London open: Stocks fall as investors mull inflation data

London stocks fell in early trade on Wednesday, taking their cue from a weak session on Wall Street after a hotter-than-expected inflation print, as the latest reading on UK inflation showed an unexpected dip in August.

At 0825 BST, the FTSE 100 was down 0.6% at 7,342.71.

Data out earlier from the Office for National Statistics showed that inflation eased in August but remained close to a 40-year high.

Consumer price inflation slowed to 9.9% from 10.1% in July, coming in below consensus expectations for an increase to 10.2%. Most of the decline was down to a drop in fuel inflation to 32.1% form 43.7%.

"A fall in the price of motor fuels made the largest downward contribution to the change in both the CPIH and CPI annual inflation rates between July and August 2022," the ONS said. "Rising food prices made the largest, partially offsetting, upward contribution to the change in the rates."

The figures also showed that food price inflation rose to 13.4% in August from 12.8% the month before, while clothing price inflation edged up to 7.9% from 6.9% to 7.9%.

Core inflation - which strips out food, alcohol and tobacco and energy - ticked up to 6.3% on the year, from 6.2%.

Paul Dales, chief UK economist at Capital Economics, said the easing in CPI inflation "is a bit of a relief after yesterday’s US CPI shocker, but overall and core UK CPI inflation haven’t peaked yet". As such, he reckons the Bank of England "will have to continue turning the screws".

Dales added: "Overall, we think CPI inflation will peak around 11.0% just before the end of the year and that core inflation will continue to edge higher too. That means the Bank will have to continue raising interest rates, from 1.75% now to 3.00% if not higher."

In equity markets, Abrdn was the worst performer on the FTSE 100 after a downgrade to ‘sell’ at Deutsche Bank.

Budget airline easyJet flew lower after a downgrade to ‘sell’ at Stifel.

C&C Group was also under the cosh after the Bulmers maker said it expects to deliver a 35% jump in first-half net revenues but that it has seen a slowdown in on-trade momentum over the second quarter.

On the upside, Croda was sitting pretty at the top of the FTSE 100 after an upgrade to ‘buy’ at Jefferies.

Homeware retailer Dunelm surged to the top of the FTSE 250 as it reported record full-year results in a "challenging" environment.

Market Movers

FTSE 100 (UKX) 7,342.71 -0.58%
FTSE 250 (MCX) 19,110.79 -0.29%
techMARK (TASX) 4,304.82 -0.21%

FTSE 100 - Risers

Croda International (CRDA) 6,968.00p 2.17%
Next (NXT) 5,936.00p 1.85%
Pershing Square Holdings Ltd NPV (PSH) 2,820.00p 1.81%
Kingfisher (KGF) 250.50p 1.33%
B&M European Value Retail S.A. (DI) (BME) 356.60p 1.08%
Scottish Mortgage Inv Trust (SMT) 814.20p 0.84%
Associated British Foods (ABF) 1,370.50p 0.77%
JD Sports Fashion (JD.) 128.10p 0.71%
Barratt Developments (BDEV) 419.70p 0.60%
Unite Group (UTG) 1,035.00p 0.58%

FTSE 100 - Fallers

Abrdn (ABDN) 144.60p -3.08%
Anglo American (AAL) 2,870.00p -1.73%
Shell (SHEL) 2,294.00p -1.44%
Antofagasta (ANTO) 1,193.50p -1.36%
BP (BP.) 455.70p -1.27%
Centrica (CNA) 83.88p -1.25%
Melrose Industries (MRO) 120.10p -1.23%
InterContinental Hotels Group (IHG) 4,771.00p -1.22%
Ocado Group (OCDO) 671.20p -1.18%
Schroders (SDR) 2,626.00p -1.06%

FTSE 250 - Risers

Dunelm Group (DNLM) 774.00p 7.05%
Baltic Classifieds Group (BCG) 144.60p 3.29%
Tritax Eurobox (GBP) (EBOX) 82.00p 2.89%
Spirent Communications (SPT) 274.80p 2.54%
Hipgnosis Songs Fund Limited NPV (SONG) 108.00p 1.89%
Countryside Partnerships (CSP) 254.40p 1.84%
Darktrace (DARK) 375.80p 1.65%
Playtech (PTEC) 472.00p 1.59%
Primary Health Properties (PHP) 134.00p 1.21%
Fidelity China Special Situations (FCSS) 238.50p 1.06%

FTSE 250 - Fallers

Aston Martin Lagonda Global Holdings (AML) 149.90p -4.67%
easyJet (EZJ) 339.90p -3.90%
Trainline (TRN) 347.90p -3.71%
C&C Group (CDI) (CCR) 168.00p -3.39%
Tullow Oil (TLW) 48.50p -2.41%
Wizz Air Holdings (WIZZ) 2,103.00p -2.32%
Virgin Money UK (VMUK) 151.45p -2.29%
Jupiter Fund Management (JUP) 103.50p -2.17%
Ferrexpo (FXPO) 154.20p -2.16%
888 Holdings (DI) (888) 119.30p -2.13%