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London open: FTSE edges lower as inflation hits 3%
London stocks edged lower in early trade on Wednesday as investors mulled a higher-than-expected UK inflation reading.
At 0840 GMT, the FTSE 100 was down 0.3% at 8,741.97.
Data released earlier by the Office for National Statistics showed the annual rate of consumer price inflation rose to 3% in January from 2.5% the month before, versus expectations for a smaller uptick to 2.8%.
On a monthly basis, CPI fell 0.1% last month, compared with a 0.6% fall in January 2024.
The ONS said the largest upward contribution to the monthly and annual changes came from transport, and food and non-alcoholic beverages, while the largest downward contribution came from housing and household services.
Core CPI – which excludes energy, food, alcohol and tobacco – was 3.7%, up from 3.2% in December. Meanwhile, services inflation ticked up to 5% from 4.4%.
The figures revealed a rise in private school fees, where prices rose by 12.7% on the month after the government imposed 20% VAT on school fees.
ONS chief economist Grant Fitzner said: “Inflation increased sharply this month to its highest annual rate since March last year.
“The rise was driven by air fares not falling as much as we usually see at this time of year, partly impacted by the timing of flights over Christmas and New Year. This was the weakest January dip since 2020.
“After falling this time last year, the cost of food and non-alcoholic drinks increased, particularly meat, bread and cereals.
“Private school fees were another factor, as new VAT rules meant prices rose nearly 13% this month.”
Ruth Gregory, deputy chief UK economist at Capital Economics, said the climb in inflation will be “uncomfortable” for the Bank of England.
“We doubt this will prevent the Bank of England from cutting interest rates further. But it will mean it continues to cut rates only slowly,” she said.
In equity markets, Glencore lost ground as the miner reported a fall in annual core earnings due to weaker commodities prices but said it would still return $2.2bn to shareholders via dividends and a buyback.
HSBC was also in the red even as it posted a rise in annual profits and announced a $2bn share buyback.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “There was a slight disappointment in impairments, which are higher than expected, signalling a potential shift from HSBC’s historically market-leading credit quality – a trend worth keeping an eye on.
“Guidance for the new year is ahead of expectations, but much of the positive outlook was already priced in given the improved US rate environment and expected cost management efforts.”
BAE Systems retreated despite reporting a jump in full-year profit and a record order backlog.
Airlines flew lower, with easyJet, IAG and Wizz all down after Jet2 warned profit margins in the year ahead would come under some pressure due to cost pressures.
Trainline tumbled after a downgrade to ‘neutral’ at JPMorgan Cazenove.
On the upside, Antofagasta was the top gainer on the FTSE 100 after a double upgrade to ‘overweight’ at JPMorgan, which cited a positive long-term copper outlook and leading medium-term copper growth.
BP gained following a report it is considering a potential sale of its lubricants business. Bloomberg cited people familiar with the matter as saying that the oil major’s unit – which operates under the Castrol brand – could be worth about $10bn in a deal.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Antofagasta Plc | +2.15% | +39.50 | 1,874.50 |
| 2 |  |
Wise Plc | +1.38% | +15.00 | 1,103.00 |
| 3 |  |
Pershing Square Holdings Ltd | +1.20% | +54.00 | 4,542.00 |
| 4 |  |
Bp Plc | +0.96% | +4.45 | 466.85 |
| 5 |  |
Smurfit Westrock Plc | +0.93% | +40.00 | 4,359.00 |
| 6 |  |
Gen.acc.7se.pf | +0.82% | +1.00 | 122.50 |
| 7 |  |
Marks And Spencer Group Plc | +0.78% | +2.70 | 349.70 |
| 8 |  |
Sse Plc | +0.68% | +10.00 | 1,473.50 |
| 9 |  |
Shell Plc | +0.62% | +16.50 | 2,696.50 |
| 10 |  |
Coca-cola Europacific Partners Plc | +0.58% | +40.00 | 6,880.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Glencore Plc | -7.17% | -25.35 | 328.20 |
| 2 |  |
Barratt Redrow Plc | -2.55% | -11.20 | 428.20 |
| 3 |  |
Bae Systems Plc | -2.39% | -32.00 | 1,304.50 |
| 4 |  |
Carnival Plc | -1.89% | -35.00 | 1,812.50 |
| 5 |  |
International Consolidated Airlines Group S.a. | -1.69% | -5.70 | 331.10 |
| 6 |  |
Anglo American Plc | -1.63% | -40.00 | 2,413.00 |
| 7 |  |
Segro Plc | -1.40% | -10.00 | 704.00 |
| 8 |  |
South32 Limited | -1.35% | -2.50 | 182.80 |
| 9 |  |
Associated British Foods Plc | -1.14% | -22.00 | 1,900.00 |
| 10 |  |
Ashtead Group Plc | -1.14% | -58.00 | 5,050.00 |
US close: Stocks higher after late rally, S&P 500 hits new record
A late-afternoon rally pushed US stock markets into positive territory on Tuesday, helping the S&P 500 rise to a new record closing high
Following the Presidents Day national holiday on Monday, Wall Street initially opened in a subdued fashion, with the three main equity benchmarks trading flat to slightly lower.
