London close: Stocks weaker, sterling slides as inflation surges

The FTSE 100 ended the session down 1.07% at 7,438.09, and the FTSE 250 was off 0.58% at 19,949.44.

Sterling was also in the red, last trading 0.83% lower on the dollar at $1.2389, and slipping 0.25% against the euro to €1.1811.

“That stocks can’t even manage a decent rebound after their heavy losses should tell investors that we are not in the bull market of 2021 any more,” said IG chief market analyst Chris Beauchamp.

“After clawing their way higher earlier in the week, indices have lost their footing and have slumped into the red.”

Beauchamp said investors seemed to have taken counsel of their fears once again, fretting over inflation and recession in parts of the global economy.

“While it was expected that this bounce would be short-lived, the rapidity with which it has unravelled will mean that even more investors will start heading for the exits.”

On the economic front, official data released earlier showed UK inflation hitting a fresh 40-year high of 9%, after energy prices surged in April.

According to the Office for National Statistics, the headline consumer price index rose to 9.0% in April from 7% in March.

The rate was the highest in the national statistics series, which began in January 1997, and the highest in the constructed historical series, which began in January 1989.

Inflation was likely to last higher "sometime around 1982", the ONS said, where estimates ranged for between around 6.5% in December to nearly 11% in January.

April's figure was marginally below consensus expectations of 9.1%, however.

“Inflation in the UK is completely out of control, and there is no doubt soaring inflation is having a negative influence on disposable income,” said Naeem Aslam, chief market analyst at AvaTrade.

“Consumers are struggling to meet their daily needs and now the pressure is even more on the Bank of England to do more to control inflation.

“But it is walking a fine line, and can only do so much to control inflation by increasing the interest rate.”

Elsewhere, ONS data also showed average UK house prices increased by £24,000 in the year ended 31 March, which was a slight slowdown when compared to the previous month.

The average price of a home in the UK rose to £278,000 in March as the annual growth rate came to 9.8%, down from the 11.3% annual increase seen in February.

Average house prices in England hit a record level of £298,000, a 9.9% annual increase, while the average price of a home in Wales, Scotland, and Ireland all saw double-digit percentage increases to £206,000, £181,000, and £165,000, respectively.

“Average annual price rises have bounced in and out of double digits for almost a year now, so a single monthly drop isn't the canary in the coalmine,” said Hargreaves Lansdown's Sarah Coles.

“It's not the first monthly pause in the relentless rise of average prices either.

“There are still plenty of signs of strength in the market that have come through since March, with sales remaining brisk, mortgage approvals running above pre-pandemic levels, and the number of buyers still growing - and continuing to dramatically outnumber sellers.”

On the continent, the cost of living in the euro area was unchanged last month, contrary to a preliminary estimate.

According to Eurostat, the annual rate of headline consumer price inflation was unchanged at 7.4% in April.

Economists had expected the preliminary reading of 7.5% to be confirmed.

Finally, housebuilding activity in the United States weakened more than expected last month.

According to the US Department of Commerce, housing starts dipped at a seasonally-adjusted month-on-month pace of 0.2% to reach an annualised pace of 1.724m.

That was significantly less than the 1.77m print anticipated by economists, although starts were up by 14.6% on a year earlier.

In equity markets back in London, Experian fell 5.62% even after the credit-checking firm posted a jump in full-year profit and revenue and highlighted significant progress in consumer services.

Darktrace tumbled 15.17% after a senior director of the cyber security specialist was linked to the legal row over Autonomy’s sale to Hewlett Packard.

According to the Telegraph, Justice Robert Hildyard found on Tuesday that Autonomy’s central management had pulled on accounting "levers" to misrepresent how well the business was fairing ahead of its 2011 sale to the US tech firm.

Nicole Eagan, then Autonomy's chief marketing officer, was named as "part of a clique responsible with the defendants of the operation of the impugned levels".

