London midday: FTSE flat as investors mull higher-than-expected inflation

(Sharecast News) - London stocks had pared earlier small gains to trade flat by midday on Wednesday as higher-than-expected UK inflation fuelled expectations the Bank of England will refrain from cutting rates next month. The FTSE 100 was steady at 8,100.84.

Data from the Office for National Statistics showed that inflation jumped past the BoE's 2% target in October after energy bills rose.

The consumer price index rose at an annual rate of 2.3% in October, up from 1.7% in September and above the 2.2% expected by economists. The increase was put down to higher electricity and gas prices.

Electricity prices rose by 7.7% in October, having fallen by 7.5% between the same two months last year. Meanwhile, gas prices were up 11.7%, having fallen by 7% last year.

The figures showed that services inflation ticked up to 5% in October from 4.9% the month before. However, it was down from 7.4% in July 2023, which was the joint highest rate - with May 2023 - since March 1992.

Core inflation - which strips out volatile elements such as food and energy - rose to 3.3% from 3.2%.

ONS chief economist Grant Fitzner said: "Inflation rose this month as the increase in the energy price cap meant higher costs for gas and electricity compared with a fall at the same time last year."

Russ Mould, investment director at AJ Bell, said: "After yesterday's wobble on heightened tensions between Russia and the West, the FTSE 100 was steady in early trading on Wednesday.

"For now, investors seem to have largely shrugged off concerns about the Ukraine war. Moscow said yesterday the Ukrainians had fired US-made long-range missiles into Russian territory after President Joe Biden gave them the green light to do so. However, investors will be watching closely for signs of further escalation.

"The devil was in the detail of the latest UK inflation figures. The increase in the headline number was largely thanks to the increase in the energy price cap and is unlikely to cause too much disquiet.

"What is more telling is higher than expected rates of core and services inflation. These are more likely to move the dial when it comes to the Bank of England's decision making about a December rate cut."

Looking ahead to the rest of the day, attention will turn to third-quarter results from US tech giant Nvidia, due after the closing bell.

Richard Hunter, head of markets at Interactive Investor, said: "Nvidia has become the poster child of the new AI revolution and a market darling in turn, with investors still scrambling to price a stock whose earnings have continued to confound.

"Expectations are ratcheting higher with each release, which is unsurprising given a lofty valuation which has seen the share price rise by 850% over the last two years and by 205% this year alone."

In equity markets, Sage Group surged to the top of the FTSE 100 as it posted a 21% rise in full-year underlying operating profit and announced a share buyback of up to £400m.

Severn Trent advanced as it reported a double-digit increase in first-half profits and said it expects capital investment to hit the top end of guidance this year, putting it in a strong position for the next five-year regulatory cycle, AMP8.

Genus gained as the animal genetics firm said trading has been encouraging and that full-year adjusted pre-tax profit was set to be in line with market expectations.

Rotork was also in the black after a trading update.

On the downside, Vistry slid as it said chief operating officer Earl Sibley was leaving the housebuilder after his role was axed.

Crest Nicholson was also in the red after the housebuilder said it expected full-year earnings to be at the lower end of guidance due to a higher proportion of affordable homes being delivered.

British Land lost ground as it said half-year underlying profit rose just 1% and that its portfolio valuation ticked up just 0.2%.

Helios Towers tumbled after investor Arbejdsmarkedets Tillægspension (ATP) - Denmark's largest lifelong pension plan - sold around 50.6m shares in the company in a placing for approximately £48m.

The shares were placed with investors in an accelerated bookbuild offering, at 94p each. The placing price is a 10% discount to the closing share price on Tuesday.

In broker note action, United Utilities was boosted by an upgrade to 'buy' at Deutsche Bank, but easyJet was knocked lower by a downgrade to 'hold' at HSBC.

SSP was also hit by a downgrade, to 'neutral' at JPMorgan.

Market Movers

FTSE 100 (UKX) 8,100.84 0.02% FTSE 250 (MCX) 20,364.73 -0.31% techMARK (TASX) 4,630.92 0.36%

FTSE 100 - Risers

Sage Group (SGE) 1,285.50p 19.14% Severn Trent (SVT) 2,775.00p 3.20% Anglo American (AAL) 2,354.00p 2.15% United Utilities Group (UU.) 1,117.50p 1.92% Beazley (BEZ) 758.50p 1.74% Hikma Pharmaceuticals (HIK) 1,846.00p 1.48% Mondi (MNDI) 1,179.00p 1.29% Prudential (PRU) 632.60p 1.25% International Consolidated Airlines Group SA (CDI) (IAG) 242.60p 1.21% Rio Tinto (RIO) 4,923.00p 1.17%

FTSE 100 - Fallers

Vistry Group (VTY) 628.50p -6.26% Admiral Group (ADM) 2,423.00p -3.23% Convatec Group (CTEC) 236.60p -2.63% Rolls-Royce Holdings (RR.) 525.20p -2.60% Persimmon (PSN) 1,248.50p -2.42% Barratt Redrow (BTRW) 398.80p -2.23% SEGRO (SGRO) 746.60p -2.23% Entain (ENT) 735.20p -2.03% JD Sports Fashion (JD.) 114.45p -2.01% Taylor Wimpey (TW.) 127.55p -1.88%

FTSE 250 - Risers

Vesuvius (VSVS) 398.00p 7.71% Hill and Smith (HILS) 2,145.00p 3.13% Hochschild Mining (HOC) 223.00p 3.00% Harbour Energy (HBR) 256.50p 2.64% BH Macro Ltd. GBP Shares (BHMG) 386.50p 2.52% Genus (GNS) 1,726.00p 2.37% Close Brothers Group (CBG) 203.40p 2.11% Baillie Gifford US Growth Trust (USA) 251.50p 1.62% Pennon Group (PNN) 577.00p 1.58% Wizz Air Holdings (WIZZ) 1,349.00p 1.50%

FTSE 250 - Fallers

Helios Towers (HTWS) 94.30p -7.00% SSP Group (SSPG) 150.40p -4.33% Genuit Group (GEN) 402.50p -3.94% Marshalls (MSLH) 326.00p -2.98% Big Yellow Group (BYG) 1,066.00p -2.91% Dr. Martens (DOCS) 56.05p -2.86% SThree (STEM) 336.50p -2.60% IP Group (IPO) 41.45p -2.59% Raspberry PI Holdings (RPI) 326.80p -2.39% Fidelity Emerging Markets Limited Ptg NPV (FEML) 665.20p -2.18%