- FTSE 100 closes 136 points lower
- US stocks under pressure on debt ceiling worries
- UK inflation fell to 8.7% in April, less than expected
- M&S advances after strong results
4.40pm: FTSE 100 bleeds on growth outlook
At the close, the UK's premier index had dropped by 136 points, or 1.8%, to finish at 7,627 points.
"The modest declines of the last two days have accelerated today, with sharp falls across the board, as sentiment continues to deteriorate, raising the question as to whether this is the beginning of a market puke that gets US lawmakers attention and generates the urgency required to preserve the fiscal integrity of the US government," CMC Markets' Michael Hewson wrote.
"We’ve seen weakness across the board with heavy falls in the DAX, FTSE100 and CAC 40 as European markets undergo their biggest one-day loss since March, with the FTSE100 falling below its April low and to its lowest levels in six weeks."
3.50pm: Smaller is beautiful
Equity strategists at Barclays believe that investors looking for opportunities in the UK stock market could do worse than looking beyond the FTSE 100 index.
They noted that the broader FTSE 250 index is down over 20% from its 2021 peak, compared to the FTSE 100 which hit a record high in the first quarter of this year.
Barclays thinks this underperformance is overdone and says smaller cap firms offer attractive long-term optionality.
"The divergence in performance within the equity market has left defensive equities looking historically expensive,” the Barclays strategists noted.
They highlighted a number of their higher conviction overweight-rated stocks, supported by organic growth narratives and/or M&A, which include OSB Group, Harbour Energy, Howden Joinery, WH Smith, Tate & Lyle, Coca Cola HBC and IMI.
3.30pm: UK rates to peak higher
Credit Suisse now expects that the Bank of England will raise rates to 5% in August, up from a previous peak of 4.75% after April inflation data released earlier Wednesday showed a smaller decline than economists had forecast, Reuters has reported.
"But,” Credit Suisse's head of UK economics, Sonali Punhani said,”we expect the BoE to hike rates to less than market pricing, which has peak rates at 5.4%.
She added: ”Our expectation is for headline inflation to continue to fall and for some of the strength in core inflation seen today to reverse."
Meanwhile, Japanese bank Nomura said it now expected the Bank of England to raise its main interest rate three more times to 5.25% by September, after the release of higher-than-expected inflation data. At the start of this month, Nomura had forecast the BoE would only raise interest rates as high as 4.75%.
The UK consumer price index rose by 8.7% in annual terms in April, down from 10.1% in March and a peak of 11.1% last October, but higher than economists had expected.
3.10pm: Charged up
The BBC has reported that the UK is set to win a battle with Spain for a multi-billion-pound electric car battery plant for Jaguar Land Rover (JLR).
The boss of JLR-owner Tata is expected to fly to London next week to finalise the deal for the plant to be based at Bridgewater in Somerset, which could see up to 9,000 jobs created.
Sources familiar with the matter say that although the deal has yet to be signed, engagement has moved from negotiations to drafting and choreography of how the landmark agreement will be presented, the BBC added.
Tata was considering another site in Spain and the expected decision to choose Somerset will be presented as a major achievement for the UK government which has been criticised for lacking a clear electric car battery strategy and falling behind the US and EU in attracting investment.
India's Tata has extensive steel interests in the UK including the Port Talbot plant in South Wales and the government will also offer around £300mln to subsidise, upgrade, and decarbonise those operations, the BBC report said.
2.50pm: Caution all round
The FTSE 100 dropped to a fresh session low below the 7,600 level as US stock indexes started lower amid worries that US political leaders still haven’t reached an agreement on the country’s debt ceiling ahead of a perceived June 1 deadline.
Around 20 minutes after the opening bell in New York, the Dow Jones Industrials Average had shed 176 points, or 0.5% at 32,879, while the S&P 500 and the Nasdaq Composite both dropped 0.6%, extending Tuesday's big falls.
City Index and FOREX.com market analyst Fawad Razaqzada noted that risk appetite had soured even further on Wednesday, with a sharp sell-off in European stock markets mirrored across the Atlantic in the US.
“Sentiment has been hurt because of various reasons, but top of the list are concerns about the health of the Chinese and European economies and fears about the US debt ceiling,” Razaqzada said.
