London stocks inched lower on Wednesday, after stronger-than-expected domestic inflation data prompted investors to scale back bets for an August interest rate cut by the Bank of England.
The blue-chip FTSE 100 index was down 0.1%, as of 0735 GMT, falling for a third session. The mid-cap FTSE 250 dipped 0.2%.
British consumer prices data showed that inflation held at 2%, defying forecasts of a slight fall, adding to uncertainty around when the BoE would start its easing cycle.
The odds of a rate cut in August dropped to 33%, from 49% before the data release.
British stocks finish higher on precious miners boost
Yields on the 2-year government bond edged higher, while the pound strengthened against the dollar, further dampening sentiment.
“Investors wanted to see a figure below target to give them some cushion, and (inflation) coming in at target remains unconvincing,” said Julian Howard, chief multi-asset investment strategist at GAM Investments.
“To actually cut rates, the BoE needs that additional level of certainty. There were some elements of the report which were quite disappointing, like the service inflation aspect.”
Industrial metals miners weighed on the market with a 0.9% fall, dragged lower by Antofagasta, down 3.8%, after the Chilean miner said it expects full-year copper output at the lower end of its guidance range.
Losses were limited by the automobile and parts sector that gained 1.1%, rebounding after three sessions of losses. Precious metal miners rose 0.7% after gold prices hit a record high.
Legal & General Group fell 1.5%, after RBC downgraded the stock to “Sector perform” from “Outperform”. It pulled down life insurers, that dipped 0.8%.
Genus fell 5.2% to the bottom of the FTSE 250 after the animal genetics firm forecast adjusted pre-tax profit in line with market view for 2024, and 2025 adjusted operating profit to be lower than its earlier forecast.
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