16th Jul 2025 17:09
(Alliance News) - The FTSE 100 faded into the close to end lower on Wednesday after a White House official told Bloomberg News President Donald Trump is likely to fire Federal Reserve Chair Jerome Powell soon.
The blue-chip index had earlier traded in the green, shrugging aside stronger-than-expected inflation data.
The FTSE 100 index closed down 11.77 points, 0.1%, at 8,926.55. It had earlier traded as high as 8,972.29.
The FTSE 250 ended down 88.60 points, 0.4%, at 21,601.86, but the AIM All-Share rose 1.07 points, 0.1%, at 772.10.
The Cboe UK 100 closed down slightly at 892.50, the Cboe UK 250 eased 0.2% at 19,054.88, but the Cboe Small Companies ended 0.4% higher at 17,536.44.
According to the Office for National Statistics, the UK annual consumer price inflation rate accelerated to 3.6% in June, from 3.4% in May.
According to FXStreet cited consensus, it had been expected to remain at 3.4% in June.
Costs for the transport, particularly motor fuels, made the largest upward revision to the annual inflation rate, the ONS said.
Core consumer prices, excluding energy, food, alcohol, and tobacco, rose 3.7% annually in June, topping the FXStreet cited consensus which had pencilled in another 3.5% hike, which would have matched the May increase.
The annual service price inflation rate was unchanged at 4.7% in June, the ONS said.
Barclays said the "tricky print" should keep the Bank of England "cautious and gradual".
"The overshoot in inflation itself is problematic but, we think, within the tolerance range of the [Monetary Policy Committee] for data outturns relative to its forecast, especially given the role played by airfares and the fact that core goods is undershooting relative to the May forecast."
Barclays felt the lack of progress on underlying services was of more concern and likely to give the central MPC members enough reason to remain cautious, even as "we expect the labour market loosens in the coming months".
"Governor Bailey has said that he is waiting to see the pass-through of a loosening labour market in inflation data before he can be more committal than gradual, and that is not present in today's print."
For that, Barclays said Thursday's labour market data will be key.
"Altogether, we expect the committee to cut in August and remain on a gradual path for the removal of restriction to neutral, at a quarterly pace to 3.5% by February 2026."
Bank of America agreed and said the stronger-than-expected data was unlikely to derail an August rate cut.
"But there will be increased focus now on tomorrow's labour market data to validate continued easing in pay and softer employment dynamics," BofA said.
"We expect a continued slowing in private regular pay growth to 4.8% year-on-year, unemployment to rise to 4.7%, above the BoE's forecast of 4.6% and June payrolls at minus 70,000 with May's payrolls revised upwards from minus 109,000 to minus 65,000.
"In our view labour market data would be key in determining the rate outlook," BofA added.
Stocks in New York gave back early gains, while bond yields rose and the dollar fell after the Bloomberg report that Trump could fire the chair of the Federal Reserve Jerome Powell.
Bloomberg sources said Trump discussed the possible move in a meeting with congressional Republicans on Tuesday night.
The president has repeatedly expressed frustration over the central bank's decision to hold interest rates steady.
Dan Coatsworth, investment analyst at AJ Bell said: "Markets in both the UK and US pulled back amid speculation that Trump was about to fire Powell. He hasn't been shy in expressing displeasure in Powell's decision-making, demanding the Fed bring down rates to help drive economic activity. He wants someone new behind the wheel at the central bank, and someone who will influence looser monetary policy."
The Dow Jones Industrial Average was down 0.3%, as was the S&P 500 index, while the Nasdaq Composite fell 0.4%.
US producer price rose at a slower pace than expected in June, numbers showed.
According to the Bureau of Labor Statistics producer prices rose 2.3% on-year in June, easing from a 2.7% climb in May.
June's growth was tamer than expected. According to FXStreet cited consensus, a producer rise of 2.5% on-year was expected.
It was the tamest annual rise in producer prices since September 2024, when they climbed 2.1%.
On-month, producer prices were flat in June, defying expectations of a 0.2% climb. They had edged up 0.1% in May from April.
The data follows numbers on Tuesday showing US consumer price inflation accelerated in line with expectations in June.
