London close: Stocks fall as UK inflation tops BoE targets

(Sharecast News) - London stocks ended Wednesday in negative territory as unexpectedly high UK inflation data dampened hopes of an imminent interest rate cut by the Bank of England.

The FTSE 100 index slipped 0.17% to close at 8,085.07 points, while the FTSE 250 saw a sharper decline, dropping 0.9% to finish at 20,244.76 points.

In currency markets, sterling weakened 0.32% against the dollar to trade at $1.2641, as it rose 0.38% on the euro, changing hands at €1.2015.

"Yesterday afternoon's recovery in stock markets has been waylaid by news that Ukraine has now used British missiles against Russian targets, while tech stocks have been further hit by some pre-Nvidia earnings nerves," said IG chief market analyst Chris Beauchamp.

"Now that the initial post-election euphoria has faded, it is clear that markets are struggling for a catalyst to provoke a new rally.

"US markets in particular have done well in recent months, but another period of consolidation seems likely."

Beauchamp noted that the largest company in the world, Nvidia, was set to report earnings later in the global day, adding that it could be a volatile session for the stock.

"The last set of earnings helped to precipitate a substantial selloff in markets; a miss tonight could turn the current period of indecision into a definitive pullback for the AI sector, as well as for the broader market."

UK inflation rockets jumps past Bank of England target

In economic news, UK inflation rose past the Bank of England's 2% target in October, driven by rising energy costs, according to data from the Office for National Statistics.

Consumer prices rose 2.3% annually, up from 1.7% in September and exceeding the 2.2% forecast.

Electricity prices jumped 7.7%, reversing last year's declines, while gas prices rose 11.7%.

Services inflation edged higher to 5% from 4.9% in September, though it remained below July's 7.4%, the highest since 1992.

Core inflation, which excludes volatile items like energy and food, ticked up slightly to 3.3%.

"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," said ONS chief economist Grant Fitzner.

Ruth Gregory, deputy chief UK economist at Capital Economics, said October's "surprisingly large rebound" in CPI won't stop the Bank of England from cutting interest rates further.

"But it lends some support to our view that the Bank will skip the December meeting and cut rates only gradually, by 25 basis points in February and at every other policy meeting until rates reach 3.5% in early 2026," she added.

In housing, UK property prices rose 2.9% year-on-year in September, reaching an average of £292,000, despite slowing growth in London, where prices fell 0.5%.

Annual price growth in the North East led the UK at 6.5%.

On a seasonally adjusted basis, house prices dipped 0.1% monthly, signalling potential cooling in some areas.

"Mortgage rates are creeping up again, and inflation has now climbed back above the Bank of England's 2% target, casting doubt over the strength of the housing market's recovery," said Rachael Hunnisett, director of April Mortgages.

""If interest rates are slow to fall in the coming months, we may see house price rises soften as homebuyers become more cautious and demand falls."

On the continent, construction output in the eurozone contracted by 0.1% in September, following stagnation in August.

Building construction fell 0.8%, while civil engineering activity rebounded with a 1.4% increase.

Germany's producer prices meanwhile dropped 1.1% in October due to falling energy costs, though electricity and natural gas prices rose modestly compared to September.

Elsewhere, China maintained its benchmark lending rates earlier, leaving the one-year loan prime rate at 3.1% and the five-year rate at 3.6%, after sizable cuts last month aimed at stimulating the economy.

Sage Group surges on profit jump, Vistry in the red

On London's equity markets, Sage Group surged 18.25% after reporting a 21% jump in full-year underlying operating profit and announcing a £400m share buyback.

Utility firm Severn Trent gained 1.41% following a double-digit rise in first-half profits and expectations for capital investment to hit the top end of guidance, positioning it well for the upcoming regulatory cycle.

Engineering firm Rotork rose 1.27% on the back of a positive trading update, while Hill & Smith added 0.72% after reporting a 7.5% rise in revenues over the past four months, driven by strong performance in its engineered solutions and galvanising services divisions.

On the downside, Vistry Group tumbled 6.04% as it announced the departure of its chief operating officer, Earl Sibley, after eliminating his role.

Genuit Group also fell sharply, down 5.6%, a day after reporting a "resilient performance" in subdued market conditions.

Helios Towers slid 4.93% after Denmark's largest pension fund, ATP, sold 50.6 million shares at a 10% discount via an accelerated bookbuild.

British Land Company dropped 2.15%, as half-year profit and portfolio valuation growth disappointed investors.

SSP Group was down 1.72% after a downgrade by JPMorgan to 'neutral,' and Genus fell 0.47% despite a positive trading outlook, reversing earlier gains.

In other broker note action, United Utilities rose 1.71% after Deutsche Bank upgraded the stock to 'buy.'

Conversely, easyJet declined 1.86% following a downgrade to 'hold' by HSBC, while SSP Group struggled under JPMorgan's revised neutral stance.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,085.07 -0.17% FTSE 250 (MCX) 20,244.76 -0.90% techMARK (TASX) 4,601.09 -0.29%

FTSE 100 - Risers

Sage Group (SGE) 1,269.50p 17.66% London Stock Exchange Group (LSEG) 10,900.00p 1.58% Imperial Brands (IMB) 2,514.00p 1.58% Anglo American (AAL) 2,340.00p 1.54% Hikma Pharmaceuticals (HIK) 1,845.00p 1.43% Severn Trent (SVT) 2,727.00p 1.41% Prudential (PRU) 633.20p 1.34% NATWEST GROUP (NWG) 397.00p 1.28% Barclays (BARC) 258.95p 1.21% International Consolidated Airlines Group SA (CDI) (IAG) 242.50p 1.17%

FTSE 100 - Fallers

Vistry Group (VTY) 634.00p -5.44% B&M European Value Retail S.A. (DI) (BME) 330.10p -4.60% Convatec Group (CTEC) 233.00p -4.12% Admiral Group (ADM) 2,403.00p -4.03% JD Sports Fashion (JD.) 112.95p -3.30% Berkeley Group Holdings (The) (BKG) 4,228.00p -3.25% Persimmon (PSN) 1,239.00p -3.17% Airtel Africa (AAF) 94.95p -2.86% SEGRO (SGRO) 744.80p -2.46% Marks & Spencer Group (MKS) 363.00p -2.42%

FTSE 250 - Risers

Close Brothers Group (CBG) 215.00p 7.93% Vesuvius (VSVS) 393.50p 6.50% Hochschild Mining (HOC) 227.00p 4.85% Harbour Energy (HBR) 259.00p 3.64% CMC Markets (CMCX) 338.50p 2.27% Energean (ENOG) 1,053.00p 2.13% BH Macro Ltd. GBP Shares (BHMG) 385.00p 2.12% Herald Investment Trust (HRI) 2,200.00p 1.85% Baillie Gifford US Growth Trust (USA) 252.00p 1.82% Finsbury Growth & Income Trust (FGT) 864.00p 1.53%

FTSE 250 - Fallers

Genuit Group (GEN) 388.00p -7.40% IP Group (IPO) 39.60p -6.93% Helios Towers (HTWS) 95.80p -5.52% Marshalls (MSLH) 317.50p -5.51% Aston Martin Lagonda Global Holdings (AML) 101.40p -4.70% W.A.G Payment Solutions (WPS) 82.00p -4.65% Kier Group (KIE) 145.80p -4.58% Me Group International (MEGP) 212.50p -4.49% Renewi (RWI) 583.00p -4.11% Bytes Technology Group (BYIT) 429.00p -4.07%