London open: Stocks in the red ahead of US inflation data

London stocks fell in early trade on Thursday as investors mulled the latest minutes from the US Federal Reserve and looked ahead to key inflation data from across the pond.

At 0830 BST, the FTSE 100 was down 0.5% at 6,793.43, while sterling was 0.3% lower versus the dollar at 1.1071.

Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown, said: "The realisation that the Federal Reserve is in it for the long haul when it comes to setting and maintaining higher interest rate has sent a fresh wave of worry through financial markets. After a volatile day trading stocks in Wall Street ended lower for the sixth session in a row, sparking falls for equities in Asia and setting up the FTSE 100 for a lower open.

"Closely watched minutes from the Federal Open Market Committee showed once again that inflation is seen as the biggest economic threat, and policymakers believe that moves higher now could prevent a further escalation and even more financial pain in the future. So rates are set to rise further, but there were hints the pace could slow a little, given the rising risk of significant adverse effects on the economy."

Streeter said that the Fed, like many other central banks, is finding that inflation is an ever-tougher opponent to beat down.

"Producer prices, the cost of producing goods and services, jumped again in September by 0.4%, more sharply than expected and this will feed through to what consumers will have to pay," she said. "US consumer price snapshot will be out later, which will be closely watched by investors, but it’s the direction of travel for rates is clear, for now the only way is up."

The US consumer price index for September is due out at 1330 BST.

On home shores, the latest residential market survey from the Royal Institution of Chartered Surveyors showed that house prices rose in September at their slowest pace since early in the coronavirus pandemic and are set to fall further.

The net balance of surveyors reporting that house prices have risen over the last three months fell to +32 in September from +51 in August, coming in below consensus expectations for a reading of +45.

The survey also signalled that homeowners will struggle to make mortgage repayments and repossessions will rise next year amid surging interest rates and falling house prices.

RICS chief economist Simon Rubinsohn said: "For now mortgage arrears and possessions remain at historic lows but they are inevitably going to move upwards over the next year, as pressure on homeowners grows."

In equity markets, Taylor Wimpey, Tesco and Close Brothers were all lower as they traded without entitlement to the dividend.

Housebuilders more generally were under the cosh, with Barratt and Persimmon also down after the RICS survey and amid concerns about interest rates.

Recruiter Hays was weaker as it hailed a record first quarter but warned that macroeconomic uncertainty had led to a slowdown in some markets.

Paper and packaging group Mondi was the top performer on the FTSE 100 after an upgrade to ‘overweight’ at Morgan Stanley.

Low-cost airline easyJet flew higher after saying it expects to report annual pre-tax losses of £170m to £190m, as it flew 88% of pre-Covid capacity in the fourth quarter.

Ladbrokes owner Entain traded higher as it posted an uptick in third-quarter net gaming revenue and said online gaming revenue for the fourth quarter was expected to rise, thanks in part to the World Cup.

Market Movers

FTSE 100 (UKX) 6,793.43 -0.48%
FTSE 250 (MCX) 16,559.28 -0.31%
techMARK (TASX) 4,047.03 -0.29%

FTSE 100 - Risers

Mondi (MNDI) 1,389.50p 1.42%
Informa (INF) 542.80p 1.42%
Endeavour Mining (EDV) 1,545.00p 1.18%
Pershing Square Holdings Ltd NPV (PSH) 2,675.00p 0.94%
JD Sports Fashion (JD.) 89.92p 0.81%
Antofagasta (ANTO) 1,082.50p 0.74%
Rolls-Royce Holdings (RR.) 66.71p 0.71%
Harbour Energy (HBR) 403.70p 0.70%
F&C Investment Trust (FCIT) 873.00p 0.69%
GSK (GSK) 1,367.00p 0.60%

FTSE 100 - Fallers

Taylor Wimpey (TW.) 81.50p -5.67%
WPP (WPP) 717.00p -2.85%
Tesco (TSCO) 195.15p -2.01%
Intermediate Capital Group (ICP) 959.00p -1.74%
British Land Company (BLND) 319.20p -1.72%
BT Group (BT.A) 117.60p -1.59%
Next (NXT) 4,315.00p -1.55%
St James's Place (STJ) 907.40p -1.37%
Coca-Cola HBC AG (CDI) (CCH) 1,937.50p -1.35%
Burberry Group (BRBY) 1,847.00p -1.28%

FTSE 250 - Risers

IP Group (IPO) 57.55p 8.89%
AJ Bell (AJB) 286.40p 4.83%
Impax Environmental Markets (IEM) 399.00p 3.77%
Playtech (PTEC) 487.00p 3.62%
Carnival (CCL) 558.20p 3.29%
Centamin (DI) (CEY) 86.06p 2.99%
Bodycote (BOY) 474.80p 2.59%
Home Reit (HOME) 87.20p 2.35%
BlackRock World Mining Trust (BRWM) 575.00p 2.31%
Elementis (ELM) 91.05p 2.25%

FTSE 250 - Fallers

Close Brothers Group (CBG) 874.00p -4.84%
Mitie Group (MTO) 61.00p -3.79%
Drax Group (DRX) 497.80p -2.68%
888 Holdings (DI) (888) 85.00p -2.63%
NCC Group (NCC) 205.00p -2.61%
Savills (SVS) 770.50p -2.28%
Auction Technology Group (ATG) 680.00p -2.16%
TUI AG Reg Shs (DI) (TUI) 111.40p -2.11%
Morgan Advanced Materials (MGAM) 236.00p -2.07%
Liontrust Asset Management (LIO) 733.00p -2.01%