13th Aug 2026 08:59
(Alliance News) - London's FTSE 100 weakened in early trade on Thursday, weighed down by the mining sector, but European indices moved higher after US inflation data took some sting out of Federal Reserve hike expectations.
The FTSE 100 index opened down 50.84 points, 0.5%, at 10,782.31. The FTSE 250 edged down 32.74 points, 0.1%, at 24,782.14. The AIM all-share was down 3.38 points, 0.4%, at 800.55.
The Cboe UK 100 was down 0.5% at 1,070.32, the Cboe UK 250 was marginally lower at 21,559.83, and the Cboe small companies was down 0.4% at 19,029.38.
In European equities on Thursday, the CAC 40 in Paris was up 0.2%, but the DAX 40 in Frankfurt was up 0.4%.
Sterling fell to USD1.3484 on Thursday morning, from USD1.3507 at the time of the London equities close on Wednesday. Versus the euro, it was weaker at EUR1.1698 from EUR1.1704.
UK economic growth slowed in the second quarter of the year, as expected, according to numbers on Thursday.
The Office for National Statistics said UK gross domestic product advanced 0.4% quarter-on-quarter on the three months to June 30, slowing from a 0.6% rise in the first quarter.
The reading was in line with consensus cited by FXStreet.
Schroders analyst George Brown commented: "The UK economy has proven more resilient than many expected given the conflict in the Middle East. But we still suspect seasonal quirks are flattering activity in the first half of the year, with growth likely to lose some steam later in 2026."
The euro bought USD1.1522, down from USD1.1539 at the time of the London equities close on Wednesday. Against the yen, the buck rose to JPY159.36 from JPY159.24.
"Yesterday's unexciting US CPI print left FX with little sense of direction into the end-August Jackson Hole Symposium. What can stop this relentless decline in volatility? Gulf news, Fedspeak and big surprises in tier-two data are all possible candidates. But there's a good chance they won't, and EUR/USD may stay in tight ranges for the next few weeks," analysts at ING commented.
"Next week's FOMC minutes should offer some insight into the Committee's latest thinking, but unless we see a major surprise in today's PPI data or other second-tier releases over the coming weeks, Fed pricing may settle and FX volatility may compress further. Even so, we expect Fed communication to gradually soften its hawkish tone and keep risks on the downside for USD."
US inflation data for July was in-line with expectations, numbers on Wednesday showed, strengthening the case for a rate hold next month, though numbers for August could swing the pendulum back in favour of a hike.
The Fed's next rate decision is on September 16. According to the CME FedWatch Tool, there is a 64% chance it leaves rates unmoved. Ahead of the decision, there is the August consumer price index reading on September 11, which could move the dial again. A week ago, the odds of a hold stood at 45%. A month ago, they stood at 25%.
The Bureau of Labor Statistics said US consumer prices rose 3.4% on-year in July, abating from a 3.5% increase in June. The reading was in line with consensus cited by FXStreet.
A US producer price report is released at 1330 BST on Thursday.
The yield on the US 10-year Treasury widened to 4.68% on Thursday, from 4.67% at the time of the London equities close on Wednesday. The yield on the US 30-year Treasury stretched to 5.24% from 5.23%.
Analysts at Deutsche Bank commented: "One reason for continued caution in rates markets is the situation in the Middle East as Iran and the US appear to harden their positions."
Gold traded at USD4,372.80 an ounce on Thursday morning, down from USD4,422.11 at the time of the closing bell on the London Stock Exchange on Wednesday. Gold miners were on the decline in London, with Fresnillo falling 4.1% and Hochschild down 4.0%.
A barrel of Brent was fractionally lower at USD88.74 from USD88.88.
President Donald Trump on Wednesday said the US is in control of the strategic Strait of Hormuz and will "keep it."
"The USA. has total control over the Strait of Hormuz. I THINK WE WILL KEEP IT!" Trump wrote on his Truth Social platform. "Our Naval Blockade is being called, by everyone, 'A WALL OF STEEL,' and there is nothing Iran can do about it."
Trump has repeatedly claimed the US controls the strait, which is vital for the flow of energy and other commodity shipping through the Middle East.
However, Iran says it effectively controls much of the waterway and intends to impose a toll system.
In the US on Wednesday, Wall Street ended mostly lower, with the Dow Jones Industrial Average marginally down, but the S&P 500 up 0.3% and the Nasdaq Composite up 0.5%.
In Tokyo, the Nikkei 225 surged 1.2%. In China, the Shanghai Composite was down 0.5%, while the Hang Seng Index in Hong Kong was 0.3% lower. Sydney's S&P/ASX 200 ended down 0.2%.
In London, miners Antofagasta, Rio Tinto and Anglo American were among the worst performers on the FTSE 100, down 5.0%, 4.6% and 2.9%.
Copper miner Antofagasta reported improved half-year earnings, but it trimmed its output view.
It now expects copper output in the range of 625,000 to 655,000 tonnes for the whole of 2026, its outlook cut from 650,000-700,000 tonnes. Los Pelambres has resumed operations after "extraordinarily severe weather conditions in Chile", the miner said.
"While there has been no material impact on key equipment and infrastructure, detailed inspections have identified the need for repairs to certain pipeline platforms and water management systems," it added.
Towards the top of the FTSE 100, Aviva added 1.3% as JPMorgan lifted the insurer to 'overweight'.
On AIM, Distil surged 30% as the owner of drinks brands received its first order through a US distribution partner. The deal brings Blavod Black Vodka back into the US market.
"Distil's new distribution partner boasts an extensive distribution network across the US, Canada and Puerto Rico, with strong retail relationships," the company said, noting that a first shipment is to leave the UK early in the third quarter of the firm's financial year ending March 31.
By Eric Cunha, Alliance News news editor
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