London midday: Stocks extend losses after UK inflation data

(Sharecast News) - London stocks had extended losses by midday on Wednesday as a surprise jump in UK inflation dampened rate cut hopes, while sluggish Chinese GDP also weighed on sentiment.

The FTSE 100 was down 1.7% at 7,431.94.

Data released earlier by the Office for National Statistics showed that the consumer price index rose to 4% in the year to December from 3.9% in November, versus expectations for a drop to 3.8%. This marked the first jump in inflation since February 2023 and was driven by a rise in alcohol and tobacco prices.

Alcohol and tobacco inflation rose to 12.9% from 10.2%.

ONS chief economist Grant Fitzner said: "The rate of inflation ticked up a little in December, with rises in tobacco prices due to recently introduced duty increases.

"These were partially offset by falling food inflation, where prices still rose but at a much lower rate than this time last year.

"Meanwhile, the prices of goods leaving factories are little changed over the last few months, while the costs of raw materials remains lower than a year ago."

Core inflation - which excludes food and energy - was unchanged at 5.1%.

Russ Mould, investment director at AJ Bell, said: "Investors have had to rip up their game plan after UK inflation went in the wrong direction to support the narrative for interest rate cuts.

"Coming at 4% versus a market forecast of 3.8%, it's still double the long-term target for the Bank of England and could act as the deciding factor for the Monetary Policy Committee to sit on their hands at their next vote and keep rates higher for longer.

"If that backdrop wasn't harsh enough, Chinese GDP data showed a country still struggling to maintain high levels of economic growth. The economy expanded by 5.2% in the fourth quarter, below market forecasts of 5.3%. Naturally, that spooked investors in mining stocks for fear that commodities demand from the Asian superpower could weaken."

In equity markets, miners were under the cosh, with Glencore, Antofagasta and Anglo American all down. Antofagasta was also in focus after a production report.

Housebuilders lost ground as the inflation data dashed rate cut hopes, with Persimmon, Barratt Developments and Vistry all lower.

Ibstock fell as the building products supplier said full-year revenues are expected to have declined by 21% to around £405m.

888 tumbled as the William Hill owner warned that adjusted earnings before interest, taxes, depreciation and amortisation for 2024 were set to be at the low end of the consensus range due to extra investment.

Education publisher Pearson fell despite hailing a strong 2023 financial performance, with a 5% increase in underlying group sales and a jump in adjusted operating profit.

Admiral was hit by a downgrade to 'neutral' from 'buy' at UBS.

On the upside, IMI was boosted by an upgrade to 'buy' from 'neutral' at Goldman Sachs.

Keller gained as it said 2023 underlying operating profit was set to be "significantly ahead" of market expectations after a particularly strong end to the year.

BP was in the spotlight as it named its former chief financial officer Murray Auchincloss as its permanent chief executive, after having served in an interim capacity for the past four months.

Market Movers

FTSE 100 (UKX) 7,431.94 -1.67% FTSE 250 (MCX) 18,828.82 -1.90% techMARK (TASX) 4,253.12 -1.14%

FTSE 100 - Risers

IMI (IMI) 1,615.00p 4.13% Smith & Nephew (SN.) 1,081.00p 1.50% International Consolidated Airlines Group SA (CDI) (IAG) 143.10p 0.70% BAE Systems (BA.) 1,182.00p 0.08% JD Sports Fashion (JD.) 107.30p -0.05% Convatec Group (CTEC) 243.00p -0.08% InterContinental Hotels Group (IHG) 7,156.00p -0.28% Barclays (BARC) 141.00p -0.28% GSK (GSK) 1,577.20p -0.29% Rolls-Royce Holdings (RR.) 296.90p -0.44%

FTSE 100 - Fallers

Persimmon (PSN) 1,401.50p -4.56% Land Securities Group (LAND) 641.80p -3.98% Ocado Group (OCDO) 594.00p -3.88% Unite Group (UTG) 987.50p -3.85% Severn Trent (SVT) 2,518.00p -3.64% United Utilities Group (UU.) 1,019.50p -3.59% Admiral Group (ADM) 2,527.00p -3.55% Glencore (GLEN) 423.90p -3.47% SEGRO (SGRO) 826.80p -3.21% Barratt Developments (BDEV) 520.40p -3.20%

FTSE 250 - Risers

Keller Group (KLR) 851.00p 2.53% Mitchells & Butlers (MAB) 260.00p 2.04% BH Macro Ltd. GBP Shares (BHMG) 362.00p 1.12% AO World (AO.) 87.80p 0.92% Ruffer Investment Company Ltd Red PTG Pref Shares (RICA) 267.00p 0.75% Caledonia Investments (CLDN) 3,525.00p 0.57% Trustpilot Group (TRST) 159.20p 0.13% PZ Cussons (PZC) 143.00p 0.00% Bakkavor Group (BAKK) 94.20p 0.00% Abrdn Private Equity Opportunities Trust (APEO) 464.00p 0.00%

FTSE 250 - Fallers

Diversified Energy Company (DEC) 959.00p -6.53% Safestore Holdings (SAFE) 795.50p -6.41% Mobico Group (MCG) 84.30p -5.49% Drax Group (DRX) 501.00p -4.97% Pennon Group (PNN) 687.00p -4.52% LondonMetric Property (LMP) 183.80p -4.42% Investec (INVP) 512.20p -4.37% Close Brothers Group (CBG) 603.50p -4.36% LXI Reit (LXI) 102.50p -4.30% OSB Group (OSB) 418.20p -3.99%