“You also have a Fed still keen to tighten its policy further, while inflation in some parts of the world continues to remain very high, causing all sorts of problems and hurting the pockets of consumers. Businesses are not doing very well either, especially in the manufacturing sector, as we found out on Tuesday with those weak PMI numbers,” he added.
2.30pm: Toxic mail
The Communication Workers Union (CWU) has suspended a ballot of International Distributions Services PLC's Royal Mail workers on a deal aimed at ending a long-running dispute over pay, jobs and conditions, according to news reports.
The union said it had become clear that the environment it was attempting to deliver the agreement in remained "toxic".
In a message to members, general secretary Dave Ward and deputy general secretary Andy Furey said the company had not stopped "attacks" against union members in the workplace.
They said the proposed agreement, set against the "most brutal dispute in our history, a self-inflicted but very real financial crisis for the company and jointly agreed need for change", would secure the future of the company, jobs, and the service.
They continued: "Unless Royal Mail Group openly accept that their culture of imposition and the 'our business to run' mantra must go – then the integrity of the negotiators agreement will be irreparably damaged."
The union's postal executive said it had decided to suspend the vote on the proposed national agreement until moves were made to restore quality of service and "genuinely review all failed revisions".
2.15pm: Divis up
Dividends from the world’s largest companies reached a record in the first quarter of this year, as banks and oil companies led the way in rewarding shareholders.
Some US$326.7bn was paid out by 1,200 companies in the first three months of the year, according to asset manager Janus Henderson, a rise of 12% year on year.
Volkswagen Group, Microsoft Corporation, ExxonMobil Corporation and Apple Inc all featured among the ten highest dividend payers, while Chevron Corporation, Ford Motor Company and JPMorgan Chase & Co sat in the top twenty.
“Banks made the largest contribution to growth in the first quarter thanks to their large weighting in the index and healthy results on the back of widening interest margins,” the report said. “Oil producers came a close second.”
1.30pm: Some of London's biggest risers
CT Property Trust - up 28% to 81.4p: Shares soar after it agreed to be bought in an all-paper deal tabled by LondonMetric valuing it at £198.6 million – a 34% premium to Tuesday’s closing price.
Simec Atlantis - up 11% to 1.16p: Shares climbed as it confirmed its Uskmouth site in Wales will be used for one of the UK’s largest battery storage (BESS) projects. In a statement, SAE said a subsidiary of Quinbrook Infrastructure Partners gave formal notice yesterday to exercise an option to lease land at Uskmouth for a BESS project with 230MW/460MWh capacity.
Active Energy - up 16% to 5.16p: Shares jumped after the firm that Player Design Inc (PDI) has obtained the necessary permit for the construction and operation of a CoalSwitch manufacturing facility in the US.
Marks and Spencer- up 12% to 184p: Shares in the FTSE 250-listed retailer Marks and Spencer shot higher after it reported profits growth in the year to 1 April 2023. Pre-tax profits in the year jumped 21% to £475mln while revenues grew 9.9% to £11.9bn.
1.00pm: US futures point to a weak start
The FTSE 100 remains close to session lows, down 138.88 points at 7,624.07, ahead of the open in New York.
Wall Street is likely to open slightly lower as the market prepares for the minutes from the latest meeting of the Federal Open Market Committee (FOMC), with still no resolution to the looming debt ceiling deadline on June 1.
Futures for the Dow Jones Industrial Average (DJIA) fell 0.3% in Wednesday pre-market trading, while those for the broader S&P 500 index slid 0.4% and contracts for the Nasdaq-100 were also down 0.4%.
The main US indexes closer lower on Tuesday as investors grew increasingly nervous over a lack of concrete updates regarding the debt ceiling talks between President Biden and House Speaker Kevin McCarthy. The DJIA closed 0.7% down at 33,056, the Nasdaq Composite fell 1.3% to 12,560 and the S&P 500 shed 1.1% to 4,146. The small-cap Russell 2000 index declined 0.2% to 1,792.
“Debt ceiling talks in the US led to some progress, but no deal was reached yesterday,” commented Swissquote Bank senior analyst Ipek Ozkardeskaya.