Goldman Sachs fell 1.6% despite reporting its best ever quarter for trading revenues, as they benefitted from the April volatility. Morgan Stanley fell back 3.6% while Bank of America dipped 1.7%.
The yield on the US 10-year Treasury was quoted at 4.48%, widened from 4.43%. The yield on the US 30-year Treasury was quoted at 5.06%, stretched from 5.02%.
The pound was quoted at USD1.3473 at the time of the London equities close on Wednesday, higher compared to USD1.3380 on Tuesday. The euro rose against the dollar to EUR1.1708 from EUR1.1604.
Against the yen, the dollar was trading lower at JPY147.97 compared to JPY148.97.
In European equities on Wednesday, the CAC 40 in Paris closed down 0.6%, while the DAX 40 in Frankfurt fell 0.2%.
In Paris, Renault shares slumped 18%.
Late Tuesday, the car maker lowered full-year operating margin and free cash flow guidance after a lower-than-anticipated performance in June.
Renault now predicts an operating margin around 6.5% in 2025, down from at least 7% before, and free cash-flow between EUR1.0 billion and EUR1.5 billion versus at least EUR2 billion previously.
Shares in other car makers on the continent also struggled. Stellantis fell 1.8%, Volkswagen gave back 3.2% and BMW lost 0.2%.
In London, Intermediate Capital Group shares rose 3.4%, the best large-cap performer. It said the investment landscape remains "very attractive" as it reported an increase in assets under management in its financial first quarter.
The London-based private equity investment firm said assets under management were USD122.58 billion on June 30, the end of its financial first quarter, up 9.1% from USD112.36 billion on March 31, or by 3% at constant currency.
Year-on-year, AUM increased 22% from USD101.00 billion, or by 15% at constant currency.
Insurer Hiscox rose 2.6%, as Morgan Stanley raised the stock to 'overweight'.
Recruiter Hays fell 1.5% after Morgan Stanley cut it to 'underweight'.
Diageo rose 0.6% after it said Chief Executive Officer Debra Crew has stepped down with immediate effect by mutual agreement, with the chief financial officer stepping up on an interim basis.
The London-based owner of Guinness and Johnnie Walker whisky said it has started a formal search process to replace Crew, which will include internal and external candidates.
CFO Nik Jhangiani will take on the role of chief executive officer in the interim.
Analysts at Citi said: "Although Debra's tenure as CEO may have been viewed as turbulent, we note that many of the factors impacting the business were spirit industry-wide. As such we think today's initially positive share price reaction to the news is primarily driven by short-covering."
The broker added that "until clarity on a new CEO is forthcoming, investor re-engagement in the stock is likely to remain limited".
Brent oil fell to USD67.87 a barrel at the time of the London equities close on Wednesday, from USD68.94 late Tuesday.
Gold was quoted higher at USD3,371.80 an ounce against USD3,331.36.
The biggest risers on the FTSE 100 were Intermediate Capital Group, up 67.00 pence at 2,044.00p, Hiscox, up 32.00p at 1,274.00p, 3i Group, up 60.00p at 4,210.00p, Beazley, up 13.00p at 912.00p and British American Tobacco, up 55.00p at 3,873.00p.
The biggest fallers on the FTSE 100 were Ashtead, down 124.00p at 4,679.00p, Croda International, down 68.00p at 2,854.00p, WPP, down 8.70p at 411.70p, Pershing Square Holdings, down 80.00p at 4,100.00p and Melrose, down 9.40p at 520.80p.
Thursday's global economic calendar has UK unemployment and average earnings data, US initial jobless claims figures and a eurozone CPI print.
Thursday's UK corporate calendar has trading statements from electricity generator SSE, low-cost airline easyJet and money transfers company Wise.
By Jeremy Cutler, Alliance News reporter
Comments and questions to [email protected]
Copyright 2025 Alliance News Ltd. All Rights Reserved.
Related Shares:
Int.cap.grpHiscoxDiageo3i GroupBeazleyWPPAshtead GroupCroda InternationalBritish American TobaccoPershing Square HoldingsMelrose