16th Jul 2025 08:48
(Alliance News) - Stock prices in London opened flat on Wednesday, while the pound climbed slightly, after a hotter-than-expected UK inflation reading.
The FTSE 100 index traded just 1.14 points higher at 8,939.46. Almost immediately after the opening bell on Tuesday, it topped 9,000 points for the first time in its 41-year history, peaking at 9,016.98. It only briefly flirted with that level, however, and faded as the day wore on.
The FTSE 250 was down just 1.53 points at 21,688.93, and the AIM All-Share added 1.59 points, 0.2%, at 772.62.
The Cboe UK 100 was down 0.1% at 892.29, the Cboe UK 250 was up 0.1% at 19,104.23, and the Cboe Small Companies edged down 0.1% to 17,463.34.
In European equities on Wednesday, the CAC 40 in Paris was down 0.3%, while the DAX 40 in Frankfurt was 0.1% lower.
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.
"The market is still pricing 86% for a 25bp rate cut in August, but this data is not helpful for the conviction of that call," analysts at Panmure Liberum commented. "With jobs data tomorrow it will be the (expected weakness) in payrolls versus stubbornly high price growth which will be the debate at the August [Bank of England's Monetary Policy Committee]."
The pound bought USD1.3394 early Wednesday, up from USD1.3380 at the time of the London equities close on Tuesday. It traded back above the USD1.34 in the wake of the inflation reading, however.
The euro rose to USD1.1618 from USD1.1604. Against the yen, the dollar fell to JPY148.83 from JPY148.97.
The yield on the US 10-year Treasury was quoted at 4.49%, stretching from 4.48% at the time of the London equities close on Tuesday. The yield on the US 30-year Treasury was quoted at 5.02%, unchanged from Tuesday.
US consumer price inflation accelerated in line with expectations in June, data published by the Bureau of Labor Statistics showed Tuesday.
The consumer price index rose by 2.7% in June from a year before, as expected by the FXStreet-cited market consensus and picking up pace from 2.4% in May.
SPI Asset Management analyst Stephen Innes commented: "About ninety minutes after Tuesday's CPI print crossed the wires, US Treasuries turned tail and sold off. Not because the inflation number was hot—it wasn't. It met expectations, even gave the bulls a window to test the downside in yields. But the market didn't bite. Instead, it reversed, hard. That pivot wasn't random—it spoke volumes.
"Either a whale-sized seller stepped in to short-circuit the post-CPI optimism, or we've hit an inflection point where the price action is no longer about just the data. It's about the soundtrack playing in the background: a dissonant mix of rising issuance, political tension around Powell's role, and the looming spectre of tariff-fuelled inflation. It's a market that's stopped hoping for a clean Fed pivot and started bracing for a muddier, messier path forward."
Innes added that while equities markets have a "surface of calm", bond markets are "restless" amid unease of fiscal politics.
"Start with France, where passing the new budget is shaping up to be less a policy exercise and more a knife-edge political gamble," the analyst explained. "This isn't just a US story or a French dilemma—Japan's fiscal trajectory looks shaky, and the UK isn't far behind."
UK Chancellor Rachel Reeves told City bosses on Tuesday that Britain cannot meet its growth ambitions without a "fighting fit and thriving" finance sector, as she urged regulators to resist "excessive caution".
Reeves, delivering her annual Mansion House speech to the financial services sector, said changes were needed for the UK to stay competitive in a more uncertain global economy.
"Today, I have placed financial services at the heart of the government's growth mission, recognising that Britain cannot succeed and meet its growth ambitions without a financial services sector that is fighting fit and thriving," she told the attendees.
The Treasury announced a package of reforms on Tuesday aimed at attracting more investment to the UK, and among individual consumers, to help grow the economy.
Reeves said this involves "rolling back regulation that has gone too far in seeking to eliminate risk", with plans to cut red tape in the City and reform banking rules including the ring-fencing regime.
In Tokyo on Wednesday, the Nikkei 225 ended slightly lower. In China, the Shanghai Composite fell slightly, while the Hang Seng Index in Hong Kong was 0.2% lower. The S&P/ASX 200 in Sydney ended down 0.8%.
In London on Wednesday, miners Rio Tinto and Antofagasta rose 2.1% and 2.2% on largely improved production results. The duo also maintained guidance.
Elsewhere in London, McBride slumped 15%. The private label products maker expects adjusted operating profit for the year to June 30 to be in line with expectations.
Revenue for the period was 0.7% higher at constant currency.
However, it cautions: "Whilst demand for private label products remains strong, there are signs that private label market share has stabilised at current levels. In light of continuing inflationary pressures, many retailers are seeking value to support their consumer proposition with an increased requirement for cost out actions to support lower market pricing."
Over in Zurich, shares in luxury goods firm Richemont rose 1.3%. It said it delivered a "solid" performance in the first quarter of its financial year, despite volatile global economic and geopolitical conditions.
It delivered a 2.7% rise in sales to EUR5.41 billion for the first quarter that ended June 30, from EUR5.27 billion a year earlier. At constant exchange rates, sales rose 6%.
Jewellery Maisons - Buccellati, Cartier, Van Cleef & Arpels and Vhernier - stood out, with sales rising 7.1% on-year to EUR3.91 billion from EUR3.66 billion. Sales rose 11% at constant exchange rates, marking a third consecutive quarter of double-digit growth.
A barrel of Brent traded at USD68.92 early Wednesday, largely flat from USD68.94 at the time of the London equities close on Tuesday. Gold rose to USD3,336.61 an ounce from USD3,331.36.
Explosive-laden drones hit three oil fields in Iraq's northern autonomous Kurdistan region early Wednesday, Kurdish forces said, a day after a similar attack shut operations at a US-run field.
In the past few weeks, Iraq and particularly the Kurdistan region have seen a spate of unclaimed drone and rocket attacks.
Wednesday's attacks have raised the number of oil field hit in Kurdistan to five within a week.
London listings Gulf Keystone Petroleum and Genel Energy both participate in oil fields in Kurdistan and early Wednesday said they had suspended operations following the explosions. Both said there were no injuries among their workers.
GKP shares were down 4.8%, while Genel was 5.6% lower.
By Eric Cunha, Alliance News news editor
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