The rally in London's stock prices came to a halt at the close on Wednesday, as a continued acceleration in UK inflation gave investors a spook.
Consumer prices in the UK shot up in April, setting a record pace of inflation, as pressure continues to mount on the Bank of England to rein in spiralling costs.
Annually, consumer prices jumped 9.0% in April, accelerating from March's 7.0% rise, but slightly behind market expectations of 9.1%. It was, however, the fastest measured inflation rate since records began in 1989, and the ONS estimates it was the highest since 1982.
‘With the spectre of stagflation looming, there are expectations that the bank may be forced to take more of a softly-softly approach to rising interest rates further with the risks that a very aggressive policy risks tipping the UK into a deeper downturn,’ Hargreaves Lansdown analyst Susannah Streeter commented.
The FTSE 100 index ended down 80.26 points, or 1.1%, at 7,438.09 on Wednesday. The mid-cap FTSE 250 index closed down 116.15 points, or 0.6%, at 19,949.44. The AIM All-Share index ended down 8.77 points, or 0.9%, at 952.95.
The Cboe UK 100 index lost 0.9% at 742.49. The Cboe 250 fell 0.7% at 17,630.26, and the Cboe Small Companies dropped 0.1% at 14,763.20.
In Paris, the CAC 40 stock index slumped 1.2% and the DAX 40 in Frankfurt closed 1.3% lower.
The pound was quoted at $1.2402 late Wednesday, down from $1.2465 at the London equities close on Tuesday. The euro was priced at $1.0497, down from $1.0534.
The eurozone faces rampant inflationary pressures of its own.
Annual inflation in the eurozone remained steady, but robust, in April. Eurostat's harmonised index of consumer prices in the eurozone rose 7.4% in April on an annual basis, unchanged from the annual rise in March.
Against the yen, the dollar was trading at JP¥128.21 late Wednesday UK time, down from JP¥129.29 on Tuesday.
Stocks in New York were sharply lower. The Dow Jones Industrial Average was down 2.3% at the time of the closing bell in London. The S&P 500 was 2.8% lower and the Nasdaq Composite shed 3.1%.
In London, British Land closed up 2.5%, among the best performing large caps. The landlord posted a swing to profit in its recent financial year, as the commercial property market recovered from the hit of the pandemic.
At the conclusion of the year that ended March 31, the London-based property development and investment company said EPRA net tangible assets per share stood at 727 pence, up 12% year-on-year from 648p.
Net asset value per share grew 13% to 722p from 641p, as the value of its portfolio rose 6.8% to £6.73 billion.
British Land swung to a pretax profit of £958 million from a loss of £1.05 billion the year before. Revenue fell by 12% to £410 million from £468 million.
At the other end of the FTSE 100, Experian shed 4.3% as it expects growth rates to moderate.
Pretax profit surged 34% in its financial year ended March 31 to $1.45 billion from $1.08 billion a year ago. Revenue grew 17% to $6.29 billion from $5.37 billion.
The company declared a second interim dividend of 35.75 US cents per share, up 10% from 32.5 cents a year ago. As a result, it will pay a total dividend of 51.75 cents per share for the financial year, up from 47.00 cents a year ago.
Organic revenue grew by 12%. For the year ahead, Experian expects organic revenue growth to slow to 7% to 9% with modest margin improvement at constant exchange rates.
Premier Foods surged 10%. The Mr Kipling cakes maker was the best FTSE 250 performer.
It recorded a pretax profit of £102.6 million in the year ended April 2, down 16% compared to £122.8 million the year before.
Annual adjusted pretax profit amounted to £128.5 million, up 38% from £115.3 million. Further, Adjusted pretax profit topped guidance of around £125 million.
Darktrace slumped 15% after a potentially worrying news report from the Daily Telegraph.
The UK newspaper reported the cybersecurity firm's strategy chief Nicole Eagan has been named as ‘part of a clique’ in a fraud ruling at the UK High Court.
The Telegraph reported Eagan was marketing chief at software company Autonomy, when it was sold to Hewlett-Packard in 2011.
Autonomy Co-Founder Mike Lynch has been accused of deliberately overstating the value of his business before it was acquired by the American technology firm. Lynch also co-founded Darktrace.
High Court judge Robert Hildyard found that Autonomy's management used accounting ‘levers’ to overstate the value of the business. He said Darktrace's Eagan was part of the ‘clique’ responsible for this.
Elsewhere in London, the retail sector struggled, amid fears of consumer spending as inflationary pressures increase. Athleisure firm JD Sports lost 5.4%, while online-only retailers Asos and boohoo fell 5.1% and 5.9%.
JD Williams and Jacamo owner N Brown bucked the trend, jumping 25%. Its pretax profit in the year ended February 28 doubled to £19.2 million from £9.2 million.
However, revenue declined 1.8% to £715.7 million from £728.8 million.
Brent oil was quoted at $109.83 a barrel late Wednesday, down sharply from $115.10 late Tuesday. Gold stood at $1,817.50 an ounce, lower against $1,820.68.
Thursday's economic calendar has the latest US initial jobless claims number at 1330 BST.
The local corporate calendar has annual results from National Grid and postal service operator Royal Mail. Budget carrier easyJet posts interim results, while mixers maker Fevertree reports a trading statement.
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