London open: FTSE nudges lower after inflation data, ahead of Fed

(Sharecast News) - London stocks nudged lower in early trade 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. At 0820 GMT, the FTSE 100 was down 0.1% at 7,733.16.

Figures released earlier by the Office for National Statistics showed that inflation fell a touch 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."

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

In equity markets, luxury fashion brand Burberry was 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.

Prudential gained as it said it was "increasingly confident" of meeting its long-term targets after a strong set of results for 2023, with new business profits rising by almost a half on the back of its ongoing strategic shift to Asian and African markets.

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) 7,733.16 -0.07% FTSE 250 (MCX) 19,458.06 0.13% techMARK (TASX) 4,465.30 0.01%

FTSE 100 - Risers

Halma (HLMA) 2,273.00p 2.94% Hikma Pharmaceuticals (HIK) 1,955.50p 2.22% Persimmon (PSN) 1,290.00p 2.14% Taylor Wimpey (TW.) 139.15p 1.53% Prudential (PRU) 792.40p 1.51% Kingfisher (KGF) 226.90p 1.20% Haleon (HLN) 324.05p 1.14% Intertek Group (ITRK) 4,904.00p 0.97% Ashtead Group (AHT) 5,360.00p 0.90% Barratt Developments (BDEV) 468.70p 0.82%

FTSE 100 - Fallers

Burberry Group (BRBY) 1,173.00p -4.63% Standard Chartered (STAN) 651.80p -1.06% Weir Group (WEIR) 1,978.00p -0.93% Fresnillo (FRES) 437.50p -0.88% Smurfit Kappa Group (CDI) (SKG) 3,570.00p -0.83% Unilever (ULVR) 3,897.00p -0.81% Next (NXT) 8,414.00p -0.75% British American Tobacco (BATS) 2,395.00p -0.70% Antofagasta (ANTO) 1,903.50p -0.70% BP (BP.) 495.05p -0.65%

FTSE 250 - Risers

Johnson Matthey (JMAT) 1,857.50p 8.78% W.A.G Payment Solutions (WPS) 78.80p 8.54% Target Healthcare Reit Ltd (THRL) 82.90p 2.85% Investec (INVP) 504.60p 2.77% Helios Towers (HTWS) 85.20p 2.65% Greggs (GRG) 2,898.00p 2.40% Derwent London (DLN) 2,100.00p 2.04% Premier Foods (PFD) 152.60p 1.87% Genus (GNS) 1,746.00p 1.81% Vietnam Enterprise Investments (DI) (VEIL) 572.00p 1.78%

FTSE 250 - Fallers

Trustpilot Group (TRST) 195.90p -5.82% Computacenter (CCC) 2,800.00p -4.83% Safestore Holdings (SAFE) 732.00p -1.88% Watches of Switzerland Group (WOSG) 359.80p -1.80% Wetherspoon (J.D.) (JDW) 779.50p -1.70% Indivior (INDV) 1,637.00p -1.56% Dr. Martens (DOCS) 88.50p -1.50% Games Workshop Group (GAW) 9,855.00p -1.10% Pagegroup (PAGE) 431.00p -1.10% Bodycote (BOY) 654.00p -1.06%