19th Aug 2026 09:04
(Alliance News) - Stock prices in London opened slightly higher on Wednesday after UK inflation came in as expected, easing fears of a more aggressive Bank of England, while investors continued to monitor escalating tensions in the Middle East.
The FTSE 100 index opened up 8.41 points, 0.1%, at 10,736.56. The FTSE 250 was down 58.82 points, 0.2%, at 24,502.61, and the AIM all-share was down 0.47 points, 0.1%, at 793.78.
The Cboe UK 100 was up 0.1% at 1,067.49, the Cboe UK 250 was down 0.2% at 21,332.28, and the Cboe small companies was down 0.2% at 19,030.49.
Fresh figures from the Office for National Statistics showed UK inflation accelerated in July, largely reflecting higher housing and household services costs.
Consumer price inflation rose 2.9% annually in July, up from 2.6% in June and in line with FXStreet-cited consensus. The ONS's preferred CPIH measure accelerated to 3.1% from 2.8%, though it came in just below expectations of 3.2%.
Core CPI was unchanged at 2.6%, slightly above forecasts of 2.5%. Goods inflation picked up to 2.2% from 1.7%, while services inflation eased to 3.4% from 3.6%.
Separate producer price data pointed to easing pipeline inflation pressures. Producer input prices rose 4.9% annually in July, slowing sharply from a revised 7.4% in June and below expectations of 6.6%, while factory gate inflation eased to 3.1% from 3.5%. The ONS said lower crude oil prices were the main driver of the slowdown.
Deutsche Bank's Chief UK Economist Sanjay Raja said: "UK inflation broadly met expectations today...Energy prices – as expected – rose on the back of the hefty rise in the Ofgem Price Cap. Elsewhere, base effects played their role in pushing inflation a little higher.
"There was some good news though. Food price inflation dropped to its lowest rate since late 2021. Services CPI also fell to its lowest rate in three months.
"Looking ahead, some further upside to inflation looks likely. Energy prices look poised to rise further. Services inflation, we think, will also edge up. We continue to see CPI peaking near 3% year-on-year later this year. Risks are skewed to the upside."
UK government bonds outperformed European peers after the inflation data, with the 10-year gilt yield falling around three basis points.
Traders pared back expectations of further Bank of England tightening, judging that the latest rise in inflation was largely driven by expected energy costs.
The pound was quoted at USD1.3553 early Wednesday, slightly higher than USD1.3539 at the London equities close on Tuesday. Against the euro, sterling fell to EUR1.1687 from EUR1.1693 a day prior.
The euro traded at USD1.1596 early Wednesday, higher than USD1.1578 late Tuesday. Against the yen, the dollar was quoted at JPY159.14 versus JPY159.62.
In European equities on Wednesday, the CAC 40 in Paris rose 0.2%, while Frankfurt's DAX 40 was marginally lower ahead of eurozone inflation data due at 0900 BST.
Annual consumer price inflation is expected to have accelerated to 2.9% in July from 2.8% in June.
Back in London, Smith & Nephew fell 3.5%, the worst performer in the FTSE 100, after announcing Chief Financial Officer John Rogers will leave the company at the end of September to take up a role in the US.
Rogers stepped down from the board with immediate effect, while Senior Vice President Finance & Group Controller Pierre Palassian was appointed interim chief financial officer.
On the FTSE 250, Trainline plunged 14% after the Competition & Markets Authority opened a formal consumer protection investigation into how the online ticketing platform presents mandatory booking fees.
The CMA is investigating whether mandatory train and coach booking fees are included in the total upfront price shown to customers at the start of the booking process, as part of a wider crackdown on so-called "drip pricing".
If it ultimately finds an infringement, the CMA can order customer compensation and impose fines of up to 10% of global turnover.
The CMA also opens separate investigations into Virgin Atlantic over package holiday pricing and RED Driving School over mandatory booking and digital fees as part of the same enforcement action against drip pricing.
Oxford Nanopore Technologies climbed 5.3% to lead the mid-cap index after reporting first-half revenue of GBP116.7 million, up 11% from GBP105.6 million, while its adjusted Ebitda loss narrowed to GBP22.1 million from GBP48.3 million.
The molecular sensing technology company reiterated guidance for adjusted Ebitda breakeven in 2027 and positive free cash flow in 2028.
It also maintained 2026 constant-currency revenue growth guidance of 16% to 20%, excluding a one-off USD20 million licensing payment announced after the reporting period, and unveiled new 2030 targets of more than USD700 million in annual revenue and an adjusted Ebitda margin above 15%.
Investors also continued to monitor developments in the Middle East.
According to the Financial Times, Iran has drawn up contingency plans to target US military assets in southeastern Europe should President Donald Trump escalate the conflict. Iranian officials reportedly identified US facilities in Bulgaria and Cyprus as potential targets.
The report came after Trump reiterated there were "no talks or conversation" under way or planned with Iran and again claimed the Strait of Hormuz as US territory.
Brent crude traded at USD91.26 a barrel early Wednesday, little changed from USD91.17 late Tuesday.
In Asia on Wednesday, Tokyo's Nikkei 225 closed down 3.2%. The Shanghai Composite fell 2.4%, the Hang Seng in Hong Kong ended marginally lower, and the S&P/ASX 200 in Sydney closed down 0.2%.
In the US on Tuesday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.2%, the S&P 500 down 0.7% and the Nasdaq Composite down 1.3%.
The yield on the US 10-year Treasury was quoted at 4.68%, narrowing from 4.72%. The yield on the US 30-year Treasury was quoted at 5.27%, narrowing from 5.30%.
Gold was quoted at USD4,358.40 an ounce early Wednesday, slightly lower than USD4,361.38 on Tuesday.
Still to come on Wednesday's economic calendar is the eurozone's latest consumer price inflation reading.
By Eva Castanedo, Alliance News senior economics reporter
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