“The two sides are apparently close in some areas – they both want to avoid a default – but the Republicans need ‘some movement or some fundamental change’ on the White House deck. Republicans want to slash spending over as long as possible, while Democrats offer little cuts over a couple of years. But the time is ticking louder as the US Treasury’s General Account goes south at a decent pace, and the US will soon run out of money to pay its bills,” she added.
While there will be no escaping the ongoing US debt ceiling drama, Marc Ostwald, strategist at ADM Investor Services International, noted that the schedule of data and events has more to it today – including the latest minutes from the Federal Reserve’s rate-setting committee.
“As markets ponder the non-committal 'pause' signal at May's FOMC meeting, the minutes of that meeting to be published on Wednesday may offer some insight into whether a pause may be more a case of skipping a rate hike in June rather than signalling a potential peak, which again questions the wisdom of markets still discounting multiple rate cuts by year-end, despite the unwind witnessed in the past fortnight," Ostwald said.
12.35pm: CMA finds banks provisionally guilty of breaking competition rules
The UK’s competition watchdog has provisionally found that five major banks broke competition law by unlawfully exchanging sensitive information about British government bond trading in online chatrooms.
In an investigation, the CMA found that the banks – Citi, Deutsche Bank, HSBC, Morgan Stanley (NYSE:MS) and Royal Bank of Canada (TSX:RY) – shared competitively sensitive information on pricing and aspects of their trading strategies through multiple one-to-one online chats.
These discussions could have prevented taxpayers, savers and other financial institutions from getting the full benefit of competition for these products, according to the CMA.
In the aftermath of the global financial crisis, and at varying times between 2009 and 2013, a small number of traders working at the banks exchanged information in chatrooms on Bloomberg terminals relating to the buying and selling of UK government bonds, commonly referred to as gilts, according to the CMA.
12.25pm: Interest rates to rise after sticky inflation data
Stubborn inflation is proving a thorn in the side of the Bank of England with markets now pricing in interest rates above 5% by the end of the year.
Susannah Streeter, head of money and markets, Hargreaves Lansdown said: "’Inflation has soared up like an eagle and taken a ferocious bite out of our standard of living, but it’s coming down at a snail’s pace and leaving a sticky trail of prices in its wake.”
Consumer price inflation rose 8.7% in April, down from 10.1% in March, but well above City expectations for growth of 8.2%. Worse, core inflation, stripping out (excluding energy, food, alcohol and tobacco) actually rose by 6.8% in April, from 6.2% in March, the highest rate since March 1992.
Samuel Tombs at Pantheon Macroeconomics thinks a further increase in bank rate to 4.75% at the Monetary Policy Committee’s (MPC) June meeting from 4.50% “now is firmly on the table.”
He thinks the marginal drop in food inflation to 19% from 19.1% will worry the MPC given the “sensitivity of households’ inflation expectations to food price changes.”
ING’s James Smith agreed, he feels food prices are now the Bank of England’s (BoE) “biggest headache.”
He explained we are now in an unusual situation where food inflation – at around 19% YoY – has diverged noticeably from the relevant producer output price measure.
The latter has undoubtedly peaked on a year-on-year basis, he said.
He estimates that assuming the recent increases in output prices continue for the rest of year, "food inflation should be back to the 6% area or below by Christmas."
“In practice, we doubt the deceleration will be that aggressive, but there are nevertheless good reasons to think that food will be contributing less to overall inflation by the end of the year,” he thinks.
Kallum Pickering at Berenberg expressed concern at the jump in the core rate. He thinks this will concern policymakers more than the slower-than-expected fall in the headline rate.
Nick Rees, FX market analyst at Monex Europe explained the rise appears to have been fuelled by stronger-than-expected price growth in parts of the services sector, notably, recreation and culture, but also communication and transport.
“The uptick in services inflation suggests that at least some firms in the sector are passing on these increased wage costs, which will set alarm bells ringing amongst policymakers concerned with embedded inflationary pressure and the potential for a wage price spiral”, he warned.
One brighter note was highlighted by Berenberg’s Pickering. He pointed out that in contrast to the big upside surprise to consumer prices, producer price pressures eased by more than expected in April.
