LONDON: UK’s FTSE 100 ended lower on Wednesday as measures unveiled by finance minister Rishi Sunak to ease the worst cost-of-living squeeze in decades fell short of some investors’ expectations.
After earlier rising as much as 0.6%, the blue-chip index closed down 0.2% on losses in financials and consumer staple stocks such as Reckitt Benckiser and Unilever.
Announcing the half-yearly budget update in parliament, Sunak said he was increasing the threshold at which workers start to pay national insurance contributions by 3,000 pounds ($3,958.50) this year, and cut fuel duty by 5 pence per litre.
“Today’s Spring Statement from the Chancellor of the Exchequer did go some way to mitigating some of this (cost-of-living squeeze). However, the measures will do little to ameliorate the bulk of what’s coming our way,” said Michael Hewson, chief market analyst at CMC Markets.
The market was also weighed down by concerns over the Ukraine conflict, surging inflation and hawkish comments from U.S. Federal Reserve officials.
Data earlier in the day showed British inflation shot up faster than expected in February to hit a new 30-year high of 6.2%, beating estimates of a 5.9% rise in a Reuters poll.
The Bank of England last week hiked interest rates for a third time in a row to combat surging inflation, but raised doubts about further hikes as the Ukraine crisis increases the risk of an economic downturn.
Capping the losses on Wednesday, energy majors BP and Shell rose more than 3% each as oil prices soared on a disruption to Russian and Kazakh crude exports domestically focussed midcap index dropped 0.5%, with homebuilders, travel and retail stocks among the biggest decliners.
“General retailers are obviously feeling the pinch due to the cost of living crisis that they’re going to be at the sharp end of ... really, with the exception of mining and oil and gas sector, everything is falling,” said David Madden, market analyst at Equiti Capital.
TP ICAP jumped 12.5% after U.S. hedge fund Phase 2 Partners asked the world’s largest inter-dealer broker to explore a sale.