UK’s FTSE 100 ended lower on Wednesday, snapping its longest winning streak in about 29 months, as consumer inflation stayed in double-digit territory, boosting bets for one more rate hike from the Bank of England at its May monetary policy meet.
Data showed Britain now has Western Europe’s highest rate of consumer price inflation, with prices for food and non-alcoholic drinks 19.1% higher in March than a year earlier - the biggest such increase since August 1977.
“They (BoE) will come out as hawkish, but when push comes to shove, they probably will be more sensitive to recessionary worries than inflationary worries,” said James Baxter, founder of Tideway Wealth.
Traders now see a 98.2% probability of a 25-basis-point hike in May, with interest rates peaking in November.
The blue-chip FTSE 100 closed 0.1% down, while the mid-cap FTSE 250 fell 0.5%.
However bucking the trend, food, beverages and tobacco sector advanced 1.7% on the heels of sticky inflation numbers.
“Companies that can put inflation through to prices and not be held ransom is going to do well in a rising inflationary market,” Baxter added.
Energy stocks slid 0.9% and were the biggest drag on the commodity-heavy FTSE 100, tracking weakness in crude oil prices.
The FTSE 100 clocked its longest winning streak since December 2020 on Tuesday, but signs of sticky inflation in a stagnating economy have dented investor sentiment.
Among stocks, Antofagasta said its March quarter copper output fell from the previous three months due to lower water availability and reduced ore grades, sending the miner’s shares 1.4% lower.
Fellow miner Glencore shed 0.7% after it told Teck Resources shareholders it is willing to sweeten its takeover offer.
The industrial miners sector housing Antofagasta and Glencore fell 1%.
Liontrust Asset Management Plc slid 6.9% as the asset manager reported significant quarterly net outflows.
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