Early market roundup: Stocks mixed amid soft UK inflation; Hardide up

Stock prices in London were mixed on Wednesday morning amid soft UK inflation data, with the annual inflation rate for food and beverages slowing notably; meanwhile Hardide shares jumped as it expects to "materially" beat previous expectations for the financial year.

The FTSE 100 index opened down 2.33 points at 10,583.58, and the FTSE 250 was down 78.77 points, 0.3%, at 23,673.63, but the AIM all-share was up 2.86 points, 0.4%, at 768.99.

The Cboe UK 100 was up 0.1% at 1,053.35, the Cboe UK 250 was down 0.4% at 20,562.09, and the Cboe small companies was up 0.1% at 18,461.19.

The UK input producer price index posted a 2.0% decline in June, compared with a revised 0.6% rise in May and missing FXStreet-cited consensus for a 0.2% increase, the Office for National Statistics reported. The core producer price output index, which excludes volatile items such as food and energy, showed prices rising 0.5% on a monthly basis in June, compared with a revised 0.7% in May. Monthly non-core output PPI was flat at 0%, despite consensus for a 0.4% increase.

The UK retail prices index showed 0.3% monthly inflation, accelerating from 0.2%. Annual RPI came in at 3%, as forecast, and slowing from 3.1%.

As for consumer inflation, the core consumer price index showed a 2.6% year-on-year increase in June, surpassing consensus for a 2.5% rise. Non-core annual CPI showed prices rose 2.6% in June, slowed from 2.8% in May and below consensus for a 2.7% increase. Notably, the annual inflation rate for food and non-alcoholic beverages decelerated to 1.7% in June from 2.2% in May.

Deutsche Bank Chief UK Economist Sanjay Raja noted that the 2.6% CPI is the measure's "lowest rate since March 2025," and 0.4 percentage points lower than the Bank of England's April forecast.

"Today's inflation data will buy the MPC more time as it deliberates on where to peg monetary policy...crucially, food and non-alcoholic beverages sit a staggering 1.87pp below the Bank's Jun-26 forecast at 1.69% y/y," Raja noted.

He continued: "The good news is that inflation continues to miss expectations, coming in softer than most forecasters expected. The bad news is that the resurgence in commodity prices [energy, fertiliser] will keep inflation forecasts elevated for some time.

"To be sure, the UK will see inflation push higher from here – potentially pushing closer to 3.3% -3.5% y/y in Q4-26 as base effects, food price rises and energy price rises catch up with households.

"This, we think, will continue to keep any prospect of rate cuts off the table for now, while allowing the MPC to retain its slight hawkish bias."

Gold and defence stocks led the FTSE 100 again, led by a 2.5% rise from Endeavour Mining. Antofagasta rose 0.9%.

Fresnillo rose 1.0%, after posting its second-quarter production update.

The London- and Mexico City-based silver and gold miner said attributable silver production has fallen 1.7% on a quarterly basis and 13% annually to 10.9 million ounces. Gold production was down 1.9% on-year, but rose 14% to 154,800 ounces from the first quarter.

Chief Executive Officer Octavio Alvidrez said that "we remain on track to meet our full-year production guidance."

Gold was quoted higher at USD4,112.75 an ounce against USD4,077.93 on Tuesday.

Reckitt Benckiser was up 1.3%, after Jefferies raised the Nurofen, Strepsil and Dettol owner to 'buy' from 'hold', and increased the price target to 5,900 pence from 5,600p.

Melrose was the second-highest stock, up 1.7%, while Rolls-Royce rose 1.1% and Babcock rose 0.7%.

The defence sector was previously riding high on Tuesday, after former defence minister John Healey became UK chancellor.

Elswhere, the US military said Tuesday it had launched an eleventh consecutive night of strikes against Iran, saying it targeted military sites to "further degrade Iran's ability to threaten commercial shipping in the Strait of Hormuz".

Trump had said earlier that the next US target could be an underground complex known as Pickaxe Mountain, a subterranean nuclear site near Natanz where Western intelligence suspects Iran is building an undeclared enrichment facility.

As the war nears the five-month mark and November legislative elections approach, Trump has faced intense political pressure to end the conflict, which is unpopular even with segments of his base.

Critics have pointed to the cost of the war that Pentagon Chief Pete Hegseth said Tuesday had soared to USD37.5 billion, defending a request for tens of billions in additional funding for the military.

Brent oil was quoted at USD94.21 a barrel early in London on Wednesday, climbing from USD91.36 late Tuesday.

Hardide led AIM, jumping 13%.

The Bicester, England-based surface treatment technology company forecast a financial 2026 performance "materially ahead of its previous expectations," which it said were for Ebitda of £4.3 million and revenue of £13.4 million.

"I am delighted with the ongoing growth trajectory and progress being achieved across the group," Chief Executive Matt Hamblin commented. "We are now focused on doubling revenues again from current year levels and diversifying our customer base over the next few years."

The pound was quoted higher at USD1.3381 early Wednesday, compared to USD1.3375 on Tuesday. Against the euro, sterling rose to EUR1.1724 from EUR1.1720 a day prior. The euro stood at USD1.1410, higher against USD1.1408. Against the yen, the dollar was trading lower at JPY162.92 compared to JPY162.97.

In European equities on Wednesday, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was marginally higher.

In Asia on Wednesday, the Nikkei 225 index in Tokyo was down 0.3%. In China, the Shanghai Composite was up 0.1%, while the Hang Seng index in Hong Kong was down 1.1%. The S&P/ASX 200 in Sydney closed up 0.3%.

Japan posted a trade balance deficit of JPY406.91 billion in June, approximately USD2.49 billion, swung from a JPY122.27 billion surplus in the same month a year prior, provisional figures from the Ministry of Finance showed.

Imports jumped 25% to JPY11.336 trillion from JPY9.040 trillion, surpassing the 21% increase that was expected. Exports rose 19% to JPY10.929 trillion from JPY9.162 trillion.

Norihiro Yamaguchi, lead economist at Oxford Economics, said that "still-high energy prices are likely to weigh on the global economy and increasingly dampen demand for Japanese products, particularly non-AI capital goods and autos".

In the US on Tuesday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.7%, the S&P 500 up 0.9% and the Nasdaq Composite up 1.3%.

The yield on the US 10-year Treasury was quoted at 4.64%, widening from 4.63%. The yield on the US 30-year Treasury was quoted at 5.14%, widening from 5.13%.

Still to come on Wednesday's economic calendar is Ireland's CPI followed by US crude oil stocks.

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