Canadian theatre company Cineplex CAD1.28bn (£751.57m) in damages after pulling out of a planned takeover.

Electricals retailer Currys slid after it reported higher first-half profits but warned its market has been softer over recent weeks and it could face more headwinds from the Omicron Covid variant.

Harbour Energy was knocked lower by a downgrade to ‘hold’ at Berenberg.

On the upside, sales and marketing firm DCC surged to the top of the FTSE 100 after it bought US sales and distribution business Almo for around $610.0m, marking its largest acquisition to date.

Market Movers

FTSE 100 (UKX) 7,207.34 -0.16%
FTSE 250 (MCX) 22,579.00 0.13%
techMARK (TASX) 4,393.63 0.22%

FTSE 100 - Risers

DCC (CDI) (DCC) 5,818.00p 5.67%
Darktrace (DARK) 392.20p 4.31%
Sage Group (SGE) 816.80p 1.54%
Scottish Mortgage Inv Trust (SMT) 1,366.50p 1.26%
Spirax-Sarco Engineering (SPX) 15,635.00p 1.23%
BT Group (BT.A) 169.40p 1.22%
SEGRO (SGRO) 1,402.00p 1.15%
Aviva (AV.) 399.30p 1.04%
Severn Trent (SVT) 2,936.00p 0.93%
Halma (HLMA) 3,108.00p 0.88%

FTSE 100 - Fallers

Rentokil Initial (RTO) 530.20p -3.18%
Ocado Group (OCDO) 1,638.00p -2.38%
Rio Tinto (RIO) 4,758.00p -1.98%
Anglo American (AAL) 2,853.50p -1.54%
Next (NXT) 7,950.00p -1.29%
Royal Dutch Shell 'A' (RDSA) 1,600.60p -1.16%
Antofagasta (ANTO) 1,367.00p -1.12%
Royal Dutch Shell 'B' (RDSB) 1,601.40p -1.11%
Glencore (GLEN) 363.05p -1.08%
BHP Group (BHP) 2,145.50p -1.04%

FTSE 250 - Risers

4Imprint Group (FOUR) 2,925.00p 4.46%
Playtech (PTEC) 756.50p 4.13%
Ninety One (N91) 262.60p 2.74%
Trainline (TRN) 270.80p 2.58%
Balfour Beatty (BBY) 247.60p 2.48%
Telecom Plus (TEP) 1,540.00p 1.72%
Kainos Group (KNOS) 1,768.00p 1.67%
Scottish American Inv Company (SAIN) 538.00p 1.51%
Oxford Biomedica (OXB) 1,076.00p 1.51%
BlackRock Smaller Companies Trust (BRSC) 2,030.00p 1.50%

FTSE 250 - Fallers

Cineworld Group (CINE) 31.00p -31.69%
Currys (CURY) 115.80p -6.61%
AO World (AO.) 90.60p -3.97%
Restaurant Group (RTN) 76.40p -3.05%
Harbour Energy (HBR) 341.00p -2.96%
Aston Martin Lagonda Global Holdings (AML) 1,161.00p -2.48%
Carnival (CCL) 1,228.80p -2.27%
Contour Global (GLO) 186.40p -1.48%
Reach (RCH) 241.00p -1.43%
Ferrexpo (FXPO) 291.80p -1.35%