London open: FTSE edges lower as UK inflation eases

(Sharecast News) - London stocks edged lower in early trade on Wednesday, with banks under pressure after disappointing results from Barclays, as investors mulled a bigger-than-expected dip in UK inflation and looked ahead to the release of US retail sales. At 0820 GMT, the FTSE 100 was down 0.2% at 7,940.47, having closed at a record high on Tuesday, just short of the 8,000 level. At the same time, sterling was 0.8% lower against the dollar at 1.2082.

Data released earlier by 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.% 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%.

ONS chief economist Grant Fitzner said: "Although still at a high level, inflation eased again in January. This was driven by the price of air and coach travel dropping back after last month's steep rise.

"Petrol prices continue to fall and there was a dip in restaurant, café and takeaway prices. The cost of furniture decreased by more than this time last year, in line with traditional New Year discounting.

"These were offset by rising prices for alcohol and tobacco, following on from seasonal price cuts in December and a more subdued rise at the same time last year."

Craig Erlam, senior market analyst at Oanda, said: "UK inflation may still be far too high but the January CPI report has offered some cause for optimism, slipping faster than expected on both a headline and core basis.

"The headline number remains above 10% so there's still a very long way to go but favourable base effects and lower energy prices should go a long way in driving this much lower over the course of the year.

"The BoE may be particularly encouraged by the core decline as this is where we're likely to see stubbornness but we must remember that this is just one release and there will likely be many setbacks over the course of the year."

Still to come on the macro front, US retail sales for January are due at 1330 GMT.

In equity markets, Barclays tumbled 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".

NatWest and Lloyds also lost ground.

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

On the upside, Hargreaves Lansdown rallied 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 gained as it backed its FY23 profit guidance and reported a drop in interim profits, as expected, pointing in part to inflationary pressures.

Market Movers

FTSE 100 (UKX) 7,940.47 -0.17% FTSE 250 (MCX) 19,993.52 -0.12% techMARK (TASX) 4,568.60 -0.03%

FTSE 100 - Risers

Coca-Cola HBC AG (CDI) (CCH) 2,078.00p 1.96% Vodafone Group (VOD) 98.75p 1.57% Centrica (CNA) 99.02p 1.33% F&C Investment Trust (FCIT) 972.00p 0.93% Persimmon (PSN) 1,421.50p 0.85% BT Group (BT.A) 139.45p 0.83% Pearson (PSON) 920.20p 0.77% Tesco (TSCO) 247.60p 0.73% Scottish Mortgage Inv Trust (SMT) 744.00p 0.68% Whitbread (WTB) 3,075.00p 0.56%

FTSE 100 - Fallers

Barclays (BARC) 175.30p -6.42% NATWEST GROUP (NWG) 297.70p -2.39% Glencore (GLEN) 504.50p -2.21% Lloyds Banking Group (LLOY) 52.80p -1.84% Antofagasta (ANTO) 1,672.00p -1.79% Anglo American (AAL) 3,162.00p -1.59% Haleon (HLN) 325.35p -0.84% GSK (GSK) 1,458.00p -0.82% Rio Tinto (RIO) 5,971.00p -0.78% Abrdn (ABDN) 212.40p -0.75%

FTSE 250 - Risers

Aston Martin Lagonda Global Holdings (AML) 203.00p 2.53% VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 466.00p 2.19% BlackRock World Mining Trust (BRWM) 745.00p 1.78% Dunelm Group (DNLM) 1,189.00p 1.71% 888 Holdings (DI) (888) 69.00p 1.69% Network International Holdings (NETW) 275.20p 1.62% CLS Holdings (CLI) 159.20p 1.53% TUI AG Reg Shs (DI) (TUI) 174.95p 1.51% Moneysupermarket.com Group (MONY) 234.80p 1.03% JPMorgan Indian Investment Trust (JII) 822.00p 0.98%

FTSE 250 - Fallers

Mitchells & Butlers (MAB) 153.80p -2.47% NCC Group (NCC) 175.20p -2.23% Moonpig Group (MOON) 122.10p -2.16% Currys (CURY) 70.10p -2.16% Auction Technology Group (ATG) 699.00p -2.10% Dr. Martens (DOCS) 150.00p -2.09% Ferrexpo (FXPO) 131.40p -1.87% Shaftesbury (SHB) 421.20p -1.77% Marshalls (MSLH) 333.20p -1.59% Discoverie Group (DSCV) 803.00p -1.59%