TUI slid 12.93% after the travel company placed 162.3 million shares at €2.62 each, while media publisher Future reversed earlier gains to close down 5.84%.

Going the other way, property group British Land added 3.12% after it swung back into the black after three consecutive years of losses.

Burberry eked out gains of 0.03% after the luxury brand posted a rise in full-year profits and revenues, but said its full-year outlook hinged on how fast China bounced back from Covid-19 lockdowns.

Reckitt Benckiser gained 0.73% after an upgrade to ‘outperform’ from ‘sector perform’ at RBC Capital Markets, while WH Smith rose 1.2% after an upgrade to ‘overweight’ from ‘neutral’ at JPMorgan.

Molten metal flow engineer Vesuvius jumped 6.71% after it said its sales performance in the first four months of the year was stronger than expected.

Mr Kipling and Oxo owner Premier Foods surged 10.13% after well-received results, while housebuilder Vistry advanced 3.61% after it said 2022 profits were set to be at the top end of market forecasts.

Insurer Aviva was 2.06% higher after it reaffirmed annual guidance and reported an increase in general insurance sales to their best level in a decade.

Reporting by Josh White at Sharecast.com. Additional reporting by Michele Maatouk, Frank Prenesti, Abigail Townsend, Iain Gilbert and Alexander Bueso.

Market Movers

FTSE 100 (UKX) 7,438.09 -1.07%
FTSE 250 (MCX) 19,949.44 -0.58%
techMARK (TASX) 4,310.71 -0.68%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 84.78p 4.40%
British Land Company (BLND) 524.00p 3.12%
SSE (SSE) 1,925.50p 2.10%
Aviva (AV.) 414.00p 2.06%
Land Securities Group (LAND) 754.00p 1.54%
Entain (ENT) 1,400.50p 1.42%
United Utilities Group (UU.) 1,144.50p 0.97%
Shell (SHEL) 2,370.50p 0.85%
Standard Chartered (STAN) 596.40p 0.78%
Severn Trent (SVT) 3,148.00p 0.77%

FTSE 100 - Fallers

Ocado Group (OCDO) 731.80p -8.55%
Experian (EXPN) 2,519.00p -5.62%
JD Sports Fashion (JD.) 124.70p -5.42%
B&M European Value Retail S.A. (DI) (BME) 440.70p -5.39%
Croda International (CRDA) 6,524.00p -4.76%
Halma (HLMA) 2,093.00p -4.52%
Spirax-Sarco Engineering (SPX) 10,470.00p -4.43%
Endeavour Mining (EDV) 1,759.00p -4.40%
Tesco (TSCO) 266.10p -4.38%
Associated British Foods (ABF) 1,614.00p -4.19%

FTSE 250 - Risers

Premier Foods (PFD) 117.40p 10.13%
Coats Group (COA) 78.60p 9.02%
Vesuvius (VSVS) 353.00p 6.71%
Syncona Limited NPV (SYNC) 182.20p 6.18%
Centrica (CNA) 87.86p 3.93%
Abrdn Private Equity Opportunities Trust (APEO) 476.00p 3.70%
Vistry Group (VTY) 829.00p 3.61%
NB Private Equity Partners Ltd. (NBPE) 1,530.00p 3.38%
XP Power Ltd. (DI) (XPP) 3,300.00p 3.29%
Redde Northgate (REDD) 379.00p 2.99%

FTSE 250 - Fallers

Darktrace (DARK) 323.10p -15.20%
TUI AG Reg Shs (DI) (TUI) 214.20p -12.93%
Watches of Switzerland Group (WOSG) 917.50p -7.56%
Ninety One (N91) 230.00p -7.48%
Currys (CURY) 84.40p -6.74%
Dr. Martens (DOCS) 195.00p -6.25%
Future (FUTR) 1,934.00p -5.84%
Greencore Group (CDI) (GNC) 105.20p -4.71%
Moonpig Group (MOON) 236.40p -4.29%
Playtech (PTEC) 508.50p -4.24%