Lunchtime market roundup: Stocks down ahead of US CPI data

Stock prices in London were mostly lower at Wednesday midday ahead of US consumer price index inflation data, after the conflict between the US and Iran heated up.

The FTSE 100 index was down 45.12 points, 0.4%, at 10,182.21. The FTSE 250 was down 14.29 points, 0.1%, at 22,823.67, and the AIM all-share was down 11.02 points, 1.4%, at 769.79.

The Cboe UK 100 was down 0.6% at 1,011.39, the Cboe UK 250 was down 0.3% at 19,663.38, and the Cboe small companies was slightly higher at 18,574.84.

In European equities on Wednesday, the CAC 40 in Paris was down 0.3%, while the DAX 40 in Frankfurt was 0.8% lower.

The German Institute for Economic Research, DIW, on Wednesday halved its growth forecast for Germany’s economy in 2026 to 0.5%, citing an energy price shock.

Sterling was at $1.3393 at midday on Wednesday, up from $1.3381 at the London equities close on Tuesday. Against the euro, sterling rose to €1.1588 from €1.1581.

The euro was a little higher at $1.1552 from $1.1551. Against the yen, the dollar edged up to JP¥160.47 from JP¥160.29.

‘Yesterday’s selloff on Wall Street didn’t turn out to be too disastrous, with the Nasdaq clawing back much of its losses by the end of the session. That has helped to avoid contagion on the markets, albeit investors are slightly nervous about the heightened volatility this week,’ said AJ Bell analyst Dan Coatsworth.

‘There are many reasons why markets are wobbly. The prospect of interest rates staying higher for longer, inflation fears, frustration that the Iran war is still going on and potential liquidation events if investors are trimming holdings to raise cash to back some mega IPOs on the horizon.’

Investors are also focused on US inflation data, due at 1330 BST.

Rising inflationary pressures have totally shattered expectations of a US Federal Reserve interest rate cut this year, Swissquote analyst Ipek Ozkardeskaya said. ‘Fed funds futures now price the probability of a Fed hike as soon as October at roughly a coin flip,’ she added.

A stronger-than-expected set of figures this afternoon could cause a similar reaction to Friday’s US jobs data, sending bond yields higher and stocks lower. ‘The moves could be just as sharp, depending on the data. The market is so crowded with bulls right now that even a small fear could turn into a nightmare,’ Ozkardeskaya said.

‘Figures in line with expectations, or ideally softer than expected, on the other hand, could help avoid another risk selloff, but will hardly reassure those who watch the news beyond technology and AI regarding what’s to come.’

Meanwhile, Iran attacked American bases in Jordan and Bahrain, warning its Gulf neighbours that they had a ‘responsibility’ to stop the US and Israel from using their territory to strike the Islamic republic.

The strikes came after the US carried out attacks on Iran in response to the downing of an American helicopter, straining a ceasefire that took effect in April.

Brent crude was trading higher at $91.04 a barrel at midday on Wednesday from $90.90 on Tuesday.

Stocks in New York were called lower. The Dow Jones Industrial Average was called down 0.7%, the S&P 500 index 0.7% lower, and the Nasdaq Composite down 1.1%.

The yield on the US 10-year Treasury was quoted at 4.53% on Wednesday at midday, narrowed from 4.56% on Tuesday. The yield on the US 30-year Treasury slimmed a little to 5.01% from 5.03%.

Back in London, grocery retailers were up, as Tesco climbed 1.4% and J Sainsbury rose 0.9%.

Miners were lower as the price of gold fell. Endeavour Mining was down 2.3%, Glencore lost 1.8% and Antofagasta retreated 1.2%.

Gold was lower at $4,172.19 an ounce at noon on Wednesday from $4,270.69 late Tuesday.

On the FTSE 250 index, Workspace Group fell 3.2% as it swung to a pretax loss.

The London-based flexible workspace provider swung to a pretax loss of £120.5 million in the financial year that ended March 31 from a profit of £5.4 million the prior year.

Revenue decreased by 2.1% to £181.4 million, as net rental income slips 7.1% to £113.4 million. It also booked a £159.2 million loss in fair value of its property portfolio, widened from a £55.9 million loss a year earlier.

Chief Executive Charlie Green said: ‘The past year has been one of transition, both operationally and in our leadership, and that process continues as we reshape the business.’

WH Smith sank 16% as it said it plans to raise further funds as it lowered its full-year profit guidance once again.

The company now expects to deliver headline pretax profit before non-underlying items of between £75 million and £90 million for the financial year ending August 31, down from £108 million in the year prior.

It is the second outlook cut in three months. In April, WH Smith reduced guidance to between £90 million and £105 million from £100 million and £115 million previously.

The company announced a capital raise of up to 26 million new shares, worth around £104 million.

AJ Bell analyst Dan Coatsworth said: ‘WH Smith’s decision to go all-in on the travel sector last year was unfortunately timed given what’s happened in the Middle East. There isn’t a lot the company can do apart from shore up its finances in the hope a cash injection will help it battle through difficult market conditions.’

Among small caps, shares in EnQuest surged 18%.

The oil and gas producer said it has agreed to buy interests in four offshore production-sharing contracts in Malaysia via a reverse takeover, which would see its production more than double in size.

The firm’s local subsidiary will enter three separate farm-out agreements with Petronas Carigali Sdn Bhd and E&P Malaysia Venture Sdn Bhd.

The maximum total consideration is $833 million, of which $554 million is payable on completion, which is expected on December 31.

Production for the enlarged group would rise to over 100,000 barrels of oil equivalent per day, more than double 2025 production.

Defence Holdings shares climbed 11% after it said it has partnered with Austin, Texas-based cloud technology company Oracle Corp.

Oracle will serve as the ‘hyperscale cloud partner’ to Defence’s accelerator programme for defence and security technology firms.

Still to come on Wednesday’s economic calendar is an interest rate decision in Canada, plus inflation data in the US.

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