London close: Stocks firmer ahead of Fed decision

(Sharecast News) - London stocks edged higher on Wednesday, buoyed an in-line UK inflation reading leading to hopes for steady monetary policy from the Bank of England. The FTSE 100 index ended the session up 0.05% at 8,199.11 points, while the FTSE 250 gained 0.29% to close at 20,601.99 points.

In currency markets, sterling was last down 0.14% on the dollar to trade at $1.2692, as it firmed 0.06% against the euro, changing hands at €1.2123.

"Stock markets have found their footing after a mixed morning, but all eyes are on the Fed meeting tonight and the accompanying statement," said IG chief market analyst Chris Beauchamp.

"The first half of the month has seen US markets struggle, but there is still plenty of space for the usual second half rally to develop, should we avoid any nasty surprises from Powell and co tonight."

Beauchamp noted that the first part of the week suggested that oil markets were set to turn lower, but added that a drop in crude inventories and hopes of more concrete signs of Chinese stimulus helped prices to rally on Wednesday.

"Yesterday's API data also showed a fall in stockpiles, providing hope of at least a short-term bump in demand."

UK inflation climbs as expected, house prices rise faster in year to October

In economic news, UK inflation climbed to 2.6% in November, marking its second consecutive increase and the highest level since March, according to the Office for National Statistics.

The rise, up from 2.3% in October, was largely driven by higher motor fuel and clothing prices, partially offset by a significant drop in airfares.

Core inflation, excluding volatile categories such as energy and food, rose to 3.5% from 3.3%. Factory gate prices continued to decline, falling 0.6% in November.

The Bank of England, which has trimmed rates twice this year, is expected to keep borrowing costs steady at 4.75% during its upcoming meeting, amid persistent inflation and sluggish economic growth.

"While prices naturally rise and fall, meaning the increases in fuel and clothing costs aren't really a cause for specific concern, it's the stickiness of service sector inflation that will be drawing the attention of BofE rate setters," said Danni Hewson, head of financial analysis at AJ Bell.

"Even before today's CPI data and yesterday's wage data, markets had already priced out a December cut, which had seemed almost inevitable back in early autumn."

In the housing market, average UK house prices rose 3.4% in the year to October, up from September's 2.8% growth.

England saw a 3% increase, while Scotland and Wales posted gains of 5.5% and 4%, respectively, according to the ONS.

London remained the weakest region, with prices inching up just 0.2%.

"November saw an unusually busy London property market, with a surge in viewings, offers and sales," said James Stevenson, area director at estate agent Foxtons.

"This has been driven in part by first-time buyers racing to beat the March 2025 stamp duty deadline and lower mortgage rates."

Elsewhere, manufacturing output in the UK saw its sharpest quarterly drop since mid-2020, according to the CBI's industrial trends survey.

A balance of -25 was reported in December, compared to -12 in November.

Order books weakened significantly, with total and export orders at their lowest levels since 2020, reflecting persistent challenges in the sector.

"Manufacturing output appears to have contracted during the fourth quarter, with conditions across the sector looking more challenging than at any time since the Covid pandemic in 2020," commented CBI lead economist Ben Jones.

"Manufacturers are facing a perfect storm of weakening external demand on the one hand, amid political instability in some key European markets and uncertainty over US trade policy.

"And on the other hand, domestic business confidence has collapsed in the wake of the Budget, which has increased costs and led to widespread reports of project cancellations and falling orders."

On the continent, eurozone inflation was revised slightly downward to 2.2% in November from an initial estimate of 2.3%, while EU inflation stood at 2.5%.

Construction output rose by 1% in the eurozone and 0.7% across the EU in October, signaling moderate recovery in the sector.

Across the Atlantic, building permits in the United States surged 6.1% in November to a seasonally adjusted rate of 1.5 million, the sharpest increase since February.

However, housing starts fell unexpectedly by 1.8%, reaching a four-month low of 1.28 million.

Single-family permits edged up, while multi-family permits jumped significantly, underscoring uneven dynamics in the housing market.

