The FTSE 100 had another tepid session on Wednesday, succumbing to Bank of England interest rate worries, and with growth concerns from China still keeping a lid on mining shares and HSBC.
A robust UK core inflation reading means a Bank of England rate hike pause could be a distant prospect. The data, which showed the annual inflation rate excluding energy, food, alcohol and tobacco, remained at 6.9% last month, despite being expected to ease to 6.8%.
The reading put rate-sensitive stocks on the back foot, but insurers defied the glum mood.
Elsewhere, Marks & Spencer continued to shine, and the timing of its share price bounce may be perfect, with an index review looming.
The FTSE 100 index closed down 32.76 points, 0.4%, at 7,356.88. It is now a four-day losing streak for London’s large-cap benchmark.
The FTSE 250 ended down 78.97 points, 0.4%, at 18,580.78, and the AIM All-Share lost 2.09 points, 0.3%, at 747.84.
The Cboe UK 100 closed down 0.5% at 733.39, the Cboe UK 250 fell 0.4% to 16,331.86, and the Cboe Small Companies lost 0.5% at 13,540.57.
AJ Bell analyst Danni Hewson, while noting a fall in the headline annual inflation rate to 6.8% in July from 7.9% in June, said the data was still a ‘decidedly cup half full moment’.
‘Firstly, inflation is still significantly above that 2% and even if it is cooling off faster than a sun burnt Brit diving into a hotel pool, prices are not falling, they’re just not rising as fast as they have been.
‘Then there are the secondary effects that have indeed become embedded in the UK economy. Wage increases and price pressures have forced up service costs and that’s weaving its own nasty spell on core inflation. And it’s the core figure that will keep pressure on the Bank of England to keep raising interest rates until the sticky tendrils have been eradicated like weeds denied water,’ she continued.
The pound was quoted at $1.2750 late Wednesday in London, up from $1.2733 at the equities close on Tuesday.
Rate-sensitive stocks listed in London struggled, however. Property portal Rightmove lost 2.4%, and housebuilder Barratt Developments fell 1.7%.
In European equities on Wednesday, the CAC 40 in Paris edged down 0.1%, while the DAX 40 in Frankfurt inched up 0.1%.
Stocks in New York were mixed on Wednesday. The Dow Jones Industrial Average was up 0.2%, the S&P 500 index edged up 0.1% but the Nasdaq Composite lost 0.2%.
Minutes from the latest Federal Reserve meeting are released at 1900 BST.
The euro stood at $1.0906 late Wednesday, down against $1.0926 at the European equities close on Tuesday. Against the yen, the dollar was trading at JP¥145.77, up from JP¥145.40.
Back in London, insurers were among the standout best performers.
Admiral added 7.0%. It reported pretax profit in the first-half of 2023 rose 4.1% to £233.9 million from £224.6 million a year prior. Its top-line surged 21% to £2.24 billion from £1.85 billion.
FTSE 250-listed Direct Line added 6.8% in a positive read-across. Sabre Insurance rose 4.6%.
Aviva closed up 1.6%. It swung to a pretax profit of £496 million in the first-half, from a loss of £811 million. General Insurance gross written premiums rose 12% to £5.27 billion from £4.69 billion.
There was also evidence of China-related worries in the market. Miner Antofagasta lost 2.1% and Asia-exposed lender HSBC ended down 1.9%.
Elsewhere, Marks & Spencer extended gains, adding 4.1%, after rising 8.3% on Tuesday on a bullish update.
‘We have been supportive of the M&S turnaround and view this as further evidence that investors should look at M&S again – with a fresh pair of eyes, as the business has fundamentally changed,’ analysts at Deutsche Bank commented.
Share price progress for the retailer has put it in with a shout of FTSE 100 promotion, with an index review in roughly two weeks. Indicative changes for that review are reported next week. M&S has a market capitalisation that is above many FTSE 100 outfits including housebuilder Persimmon, insurer Hiscox and gold miner Fresnillo.
Balfour Beatty shares registered slight gains at the open but tumbled thereafter, ending down 11%.
The construction firm flagged ‘delays in some projects going to contract, largely in the US commercial office sector’, overshadowing better first-half revenue.
Revenue rose by 9.2% in the six months to June 30 to £4.53 billion from £4.15 billion. Pretax profit was £82 million, ticking down from £83 million a year before.
WANdisco added 13% after it said that it has signed a multi-project contract with General Motors, easing recent share price pressure in the data migration platform.
General Motors has signed a master licence agreement with WANdisco as a new customer to move petabyte-scale data to the Microsoft Azure Cloud using WANdisco Data Migrator for Azure.
General Motors is the Detroit, Michigan-based carmaker behind brands such as Cadillac and Chevrolet.
The agreement enables continuous data movement through the use of WANdisco software and services over a number of different use cases to be transacted through the Microsoft Azure Marketplace, WANdisco explained.
The first phase of the relationship sees General Motors committing to moving at least 3.3 petabytes of data with a contract value of over $400,000.
WANdisco shares returned to trading in July, having been suspended in London since March, after uncovering signs of possible ‘fraudulent irregularities’ on its books.
Brent oil was quoted at $84.83 a barrel at the time of the London equities close on Wednesday, up from $84.79 late Tuesday. Gold was quoted at $1,902.61 an ounce, lower against $1,907.15.
Thursday’s economic calendar has eurozone trade data at 1000 BST, before the latest US jobless claims reading at 1330 BST.
The local corporate calendar has half-year results from Bank of Georgia Group and Empiric Student Property. Grosvenor Casinos and Mecca bingo owner Rank Group reports annual results.
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