London midday: Stocks little changed as investors mull inflation data

(Sharecast News) - London stocks were still little changed by midday on Wednesday as data showed that UK inflation hit double digits again in September. The FTSE 100 was down 0.1% at 6,938.12, while the pound was 0.5% lower versus the dollar at 1.1259 after figures from the Office for National Statistics showed that higher food prices helped push up inflation to a record 10.1% last month.

The consumer price index rose by 10.1% in the 12 months to September, compared to August's rate of 9.9%. The figure was largely in line with expectations.

On a monthly basis, CPI rose by 0.5% in September, compared to 0.3% in September 2021.

The ONS said that rising food prices made the largest upward contribution to the change in both CPIH and CPI. The largest downward pressure was transport, as the price of motor fuels and second-hand cars continued to fall.

Inflation has been mounting throughout the year, hitting a 40-year high of 10.1% in July before easing slightly to 9.9%.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "Despite attempts to turn down the heat, the cauldron of hot prices continues to bubble, spitting out yet more problems the UK government has to grapple with amid the ongoing political turmoil.

"Scorching grocery prices are the big driver of the UK's headline rate of inflation, which has jumped back into double digits, returning to July's high. But with many consumers, households and businesses already feeling the burn of higher borrowing costs, a cold shock is set to be incoming. As they ramp down non-essential spending it is set to freeze off growth in the economy which should help bring down inflation as demand for goods and services lowers.

"With Trussenomics tax cuts reduced to a pile of dying embers, they no longer risk re-igniting the inflationary flames. This means that although the Bank of England is still expected to raise rates at the next meeting by 0.75%, investors are now banking on policymakers not going so hard and so fast with hikes, particularly next year. That's partly why the pound dipped below $1.13 even though prices, on the face of it, still appear so hot to handle."

Separate data from the ONS showed that house price growth eased to 13.6% in the year to September from 16% in July. The average price of a house stood at £296,000 in August, up £36,000 on the same time a year earlier.

The ONS said: "Despite UK house prices increasing between July and August 2022, annual growth has slowed because of the sharp rise in house prices in August 2021 following changes in the stamp duty holiday."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, noted that the house price data is based on transactions which will have been facilitated by mortgage offers made a few months earlier.

"The continued growth in prices, therefore, is not a sign that they are holding up well in the face of the recent surge in mortgage rates," he said.

In equity markets, banks were under the cosh following a report that Chancellor Jeremy Hunt is preparing to raid their profits as well as those of energy companies as he looks to fill a £40bn fiscal hole.

Lloyds, NatWest and Barclays fell. NatWest and Lloyds were also likely weighed down by rating downgrades at KBW.

HSBC bucked the trend, however, sitting pretty at the top of the FTSE 100 after an upgrade to 'outperform' at KBW.

Moneysupermarket slumped after Amazon said it was launching a UK insurance comparison website.

Market Movers

FTSE 100 (UKX) 6,931.09 -0.08% FTSE 250 (MCX) 17,304.46 -1.28% techMARK (TASX) 4,138.89 -0.45%

FTSE 100 - Risers

HSBC Holdings (HSBA) 475.95p 2.19% International Consolidated Airlines Group SA (CDI) (IAG) 117.94p 1.80% BAE Systems (BA.) 809.80p 1.38% BP (BP.) 451.35p 1.37% F&C Investment Trust (FCIT) 881.00p 1.15% Smith (DS) (SMDS) 288.10p 1.09% Centrica (CNA) 70.02p 0.95% GSK (GSK) 1,376.20p 0.91% Standard Chartered (STAN) 563.00p 0.82% Pershing Square Holdings Ltd NPV (PSH) 2,690.00p 0.75%

FTSE 100 - Fallers

Dechra Pharmaceuticals (DPH) 2,596.00p -4.35% Kingfisher (KGF) 206.40p -4.31% Lloyds Banking Group (LLOY) 41.12p -3.47% Intermediate Capital Group (ICP) 975.20p -3.45% SEGRO (SGRO) 727.60p -3.06% Land Securities Group (LAND) 516.80p -2.97% Persimmon (PSN) 1,233.50p -2.84% Rightmove (RMV) 467.80p -2.64% Auto Trader Group (AUTO) 519.60p -2.48% British Land Company (BLND) 340.20p -2.47%

FTSE 250 - Risers

ASOS (ASC) 546.00p 11.43% RHI Magnesita N.V. (DI) (RHIM) 1,676.00p 3.46% ITV (ITV) 67.98p 2.94% International Distributions Services (IDS) 202.10p 2.77% Carnival (CCL) 622.00p 1.80% Mitie Group (MTO) 67.20p 1.36% JPMorgan Indian Investment Trust (JII) 816.00p 0.99% Worldwide Healthcare Trust (WWH) 3,280.00p 0.77% Ascential (ASCL) 200.20p 0.75% Abrdn (ABDN) 142.90p 0.74%

FTSE 250 - Fallers

Moneysupermarket.com Group (MONY) 187.70p -10.28% OSB Group (OSB) 384.60p -5.50% HarbourVest Global Private Equity Limited A Shs (HVPE) 2,185.00p -5.00% Target Healthcare Reit Ltd (THRL) 78.10p -4.76% Moonpig Group (MOON) 130.50p -4.67% Genus (GNS) 2,486.00p -4.60% Safestore Holdings (SAFE) 825.50p -4.57% Trainline (TRN) 321.30p -4.40% Virgin Money UK (VMUK) 127.65p -4.35% Workspace Group (WKP) 374.00p -4.15%