London stocks were still a little weaker by midday on Wednesday after data showed that UK inflation surged in November to its highest level in more than a decade.
The FTSE 100 was down 0.2% at 7,204.88, while sterling was up 0.2% against the dollar at 1.3257 after figures from the Office for National Statistics showed annual inflation surged to 5.1% in November from 4.2% the month before.
This was above consensus expectations of 4.8% and the Bank of England’s forecast for 4.5% and marked the highest annual rate since September 2011.
A number of segments drove the hike, with motor fuel CPI surging to 28.5% from 21.5% after the price of crude oil jumped. Tobacco also rose, following an increase in duties in late October, while food CPI rose to 2.5% from 1.2% in October.
The price of second-hand cars rose, as did clothing CPI, increasing to 3.5% from -0.4% in October. Including occupiers’ housing costs, CPIH rose by 4.6% in the 12 months to November, up from 3.8% a month previously and the highest since September 2008.
Core consumer price inflation, which strips out volatile elements such as energy, food and alcohol, also came in above estimates, rising to 4.0% from 3.4% in October, the highest since 1992. Most analysts were expecting core CPI of around 3.7%.
IG market analyst Joshua Mahony said: “The pound is on the front foot ahead of a crucial 24-hour period that sees the Fed, BoE, and ECB all release their latest monetary policy decisions. With UK CPI inflation reaching a 10-year high of 5.1%, the Bank of England will be under pressure to lay out their plans even if they do hold off on raising rates tomorrow.
“Caught between constantly rising inflation and the prospect of a dramatic explosion in Omicron cases, the UK economic picture looks more unstable than ever. Nonetheless, with a rapid spread of this variant brings expectation that cases will peak and fall back in a significantly shorter timeframe than previous waves. Thus it looks likely that the Bank of England will look to hold off this time around in the hope that UK Omicron cases will be on a downward trajectory once the February meeting comes around.”
The latest policy announcement from the US Federal Reserve is due after the London close.
In equity markets, Cineworld tanked after it was ordered to pay Canadian theatre company Cineplex CAD1.28bn (£751.57m) in damages after pulling out of a planned takeover.
Electricals retailer Currys was sharply lower after it reported higher first-half profits but warned its market has been softer over recent weeks and it could face more headwinds from the Omicron Covid variant.
On the upside, sales and marketing firm DCC surged to the top of the FTSE 100 after it bought US sales and distribution business Almo for around $610.0m, marking its largest acquisition to date.
Market Movers
FTSE 100 (UKX) 7,204.88 -0.19%
FTSE 250 (MCX) 22,508.38 -0.19%
techMARK (TASX) 4,378.21 -0.13%
FTSE 100 – Risers
DCC (CDI) (DCC) 5,954.00p 8.14%
Darktrace (DARK) 395.00p 5.05%
NATWEST GROUP PLC ORD 100P (NWG) 222.00p 1.74%
Sage Group (SGE) 816.60p 1.52%
St James’s Place (STJ) 1,599.50p 1.27%
3i Group (III) 1,405.50p 1.15%
Hikma Pharmaceuticals (HIK) 2,229.00p 1.13%
Ferguson (FERG) 12,545.00p 1.05%
Flutter Entertainment (CDI) (FLTR) 10,800.00p 1.03%
Auto Trader Group (AUTO) 719.60p 0.95%
FTSE 100 – Fallers
Rentokil Initial (RTO) 518.60p -5.30%
Antofagasta (ANTO) 1,344.50p -2.75%
Kingfisher (KGF) 331.60p -2.15%
Vodafone Group (VOD) 112.46p -1.54%
Whitbread (WTB) 2,771.00p -1.53%
JD Sports Fashion (JD.) 207.80p -1.52%
Rolls-Royce Holdings (RR.) 115.54p -1.37%
Intertek Group (ITRK) 5,508.00p -1.36%
BP (BP.) 333.25p -1.30%
Royal Mail (RMG) 482.90p -1.27%
FTSE 250 – Risers
Baltic Classifieds Group (BCG) 220.00p 4.76%
Playtech (PTEC) 752.00p 3.51%
Balfour Beatty (BBY) 247.60p 2.48%
Ninety One (N91) 261.40p 2.27%
Paragon Banking Group (PAG) 553.00p 2.22%
Kainos Group (KNOS) 1,772.00p 1.90%
Games Workshop Group (GAW) 9,670.00p 1.79%
Baillie Gifford Japan Trust (BGFD) 999.00p 1.73%
Beazley (BEZ) 422.00p 1.71%
Hays (HAS) 139.90p 1.60%
FTSE 250 – Fallers
Cineworld Group (CINE) 32.64p -28.07%
Currys (CURY) 113.30p -8.63%
AO World (AO.) 90.90p -3.66%
Capita (CPI) 34.93p -3.24%
Restaurant Group (RTN) 76.30p -3.17%
Chemring Group (CHG) 275.00p -3.00%
Mitchells & Butlers (MAB) 218.40p -2.85%
Carnival (CCL) 1,227.80p -2.35%
Greggs (GRG) 3,032.00p -2.16%
Ascential (ASCL) 399.20p -2.11%
