London open: Stocks steady as UK inflation unexpectedly jumps
London stocks were flitting between small gains and losses in early trade on Wednesday amid growing tensions between the US and China, as investors digested an unexpected jump in UK inflation.
At 0835 BST, the FTSE 100 was steady at 6,073.92.
Sino-US trade relations remained in focus after US President Donald Trump told reporters on Tuesday that he had cancelled talks between the two.
"I don’t want to talk to them now," Trump told reporters in Yuma, Arizona ."If you know what they’ve done to this country and the world, I don’t want to talk to China just yet. So yes, I cancelled the talks."
On home shores, figures from the Office for National Statistics showed consumer price inflation increased to 1% in July from 0.6% in June, versus expectations for it to remain unchanged. This marked the highest level since March.
Meanwhile, core inflation - which strips out volatile energy, food, alcohol and tobacco prices - rose to 1.8% in July from 1.4% in June. Economists had expected the rate to dip to 1.3%.
ONS deputy national statistician for Economic Statistics, Jonathan Athow, said: "Inflation has risen, in part, due to the largest monthly pump price increase in nearly a decade, as international oil prices rose from their lows earlier this year.
"The largest upward movement came from clothing where prices fell on the month but by less than a year ago, partly due to different sales patterns throughout the year so far.
"In addition, prices for private dental treatment, physiotherapy and haircuts have increased with the need for PPE contributing to costs for these businesses.
"Our new experimental numbers, taking into account changing spending patterns throughout the pandemic, show prices rising only a little higher than our headline inflation figures."
Ruth Gregory, senior UK economist at Capital Economics, said that while the sharp rise in CPI inflation came as a bit of a surprise, it is unlikely to mark the start of an upward trend. "CPI inflation still looks on track to fall to within a whisker of zero in August," she said.
In equity markets, South America-focused miner Hochschild was in the red after it reported a sharp fall in interim profits as operations were shuttered during the coronavirus lockdown.
On the upside, British Airways and Iberia parent IAG flew higher following two days of losses.
Primark owner Associated British Foods was boosted by an upgrade to ‘outperform’ from ‘sector perform’ at RBC Capital Markets, which said ABF had been left behind in the recent sector rally even though the prospects for its two main businesses are improving.
IT infrastructure company Softcat gained after saying it will resume dividend payments and that full-year operating profit was slightly ahead of the board's expectations.
Market Movers
FTSE 100 (UKX) 6,073.92 -0.04%
FTSE 250 (MCX) 17,645.84 0.13%
techMARK (TASX) 3,838.06 0.10%
FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 194.65p 4.20%
Associated British Foods (ABF) 2,021.00p 2.48%
Mondi (MNDI) 1,551.50p 1.57%
GVC Holdings (GVC) 782.00p 1.16%
JD Sports Fashion (JD.) 687.60p 1.03%
London Stock Exchange Group (LSE) 8,760.00p 0.94%
Lloyds Banking Group (LLOY) 28.45p 0.94%
NATWEST GROUP PLC ORD 100P (NWG) 113.10p 0.94%
Whitbread (WTB) 2,356.00p 0.90%
ITV (ITV) 60.92p 0.83%
FTSE 100 - Fallers
BHP Group (BHP) 1,770.80p -1.30%
Evraz (EVR) 345.60p -1.26%
Aviva (AV.) 283.90p -1.08%
BP (BP.) 280.45p -1.02%
Ocado Group (OCDO) 2,374.00p -1.00%
Admiral Group (ADM) 2,676.00p -0.82%
Tesco (TSCO) 226.50p -0.79%
Ashtead Group (AHT) 2,720.00p -0.73%
Fresnillo (FRES) 1,262.00p -0.71%
Hikma Pharmaceuticals (HIK) 2,368.00p -0.63%
FTSE 250 - Risers
Capita (CPI) 30.40p 5.92%
Sirius Real Estate Ltd. (SRE) 79.00p 4.36%
FirstGroup (FGP) 40.00p 3.52%
WH Smith (SMWH) 988.00p 3.51%
Rank Group (RNK) 143.20p 3.02%
Softcat (SCT) 1,368.00p 2.93%
Wood Group (John) (WG.) 228.90p 2.92%
Civitas Social Housing (CSH) 113.00p 2.73%
Virgin Money UK (VMUK) 91.48p 2.46%
Avon Rubber (AVON) 3,510.00p 2.33%
FTSE 250 - Fallers
Hochschild Mining (HOC) 261.20p -6.04%
Calisen (CLSN) 166.25p -2.81%
GCP Student Living (DIGS) 133.80p -2.34%
Watches of Switzerland Group (WOSG) 311.50p -2.04%
Babcock International Group (BAB) 273.50p -1.90%
Centamin (DI) (CEY) 205.40p -1.82%
Hill & Smith Holdings (HILS) 1,260.00p -1.41%
Hiscox Limited (DI) (HSX) 806.40p -1.32%
Network International Holdings (NETW) 404.20p -1.22%
Hammerson (HMSO) 48.43p -1.20%