London midday: Stocks just lower after inflation data; rate announcements eyed

(Sharecast News) - London stocks were still a touch weaker by midday on Wednesday as investors mulled a bigger-than-expected fall in UK inflation, with caution in the air ahead of rate decisions from the US Federal Reserve and the Bank of England. The FTSE 100 was down 0.1% at 7,728.47.

Figures released earlier by the Office for National Statistics showed that inflation fell a little more than expected in February, to its lowest level since September 2021.

The consumer price index declined to 3.4% from 4% in January, versus expectations for a fall to 3.5% and getting a touch closer to the Bank of England's 2% target.

The largest downward contributions came from food, and restaurants and cafes, while the largest upward contributions came from housing and household services, and motor fuels, the ONS said.

ONS chief economist Grant Fitzner said: "Food prices were the main driver of the fall, with prices almost unchanged this year compared to a large rise last year, while restaurant and cafe prices also slowed.

"These falls were only partially offset by price rises at the pump and a further increase in rental costs."

Core CPI - which excludes energy, food, alcohol and tobacco - rose 4.5% in the 12 months to February, down from 5.1% the month before.

The inflation data came just a day before the Bank of England's latest policy announcement.

Paul Dales, chief UK economist at Capital Economics, said the easing in inflation "probably won't make the Bank of England sound any more dovish when it leaves interest rates at 5.25% tomorrow".

"But our view that inflation will fall below 2% in April and then ease towards 1% suggests the BoE may have to start cutting rates in the summer and reduce them to 3.00% next year," he said.

The Fed is due to make its latest policy announcement at 1800 GMT.

In equity markets, Prudential was the standout loser on the FTSE 100, reversing earlier strong gains despite saying it was "increasingly confident" of meeting its long-term targets after a strong set of results for 2023. The company said new business profits rose by almost a half on the back of its ongoing strategic shift to Asian and African markets.

Luxury fashion brand Burberry and Watches of Switzerland were both under the cosh after Kering warned that sales at Gucci were set to slide 20% in the first quarter due to a slowdown in Asia.

Review platform Trustpilot slumped after Vitruvian Partners sold 15.5m shares in the company in a placing at 200p each, versus a closing price of 208p on Tuesday.

On the upside, Johnson Matthey surged as it announced the sale of its medical device components business to Montagu Private Equity for $700m (£550m).

The business makes parts for medical device manufacturers globally with a focus on precious metal alloys and nitinol. It operates manufacturing sites in the US, Mexico, and Australia.

Johnson Matthey also said it had now finished the divestment programme announced in May 2022, bringing aggregate net proceeds from sales to "significantly more" than its target of £300m.

Market Movers

FTSE 100 (UKX) 7,728.47 -0.13% FTSE 250 (MCX) 19,465.24 0.17% techMARK (TASX) 4,456.01 -0.20%

FTSE 100 - Risers

Ashtead Group (AHT) 5,518.00p 3.88% Halma (HLMA) 2,285.00p 3.49% Persimmon (PSN) 1,294.00p 2.45% Melrose Industries (MRO) 632.60p 1.90% St James's Place (STJ) 426.10p 1.86% Airtel Africa (AAF) 92.35p 1.82% Hikma Pharmaceuticals (HIK) 1,945.50p 1.70% NATWEST GROUP (NWG) 244.00p 1.67% SEGRO (SGRO) 857.40p 1.42% United Utilities Group (UU.) 1,040.50p 1.36%

FTSE 100 - Fallers

Prudential (PRU) 727.20p -6.38% Burberry Group (BRBY) 1,172.00p -4.72% Weir Group (WEIR) 1,953.00p -2.13% Standard Chartered (STAN) 645.40p -2.03% British American Tobacco (BATS) 2,370.50p -1.72% Smurfit Kappa Group (CDI) (SKG) 3,554.00p -1.28% Imperial Brands (IMB) 1,705.00p -1.16% Sainsbury (J) (SBRY) 247.40p -1.12% Centrica (CNA) 126.85p -1.09% Spirax-Sarco Engineering (SPX) 10,245.00p -1.06%

FTSE 250 - Risers

Johnson Matthey (JMAT) 1,853.00p 8.52% Close Brothers Group (CBG) 374.20p 7.71% W.A.G Payment Solutions (WPS) 75.80p 4.41% Marshalls (MSLH) 274.20p 4.26% Essentra (ESNT) 171.80p 3.87% Investec (INVP) 508.40p 3.54% FirstGroup (FGP) 185.00p 3.18% Vietnam Enterprise Investments (DI) (VEIL) 576.00p 2.49% Trainline (TRN) 390.20p 2.41% TUI AG Reg Shs (DI) (TUI) 572.50p 2.14%

FTSE 250 - Fallers

Trustpilot Group (TRST) 187.70p -9.76% Watches of Switzerland Group (WOSG) 343.40p -6.28% Computacenter (CCC) 2,764.00p -6.05% Ferrexpo (FXPO) 45.50p -4.29% Dr. Martens (DOCS) 87.55p -2.56% Fidelity Emerging Markets Limited Ptg NPV (FEML) 647.30p -2.22% Just Group (JUST) 99.30p -2.07% C&C Group (CDI) (CCR) 152.80p -2.05% Wetherspoon (J.D.) (JDW) 778.50p -1.83% OSB Group (OSB) 371.80p -1.48%