Ashtead in the green, IntegraFin tumbles on cost and fee outlook

On London's equity markets, Ashtead Group rose 1.57%, benefitting from a weaker pound.

The equipment rental company, which generates the bulk of its revenue in the United States, gained as currency movements improved its earnings outlook.

British Airways and Iberia parent IAG climbed 2.32% after Jefferies raised its price target for the stock from 270p to 350p.

The broker cited strong fourth-quarter expectations following robust third-quarter trends, reflecting confidence in the travel sector's resilience against broader macroeconomic headwinds.

DIY retailer Kingfisher added 0.47% after announcing the €70 million sale of its Brico Dépôt business in Romania to Altex Romania.

The divestment aligned with Kingfisher's strategy to streamline operations and focus on core markets.

On the downside, IntegraFin plunged 11.79%.

While the Transact platform owner reported a solid full-year financial performance, investors appeared spooked by warnings of rising costs and reduced fees for certain services, signaling potential pressure on future earnings.

National Grid dipped 1.09% after unveiling plans to invest up to £35bn in the UK's electricity network between April 2026 and 2031.

While the ambitious plan included £11bn for network upgrades and £24bn for capacity expansion, concerns over funding and regulatory hurdles weighed on the stock.

Outside the FTSE 350, Shoe Zone suffered a dramatic 39.21% decline after warning on profits and announcing plans to close stores due to budget-related cost pressures.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,199.11 0.05% FTSE 250 (MCX) 20,601.99 0.29% techMARK (TASX) 4,653.92 0.66%

FTSE 100 - Risers

Melrose Industries (MRO) 553.60p 2.90% International Consolidated Airlines Group SA (CDI) (IAG) 302.80p 1.85% British Land Company (BLND) 363.80p 1.79% Airtel Africa (AAF) 107.30p 1.71% Ashtead Group (AHT) 5,146.00p 1.57% Informa (INF) 828.00p 1.50% Sage Group (SGE) 1,322.00p 1.38% HSBC Holdings (HSBA) 767.90p 1.35% JD Sports Fashion (JD.) 97.38p 1.18% Lloyds Banking Group (LLOY) 54.82p 1.11%

FTSE 100 - Fallers

Entain (ENT) 732.00p -2.66% Beazley (BEZ) 818.50p -1.56% AstraZeneca (AZN) 10,352.00p -1.47% Persimmon (PSN) 1,222.00p -1.37% Hiscox Limited (DI) (HSX) 1,101.00p -1.34% Rio Tinto (RIO) 4,757.00p -1.31% National Grid (NG.) 926.20p -1.11% Bunzl (BNZL) 3,324.00p -0.95% Unilever (ULVR) 4,608.00p -0.95% Severn Trent (SVT) 2,550.00p -0.93%

FTSE 250 - Risers

Jupiter Fund Management (JUP) 86.00p 3.61% Bank of Georgia Group (BGEO) 4,750.00p 2.93% Future (FUTR) 991.00p 2.80% Mitchells & Butlers (MAB) 237.50p 2.78% Aston Martin Lagonda Global Holdings (AML) 106.70p 2.69% RIT Capital Partners (RCP) 1,940.00p 2.53% PureTech Health (PRTC) 164.00p 2.50% Just Group (JUST) 160.20p 2.42% Chemring Group (CHG) 322.00p 2.38% Baltic Classifieds Group (BCG) 325.50p 2.36%

FTSE 250 - Fallers

IntegraFin Holding (IHP) 340.50p -12.69% OSB Group (OSB) 392.00p -6.53% W.A.G Payment Solutions (WPS) 78.00p -4.18% Victrex plc (VCT) 1,092.00p -2.67% Alpha Group International (ALPH) 2,195.00p -2.60% Pennon Group (PNN) 585.50p -2.09% Johnson Matthey (JMAT) 1,351.00p -1.96% Quilter (QLT) 150.90p -1.69% Hays (HAS) 76.65p -1.41% Vesuvius (VSVS) 420.00p -1.41%