(Alliance News) – Stock prices in London traded lower on Wednesday afternoon, after a higher-than-expected inflation rate in the United Kingdom dampened expectations for interest rate cuts by the Bank of England.
The FTSE 100 index lost 28.02 points, or 0.3%, to 8,388.43. The FTSE 250 index lost 39.56 points, or 0.2%, to 20,743.81 points. The All-Share AIM edged down 0.68 points, or 0.1%, to 806.41.
The Cboe UK 100 was down 0.3% at 837.38, the Cboe UK 250 was down 0.3% as well, trading at 18,152.45, although the Cboe Small Companies was up 0. .1% to 16,666.36.
In Europe, the CAC 40 in Paris was down 0.6%, while the DAX 40 in Frankfurt lost 0.2%.
The pound was quoted at $1.2722 early Wednesday afternoon in London, compared to $1.2715 late Tuesday afternoon. It reached USD 1.2761 after the release of UK data, its best level in almost two months.
The euro settled at USD 1.0837, down from USD 1.0856. Against the yen, the dollar bought 156.45 yen, up from 156.10 yen.
The UK’s consumer price index rose 2.3% in April from a year earlier, a slowdown from the 3.2% annual rise recorded in March, according to the Office for National Statistics.
Although inflation was higher than the market consensus of 2.1%, which would have been only slightly above the Bank of England’s 2% target, the latest figure is still the lowest inflation rate since July 2021.
Since then, inflationary pressure has been robust, with the annual rate reaching a recent peak of 11.1% in October 2022.
On a monthly basis, consumer prices increased by 0.3% in April, after increasing by 0.6% in March compared to February. The monthly reading beat the consensus by 0.2%, according to FXStreet.
“This differential between the encouraging headline figure of 2.3% and the worrying baseline figure of 3.9% focuses attention on Andrew Bailey who must decide which of these figures will drive policy at Threadneedle Street. We also saw a major divergence between goods (-0.8%) and services (5.8%) inflation, with the UK inflation problem now solely due to pricing in the services sector “, commented Joshua Mahony, analyst at Scope Markets.
“For markets, we saw the pound gaining ground across the board, reacting to changing rate expectations which saw a June rate cut becoming increasingly unlikely.”
The Federal Reserve will also be the center of attention, with the release of the minutes of its latest meeting at 7:00 p.m. BST.
Analysts at Lloyds Bank commented: “Before this meeting, markets were concerned that the Fed was signaling a risk that interest rates would have to rise again. They were therefore relatively reassured by the message that the next rise in interest rates interest rate is still likely, but could take longer than expected due to persistent inflation Today’s report could reveal whether there are serious risks of a further rise in interest rates. “It will also be interesting to see if there is any indication of how many times the majority of Fed policymakers expect rates to be cut this year.”
Across the Atlantic, chipmaker Nvidia, whose rise in artificial intelligence has been a key theme in recent months, will report first-quarter results after the session closes in New York .
“All eyes will also be on the details of the forecasts; if they are positive, even if earnings are slightly lower than expected, they could serve as a risk buffer as participants are more sensitive to future expectations in the industry. “AI/chips than past results,” commented Anderson Alves, analyst at ActivTrades.
In London, Marks & Spencer jumped 6.2%, the best performer on the FTSE 100. The company reported growth in annual profits, hailing “market-leading” progress in the grocery sectors. and clothing and home.
The retailer said statutory revenue for the year ending March 30 rose 9.3% to £13.04 billion, up from £11.93 billion the previous year. Pre-tax profit jumped 41% from £475.7 million to £672.5 million.
Russ Mould, analyst at AJ Bell, commented: “The turnaround story has been years in the making and it finally looks like the retailer has managed to pull through.
Other FTSE 100-listed retailers made little progress, with JD Sports losing 1.7% and Next 1.6%, hurt by UK inflation data.
Mitchells & Butlers jumped 9.7%. The operator of restaurants and pubs, including Harvester and All Bar One, said revenue for the six months ended April 13 rose 8.9 per cent to £1.40 billion, up from £1. £28 billion the previous year. Pre-tax profit rose from £40m to £108m.
On the AIM, Powerhouse Energy Group climbed 39% as it drew a line under a European patent case.
The non-recyclable waste-to-energy company said a patent application issued by GetGo Recycling in October “has been resolved.”
“An agreement has been reached to resolve the issues and the company looks forward to advancing its other patent applications in Europe and the rest of the world. The agreement ensures that no additional challenges to Powerhouse’s patents worldwide will be raised by Onunda or any of its group companies, today or in the future,” Powerhouse Energy said.
On Tuesday, the company said it had been granted a patent in the UK for its technology and was “already in discussions with a number of customers”.
Powerhouse explained that the patent gives it intellectual property protection in the UK – which is expected to become a key market – for the technology of using recirculated syngas to heat one or more chambers and provide electrical energy via a gas generator.
Brent oil was trading at $82.45 a barrel early Wednesday afternoon, down from $82.66 late Tuesday. Gold was quoted at $2,415.02 an ounce, down from $2,425.40.
By Eric Cunha, Editor-in-Chief of Alliance News
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