17th Jun 2026 08:54
(Alliance News) - Stock prices in London opened slightly lower on Wednesday as investors digested UK inflation data, while attention turned to the Federal Reserve's interest rate decision later in the day.
The FTSE 100 index opened down 6.87 points, 0.1%, at 10,487.34. The FTSE 250 was up 91.76 points, 0.4%, at 23,417.82, and the AIM all-share was up 1.30 points, 0.2%, at 805.23.
The Cboe UK 100 was down 0.2% at 1,040.82, the Cboe UK 250 was up 0.2% at 20,111.72, and the Cboe small companies was up 0.2% at 18,509.99.
UK Prime Minister Keir Starmer on Wednesday at the G7 summit in France said he would want Andy Burnham to have "a big role in government" should he win the by-election in Makerfield on Thursday.
Should Burnham win, he is widely believed to mount a UK Labour Party leadership challenge.
Starmer repeated on Wednesday that he would not walk away from his post and intended to fight any challenge.
The prime minister is also facing a looming threat from his former health secretary Wes Streeting, who has indicated he is prepared to trigger a Labour leadership contest as early as next week.
In European equities on Wednesday, the CAC 40 in Paris was marginally lower, while the DAX 40 in Frankfurt was down 0.3%.
Data from the Office for National Statistics showed UK consumer price inflation remained unchanged in May.
Consumer price index inflation held at 2.8% on-year, matching April's reading. The consumer prices index including owner occupiers' housing costs, the ONS's preferred measure of inflation, also remained steady at 3.0%.
James Smith from ING said: "The UK is the latest country to experience remarkably benign food inflation in May, despite the Middle East crisis which threatens to push up costs later this year. If energy prices stay where they are, we're likely to see inflation peak around 3.5% in September. We don't think that meets the bar for rate hikes."
On a monthly basis, both CPI and CPIH rose 0.2%, below the FXStreet-cited consensus forecast of a 0.4% increase.
Core CPI accelerated slightly to 2.6% from 2.5%, although this was below expectations for 2.7%. Services inflation rose to 3.7% from 3.2%, while goods inflation eased to 2.0% from 2.4%.
The ONS said transport made the largest upward contribution to inflation, partly offset by food and non-alcoholic beverages.
Separate producer price data showed inflationary pressures further up the supply chain remained elevated. UK producer input prices rose 8.7% on-year in May, accelerating from a revised 7.9% in April and marking the strongest annual increase since February 2023. The figure was just below consensus expectations of 8.8%.
On a monthly basis, input prices rose 0.2%, with crude oil providing the largest upward contribution. Factory gate output price inflation eased to 4.0% from 4.1%, although output prices increased 0.5% month-on-month. Import price inflation strengthened to 10.1% from 8.8%.
Sterling weakened after the inflation figures. The pound was quoted at USD1.3418 early Wednesday, lower than USD1.3422 at the London equities close on Tuesday. Against the euro, sterling fell to EUR1.1549 from EUR1.1567 a day earlier.
The euro traded at USD1.1612 early Wednesday, up from USD1.1603 late Tuesday. Against the yen, the dollar was quoted at JPY160.26, down from JPY160.46.
On the geopolitical front, the US and Iran are due to begin talks on a final settlement to their conflict on Friday in Switzerland.
Negotiations on a permanent agreement are expected to start immediately after a signing ceremony and continue through a 60-day period, covering Iran's nuclear programme and the potential easing of international sanctions.
However, hopes for a lasting de-escalation were tempered by fresh Israeli strikes in southern Lebanon. Iran's central military command warned Israel to "await a harsh response", while Lebanon's state news agency reported strikes on vehicles near Nabatieh that killed four people.
Oil prices nevertheless remained under pressure. Brent crude was quoted at USD78.26 a barrel early Wednesday, down from USD79.95 late Tuesday and touching a fresh three-month low. Crude remains above levels seen before the conflict began, when it traded around USD65 a barrel.
Back in London, defensive stocks weighed on the FTSE 100. Centrica and Vodafone were the two biggest fallers, down 1.8% and 1.6% respectively.
Oil majors were also weaker amid the decline in crude prices. Shell fell 1.0%, while BP lost 1.2%.
On the FTSE 250, Hays topped the index, up 3.8%, after agreeing the sale of its operations in the Czech Republic, Denmark, Hungary, Luxembourg, Romania and Sweden to private equity investor Meraki Capital for around GBP4 million in net cash proceeds.
The London-based recruitment firm said the disposal will result in a modest non-cash loss in the second half of financial 2026. Hays is also exploring options for businesses in Belgium, Brazil, Greater China, Malaysia, the Netherlands, Singapore and the UAE. The 13 countries involved are expected to generate broadly break-even pre-exceptional operating profit on around GBP85 million of net fees in the year to June 30. Hays said the moves support its strategy of focusing on 16 core markets.
AO World rose 0.8% after reporting full-year pretax profit more than doubled to GBP50.5 million from GBP20.6 million as revenue increased 11% to GBP1.27 billion from GBP1.14 billion.
The Manchester-based electricals retailer plans to return a further GBP20 million to shareholders through a GBP10 million special dividend and a new GBP10 million share buyback programme. It expects financial 2027 pretax profit to be in line with market expectations.
Among smaller caps, RC365 Holding jumped 33% after saying its Hong Kong subsidiary, Regal Crown Technology, signed a merchant point-of-sale agreement with StarCruises International.
Under the one-year deal, which renews automatically unless terminated, RC365 will deploy its RC3.0 payment platform, including cryptocurrency acceptance functionality, for StarCruises customers.
Soapmaker PZ Cussons rose 9.5% after upgrading profit guidance for the year ended May 31 following continued strong trading. It now expects like-for-like annual revenue growth of around 6%, with reported revenue of about GBP540 million.
In Asia on Wednesday, the Nikkei 225 index in Tokyo closed up 0.7%. In China, the Shanghai Composite ended 0.4% higher, while the Hang Seng index in Hong Kong closed down 0.8%. The S&P/ASX 200 in Sydney closed up 0.5%.
In the US on Tuesday, Wall Street ended mixed, with the Dow Jones Industrial Average up 0.6%, the S&P 500 down 0.6% and the Nasdaq Composite down 1.2%.
Investors are now awaiting the Federal Reserve's interest rate decision at 1800 GMT. The central bank is expected to leave rates unchanged at 3.75%. The decision will be followed by the first press conference from new Chair Kevin Warsh.
The yield on the US 10-year Treasury was quoted at 4.43%, narrowing from 4.45%. The yield on the US 30-year Treasury was quoted at 4.93%, narrowing from 4.95%.
Gold was quoted at USD4,328.00 an ounce, down from USD4,323.46 on Tuesday.
Still to come on Wednesday's economic calendar are eurozone CPI figures, Ireland's trade balance, US retail sales, EIA crude oil stocks data and the Federal Reserve's interest rate decision.
By Eva Castanedo, Alliance News reporter
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