However, an increase in risk appetite in the final hour of trade saw the Dow and Nasdaq eke out a 0.02% and 0.07% gain, respectively, while the S&P 500 rose 0.24% to a new peak of 6,129.58, topping an earlier record close of 6,118.71 on 23 January.
Nevertheless, the mood was still cautious as investors continue to digest Donald Trump’s plans for “reciprocal tariffs” on a number of America’s biggest trading partners. Traders returned from the long weekend with their attention still turned to Washington on Tuesday, with all eyes focused on the White House as they hoped for further updates on the Trump administration’s tariff plans.
Meanwhile, a close eye was being kept on Saudi Arabia, where US and Russian officials ended their controversial meeting on the future of a post-war Ukraine and pledged to explore closer economic and diplomatic ties.
The talks in Riyadh – which excluded the Ukrainians or any representatives from Europe – wrapped up after five hours amid concerns that any settlement to end the three-year conflict after Russia’s unprovoked invasion of its neighbour, would favour Moscow and leave neighbouring states at risk of Russian aggression.
Economic data
On the macro front, the New York Federal Reserve’s Empire State manufacturing index surged 18.3 points to +5.7 in February, easily beating expectations for a reading of -1. New orders and shipments grew, while employment levels fell, delivery times lengthened and supply availability decreased. Most notably though, optimism about future business conditions dropped significantly.
Elsewhere, the National Association of Housebuilders’ housing market index fell to 42 in February, down from 47 in January for the lowest reading in the last five months. Concerns regarding tariffs, elevated mortgage rates and high housing costs weighed on the gauge.
NAHB chairman Carl Harris said “policy uncertainty and cost factors created a reset for 2025 expectations”. He said: “Uncertainty on the tariff front helped push builders’ expectations for future sales volume down to the lowest level since December 2023. Incentive use may also be weakening as a sales strategy as elevated interest rates reduce the pool of eligible home buyers.”
Market movers
Intel‘s share price jumped nearly 11% on the back of rumours that the hardware company could be set for a potential break-up. According to the Wall Street Journal, rivals Broadcom and TSMC are discussing options to carve up the company.
“The apparent failure of Intel’s turnaround plan means it is no surprise that vultures are starting to circle,” said Dan Coatsworth, investment analyst at AJ Bell.
Pharmacy giant Walgreens Boots Alliance also jumped 13% on the back of renewed hopes that private equity group Sycamore Partners is showing interest in the company once again.
Nike shares were higher on the back of news that the sportswear giant has struck a deal with underwear brand Skims.
Wednesday newspaper round-up: Trump, heat pumps, sickness benefits
Donald Trump stood firm against warnings that his threatened trade war risks derailing the US economy, claiming his administration could hit foreign cars with tariffs of around 25% within weeks. Semiconductor chips and drugs are set to face higher duties, Trump told reporters at a news conference on Tuesday. – Guardian
Heat pump sales fell 23% in Europe last year, industry data shows, reverting to the level they were at before the war in Ukraine and slowing the shift away from gas-burning boilers. Demand for clean heating devices fell by about half in Belgium and Germany, and by 39% in France, according to data for 13 countries that cover 85% of the European heat pump market. – Guardian
Millions of pounds of taxpayer cash is being ploughed into a company that makes wooden drinking bottles as part of Labour’s push towards net zero. Britain’s National Wealth Fund, which is fully owned by the Treasury, on Wednesday announced a £43.5m investment into Cambridgeshire-based start-up Pulpex, which makes recyclable water bottles out of wood pulp. The investment will help finance Pulpex’s plan to build its first ever manufacturing plant, near Glasgow, which is expected to produce 50m wooden bottles each year and create 35 jobs in Scotland. – Telegraph
Two million people have been claiming sickness benefits for at least five years without any requirement to look for work, official figures show. Data published by the Department for Work and Pensions (DWP) show that in January more than 900,000 people had been claiming Universal Credit (UC) with no work conditions for five years or more. – Telegraph
Barely one in ten potential first-time buyers could afford to get on the property ladder without relying on their family for financial help, research suggests. Only 11.5 per cent of all those trying to buy their first home can do so in their local area under their own means, according to Skipton Group, the owner of Connells Group, the estate agency. – The Times
