London midday: Stocks flat ahead of US retail sales; banks in the red

(Sharecast News) - London stocks had pared earlier losses to trade flat by midday on Wednesday, with banks weaker after disappointing results from Barclays, as investors mulled a dip in UK inflation and looked ahead to the release of US retail sales. The FTSE 100 was steady at 7,956.96, having closed at a record high on Tuesday, just short of the 8,000 level. At the same time, sterling was 0.9% lower against the dollar at 1.2058.

The weaker pound was likely helping to limit losses on the top-flight index.

Data out earlier from the Office for National Statistics showed that consumer price inflation eased more than expected in January.

The annual rate of CPI fell to 10.1.% in January from 10.5% in December, coming in below analysts' expectations of 10.3%.

This was the third drop in three months, after CPI hit a 41-year high of 11.1% in October 2022.

The ONS said the largest downward contribution came from transport - particularly passenger transport and motor fuels - and restaurants and hotels, helping to offset rising prices in alcoholic beverages and tobacco.

The figures showed that fuel price inflation fell to 7.7% in January from 11.5% the month before, while food inflation remained high, at 16.7% compared to 16.8% in December.

Meanwhile, core CPI came in at 5.8%, down from 6.3% in December and versus expectations of 6.2%.

Russ Mould, investment director at AJ Bell, said: "After a US inflation number which proved a mild disappointment to the market, price rises easing a little less than hoped, the UK's own inflation reading came in lower than expected.

"The US data caused a mild hangover for the FTSE 100 on Wednesday after a sluggish performance on Wall Street and weakness in Asia overnight.

"Investors are trying to work out how the US Federal Reserve might react as they desperately look towards the milestone of the final rate hike in this cycle. For now, markets are retaining some confidence that this pivot isn't too far away.

"The divergence in inflation figures, relative to expectations, on either side of the Atlantic did result in weakness for the pound. This in turn helped provide support to the FTSE 100 by boosting the relative value of its dominant overseas earnings.

"US retail sales figures will be closely watched later. The US is a nation of shoppers and this is the main gauge of consumer spending which accounts for most of the economic activity in the world's largest economy."

US retail sales for January are due at 1330 GMT.

Market participants were also digesting the latest ONS house price index, which showed that house price growth eased in the year to December 2022.

House prices were up 9.8%, down from 10.6% in November, with the average price standing at £294,000. Analysts had been expecting growth of 11.2%. On the month, prices were down 0.4% following a 0.2% increase in November.

In equity markets, Barclays slid after it said annual profits fell 14%, with provisions for debt impairments increasing as the economy worsened.

The bank posted a pre-tax profit of £7bn in 2022, down from £8.2bn a year earlier and missing estimates of £7.2bn. Credit impairment charges were £1.22bn against a net release of £653m, reflecting "macroeconomic deterioration and a gradual increase in delinquencies".

Lloyds, NatWest, HSBC and Standard Chartered also lost ground.

Glencore fell despite announcing a $7.1bn payout to shareholders and reporting record full-year profits.

Hargreaves Lansdown reversed earlier gains to trade sharply lower after it posted strong growth on both its top and bottom lines at the first half-year stage, despite the impact from "challenging" external conditions and low investor confidence on asset values and stockbroking volumes.

Homeware retailer Dunelm also reversed earlier gains, to trade a touch lower, as it backed its FY23 profit guidance and reported a drop in interim profits, as expected, pointing in part to inflationary pressures.

On the upside, luxury brand Burberry was the standout riser on the FTSE 100 as French peer Kering reversed earlier losses to trade sharply higher following results.

Elsewhere, Ascential spiked following a report the data and analytics company, which is undergoing a major restructuring, has hired JPMorgan Chase & Co. for a sale of its consumer trend-spotting business.

Market Movers

FTSE 100 (UKX) 7,956.96 0.04% FTSE 250 (MCX) 20,053.69 0.18% techMARK (TASX) 4,583.55 0.30%

FTSE 100 - Risers

Burberry Group (BRBY) 2,478.00p 3.04% Coca-Cola HBC AG (CDI) (CCH) 2,096.00p 2.85% Entain (ENT) 1,350.50p 2.31% Persimmon (PSN) 1,439.00p 2.09% Sage Group (SGE) 775.00p 1.84% Vodafone Group (VOD) 98.88p 1.71% Whitbread (WTB) 3,107.00p 1.60% Scottish Mortgage Inv Trust (SMT) 750.80p 1.60% Rolls-Royce Holdings (RR.) 109.98p 1.50% RS Group (RS1) 992.50p 1.48%

FTSE 100 - Fallers

Barclays (BARC) 168.60p -9.99% Hargreaves Lansdown (HL.) 889.40p -6.16% Lloyds Banking Group (LLOY) 51.75p -3.79% NATWEST GROUP (NWG) 296.30p -2.85% Fresnillo (FRES) 782.80p -1.36% Anglo American (AAL) 3,188.50p -0.76% HSBC Holdings (HSBA) 605.20p -0.66% Glencore (GLEN) 512.90p -0.58% BT Group (BT.A) 137.60p -0.51% GSK (GSK) 1,462.80p -0.49%

FTSE 250 - Risers

Ascential (ASCL) 275.00p 3.77% Network International Holdings (NETW) 278.80p 2.95% Keller Group (KLR) 843.00p 2.06% Redrow (RDW) 515.50p 1.98% Senior (SNR) 150.80p 1.75% Carnival (CCL) 861.00p 1.70% Softcat (SCT) 1,262.00p 1.69% Drax Group (DRX) 647.00p 1.65% Watches of Switzerland Group (WOSG) 836.00p 1.58% Allianz Technology Trust (ATT) 234.50p 1.52%

FTSE 250 - Fallers

Wizz Air Holdings (WIZZ) 2,741.00p -2.46% Trainline (TRN) 255.40p -2.30% Virgin Money UK (VMUK) 180.00p -2.28% Hammerson (HMSO) 29.15p -2.18% Shaftesbury (SHB) 419.60p -2.15% Molten Ventures (GROW) 388.00p -2.12% TBC Bank Group (TBCG) 2,350.00p -2.08% FirstGroup (FGP) 108.70p -2.07% PZ Cussons (PZC) 189.60p -1.96% Hunting (HTG) 323.00p -1.67%