Late market roundup: FTSE 100 down as markets weigh inflation data

Stocks closed mixed in London on Wednesday, as oil prices retreated and in light of strong UK economic growth figures, as well as inflation readings from the US and multiple European nations.

In London, the FTSE 100 index ended down 30.71 points, 0.3%, at 10,606.00. The FTSE 250 rose 165.18 points, 0.7%, to 24,539.99, and the AIM all-share firmed 1.24 points, 0.2%, at 787.40.

The Cboe UK 100 ended down 0.2% at 1,054.03, the Cboe UK 250 ended up 0.7% at 21,371.02, and the Cboe small companies advanced 0.4% at 19,116.61.

European markets were hit by a string of strong inflation readings. The CAC 40 in Paris ended down 0.9%, while the DAX 40 in Frankfurt closed 0.8% lower.

France's annual inflation rate hit its highest level since February 2024, while in Italy, inflation was at 4.2%, nearly a full percentage point above the rate recorded in August. In Germany, the annual consumer price inflation rate is expected to have risen to 3.3% in September from 2.9% in August and 2.8% in July.

Analysts now expect euro-wide inflation figures on Friday to be stronger than expected, putting further pressure on the European Central Bank to raise interest rates.

Mariana Monteiro, analyst at JPMorgan, thinks euro area headline HICP inflation may increase from 3.2% on-year in August to 3.9% on-year in September, higher than her original 3.6% on-year forecast.

In New York, the mood was brighter. The Dow Jones Industrial Average was up 0.1% at the time of the closing bell in London. The S&P 500 was 0.6% higher, and the Nasdaq Composite climbed 1.0%.

Figures in the US showed the economy grew faster-than-expected in the second quarter, while a closely watched inflation figure cooled more than projected.

The Bureau of Labor Statistics said US gross domestic product rose 2.2% on an annualised basis quarter-on-quarter, upwardly revised from an initially reported 1.5% increase.

Separate data showed the core personal consumption expenditures price index rose 3.0% on-year in August, the same pace of growth as in July. However, growth of 3.3% had been expected for August, according to consensus cited by FXStreet.

Core PCE inflation, which excludes food and energy prices, rose 0.2% on-month in August, below 0.3% consensus, and by 3.0% year-on-year, less than 3.3% consensus. The core PCE measure is the Federal Reserve's preferred inflation measure.

The figures saw the dollar fall as interest rate hike bets were pared back, while US bond yields eased slightly.

"Expectations of a Fed rate hike in October have dropped sharply. The market now sees a 37% chance of a hike from the Fed next month, down from a 70% chance last week," noted Kathleen Brooks, research director at XTB.

The euro rose to USD1.1359 from USD1.1335. Against the yen, the dollar was trading at JPY157.15, down from JPY157.59.

The yield on the US 10-year Treasury was quoted at 5.28%, trimmed from 5.29%. The yield on the US 30-year Treasury was quoted at 5.62%, down from 5.63%.

Ksenia Bushmeneva, economist at TD Economics, thinks that while the data paints a "slightly better picture on the inflation front", another Federal Reserve rate hike by the end of this year is the "most likely outcome".

"This week's employment report will help decide whether they go again in October or wait until December," Bushmeneva added.

Friday sees the nonfarm payrolls report. On Wednesday, figures from payroll processor ADP showed private employers added 90,000 jobs in September, up sharply from a downwardly revised 36,000 in August. The August figure was previously reported at 38,000.

In the UK, figures showed the UK economy grew at a stronger pace than expected in the second quarter of the year.

According to data from the Office for National Statistics, gross domestic product expanded 0.5% quarter-on-quarter in the three months to June 30, upwardly revised from a previously reported 0.4% increase.

It still represents a slight slowdown from a 0.6% climb in the first quarter.

Rob Wood, chief UK economist at Pantheon Macroeconomics, said the figures show that the economy rose at a "solid clip" in the quarter despite higher energy prices and borrowing costs.

"Business investment also rose by a hefty 1.8% quarter-to-quarter and was revised up fractionally, while government spending growth was cut. All told, the latest data show a healthy mix of growth, in our view," Wood said.

The pound was quoted at USD1.3276 on Wednesday, up from USD1.3210 at the same time on Tuesday. Against the euro, sterling firmed to EUR1.1688 from EUR1.1656.

Financial markets found some support in easing oil prices.

Brent oil was quoted at USD103.82 a barrel in London on Wednesday at the time of the equity market close, down from USD104.44 late on Tuesday.

David Morrison at Trade Nation noted that the decrease came alongside confirmation that the US and Iran are "communicating, albeit through mediators, with a view to ending hostilities. There was also some good news from Saudi Arabia as operations on the East-West pipeline have restarted."

The fact that the pipeline is open "provides some relief and has helped oil prices retreat," he added.

On the FTSE 100, SSE rose 2.2% ahead of Thursday's trading statement, while miner Antofagasta climbed 3.2% and Reckitt Benckiser 2.1%.

Gold was quoted at USD4,158.28 an ounce, little moved from USD4,157.46.

On the FTSE 250, Saga stormed 23% higher as it said it was on course to meet mid-term targets ahead of schedule after reporting first-half results ahead of expectations.

The Kent, England-based provider of products and services for people over 50 said underlying pretax profit soared 98% to £46.6 million from £23.5 million, and trading earnings before interest, tax, amortisation and depreciation rose by 35% to £90.9 million from £67.5 million, both being around 13% better than consensus.

As a result, the FTSE 250-listed company now expects to reach its targets of £100.0 million underlying pretax profit and a leverage ratio of below 2.0 times, before the original target date of January 2030.

Greggs rose 8.2% as it said trading has improved in recent weeks.

The Newcastle upon Tyne bakery and fast food chain said total sales rose 7.7% in the 13 weeks to September 26.

But it said it was considering closing four manufacturing sites, which may result in a total of 740 roles becoming redundant over a period of two and a half years, as part of a restructuring.

Elsewhere, Tullow Oil plunged 47% after disclosing that critical arbitration proceedings in Ghana had not ended in the company's favour.

The London-based oil and gas company said it was "disappointed" by the International Chamber of Commerce tribunal's decision.

The tribunal ruled that a USD196.5 million corporate income tax assessment does not breach Tullow's petroleum agreements with the Ghanaian government.

The biggest risers on the FTSE 100 were Antofagasta, up 116.00p at 3,766.00p, SSE, up 54.00p at 2,491.00p, Reckitt Benckiser, up 102.00p at 4,992.00p, National Grid, up 22.50p at 1,145.50p and Games Workshop Group, up 320.00p at 17,990.00p.

The biggest fallers on the FTSE 100 were Airtel Africa, down 10.40p at 300.60p, Barratt Redrow, down 8.20p at 332.20p, BT, down 4.00p at 192.00p, Hiscox, down 26.00p at 1,854.00p and Prudential, down 13.00p at 931.40p.

Thursday's local corporate calendar has trading statements from electricity generator SSE and retailer Topps Tiles.

Thursday's global economic calendar has a slew of manufacturing PMI readings, including the UK at 0930 BST. Eurozone unemployment figures will be released, as will US initial jobless claims data.

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