London midday: FTSE flat as investors mull inflation data

(Sharecast News) - London stocks had pared earlier small gains to trade flat by midday on Wednesday as investors mulled a grim UK inflation report. The FTSE 100 was steady at 7,365.66, while sterling was up 0.3% against the dollar at 1.1900.

Geopolitical tensions were in focus after a Russian-made missile landed in Poland, killing two people. The Polish president said earlier that it was likely an "unfortunate accident".

Nato-member Poland initially said the explosion in the village of Przewodow, close to the Ukrainian border, was caused by a Russian-made rocket, and the country's military was put on high alert.

However, president Andrezej Duda said at a press conference earlier that it was likely not an "intentional attack" and instead an "unfortunate accident", with the Russian-made rocket being used by the Ukrainian air defence.

On home shores, data from the Office for National Statistics showed that consumer price inflation hit a 41-year high of 11.1% in the year to October as energy bills and food prices surged. This was up from 10.1% in September and versus expectations of 10.7%.

Grant Fitzner, chief economist at the ONS, noted that over the past year, gas prices have climbed nearly 130% while electricity has risen by around 66%.

"Increases across a range of food items also pushed up inflation," he said. "These were partially offset by motor fuels, where average petrol prices fell on the month, while the price for diesel rose taking the disparity in price between the two fuels to the highest on record.

"There was further evidence that costs facing businesses are rising more slowly, driven by crude oil and petroleum prices."

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "The jumps in the cost of essentials have been showing up on grocery bills for some time and now it's made clear with the stark 16.4% rise in food inflation, the highest since 1977.

"It seems we are in a seventies time warp with runaway food prices, public sector strikes crippling services, and worries about energy supplies. The constant march upwards in prices is increasingly painful for consumers and companies, and for now shows little sign of quickly abating.

"This is difficult reading for Bank of England policymakers, as inflation is clearly proving sticker than they forecast. They are now likely to vote for another rise in interest rates at the December meeting, although expectations of another super-size hike still remain lower. So, a rise of 0.5% is on the cards next month with more to come with rates forecast to rise to around 4.5% - 4.75% by the middle of next year."

In equity markets, inspection, product testing and certification company Intertek fell sharply after a disappointing update from Swiss peer SGS.

Carnival tumbled after the cruise operator announced plans to raise $1bn with convertible senior notes to make principal payments on debt and for general corporate purposes.

CMC Markets slid even as it reported a rise in first-half net operating income amid increased activity.

SSE lost ground after the UK energy provider said it swung to an interim loss in what it called "unprecedented market volatility" as gas storage earnings amid soaring prices offset weaker earnings from renewables.

British Land was in the red despite posting a big jump in first-half profits on the back of "strong" rental growth and cost control.

Insurer Beazley fell after it raised £350m in a discounted placing to support organic growth and provide growth capital to fund "attractive" underwriting opportunities.

On the upside, software firm Sage jumped after full-year revenues beat expectations, while defence company BAE Systems rose, likely on the back of the blast in Poland.

Hill & Smith rallied as the infrastructure provider said annual profits were set to be at the upper end of guidance, driven by strong trading and foreign exchange tailwinds.

Kainos was lifted by an upgrade to 'buy' at Berenberg, while Future was boosted by an initiation at 'overweight' at JPMorgan.

Market Movers

FTSE 100 (UKX) 7,365.66 -0.05% FTSE 250 (MCX) 19,151.50 -1.56% techMARK (TASX) 4,355.65 0.45%

FTSE 100 - Risers

Sage Group (SGE) 803.60p 6.32% BAE Systems (BA.) 766.40p 3.76% Haleon (HLN) 286.10p 2.51% Convatec Group (CTEC) 228.00p 2.43% Experian (EXPN) 2,903.00p 1.82% GSK (GSK) 1,378.80p 1.82% BP (BP.) 484.90p 1.65% Reckitt Benckiser Group (RKT) 5,760.00p 1.55% Fresnillo (FRES) 870.40p 1.47% Pearson (PSON) 977.40p 1.43%

FTSE 100 - Fallers

Intertek Group (ITRK) 3,939.00p -4.42% Hargreaves Lansdown (HL.) 872.20p -4.11% International Consolidated Airlines Group SA (CDI) (IAG) 133.82p -3.85% Smurfit Kappa Group (CDI) (SKG) 3,063.00p -3.74% Dechra Pharmaceuticals (DPH) 2,790.00p -3.12% Schroders (SDR) 452.70p -3.12% Ocado Group (OCDO) 747.00p -3.01% JD Sports Fashion (JD.) 116.35p -2.84% Rolls-Royce Holdings (RR.) 88.55p -2.81% Kingfisher (KGF) 239.20p -2.76%

FTSE 250 - Risers

Kainos Group (KNOS) 1,542.00p 7.01% Hill and Smith (HILS) 1,134.00p 3.85% Plus500 Ltd (DI) (PLUS) 1,840.00p 1.04% Vietnam Enterprise Investments (DI) (VEIL) 505.00p 1.00% Sequoia Economic Infrastructure Income Fund Limited (SEQI) 91.90p 0.99% BlackRock World Mining Trust (BRWM) 699.00p 0.58% SDCL Energy Efficiency Income Trust (SEIT) 105.00p 0.57% Tate & Lyle (TATE) 706.20p 0.43% Diversified Energy Company (DEC) 127.50p 0.39% Wood Group (John) (WG.) 162.70p 0.37%

FTSE 250 - Fallers

Carnival (CCL) 736.40p -12.73% CMC Markets (CMCX) 245.00p -8.58% Elementis (ELM) 99.70p -5.50% Wizz Air Holdings (WIZZ) 2,180.00p -5.26% 888 Holdings (DI) (888) 96.35p -5.17% easyJet (EZJ) 395.80p -5.02% Liontrust Asset Management (LIO) 1,112.00p -4.96% IP Group (IPO) 69.15p -4.95% TUI AG Reg Shs (DI) (TUI) 147.25p -4.85% HGCapital Trust (HGT) 358.00p -4.79%