He noted “if history is any guide, the big drop in producer price pressures should lead consumer prices for goods lower within three to six months.”
There was broad agreement that rates would rise further but there were question marks as to whether they would peak as high as markets are now pricing in.
Berenberg’s Pickering expects a 25 basis point rate rise to 4.75% at the June meeting with a 30% probability of further hike in August.
“Looking further out, we now expect just one cut in Q4, lifting the end-2023 rate to 4.5% from 4% previously. We keep our end-2024 call for a 3% rate unchanged – we now expect six 25bp cuts next year instead of four.”
He noted financial markets now expect the BoE to hike by a full 25bp in June, August and September, with a further 10bp priced in for November to a peak bank rate of 5.35%.
However, he feels the move is “too big.”
ING’s James Smith agreed. “If nothing else, market pricing, which on the back of this data is now pricing more than three additional hikes from the BoE, looks too aggressive.”
Rees at Monex thinks there remains a significant chance that the upside beat seen today represents falls in inflation that have been “postponed rather than absent entirely.”
“Energy and food prices should continue to fall mechanically over coming months, as the decline in commodities prices continue to filter through to consumer inflation,” he said.
11.35am: IMF calls on UK to scrap stamp duty
The International Monetary Fund has called on Chancellor Jeremy Hunt to scrap stamp duty as it warned the tax was clogging up the housing market and stopping people switching jobs.
The Fund said the Chancellor should consider a move away from “transaction taxes which constrain housing and labour mobility.”
Instead of a property sales tax the Fund suggested adopting a new levy based on the value of a property.
The call came after the Washington-based said it no longer predicted a recession in the UK and increased its forecasts for economic growth.
Meanwhile, the FTSE 100 continues to languish close to session lows, now down 136 points.
11.00am: Currys faces Norwegian competition probe
Currys PLC (LSE:CURY)’s Norwegian business is facing a probe by the European Economic Area.
The EFTA Surveillance Authority (ESA) is investigating whether Elkjøp, Currys' Norwegian arm, violated rules while securing exclusive access to some electronic goods.
"The investigation will also look into arrangements where specific competitors have been denied access to certain electronic goods," ESA said in a statement.
Currys pointed out: “The decision to open formal proceedings is of a procedural nature and does not mean or indicate any decision that Elkjøp has infringed the competition rules in Norway.”
“We take our competition law responsibilities seriously. Elkjøp does not believe it has infringed any competition rules and will continue its constructive dialogue and close cooperation with ESA,” Currys said in a statement.
Elkjøp is a leading retailer of electronic goods in the Nordic countries, with more than 400 stores across Norway, Sweden, Denmark and Finland, in addition to franchise operations in Greenland, Iceland and the Faroe Islands.
Shares fell 0.6%.
10.30am: Growth in house prices slows in March
Average UK house prices increased by 4.1% in the 12 months to March 2023, down from 5.8% in February 2023, figures from the Office for National Statistics showed.
The average UK house price was £285,000 in March 2023, which is £11,000 higher than 12 months ago, but £8,000 below the recent peak in November 2022, the ONS reported.
Average house prices increased over the 12 months to £304,000 (4.1%) in England, £214,000 in Wales (4.8%), £185,000 in Scotland (3.0%) and £172,000 in Northern Ireland (5.0%).
The South West saw the highest annual percentage change of all English regions in the 12 months to March 2023 (5.4%), while London saw the lowest (1.5%).
10.10am: BT firms on Ofcom green light
BT Group PLC (LSE:BT.A) is another of that rate breed today, a FTSE 100 riser.
The telco’s shares edged 0.8% higher as its infrastructure arm, Openreach, was been given the green light from the telecoms regulator to go ahead with a reduction of its wholesale costs to encourage broadband providers like Sky, TalkTalk and Vodafone to move to high-speed full-fibre broadband.
Ofcom today said it had decided not to prevent the introduction of the new pricing offer for full-fibre broadband, known as ‘Equinox 2’.
“We conclude that the conditional terms in the offer do not create a potential barrier to using altnets,” the regulator said.
“Our conclusion is therefore that Equinox 2 is consistent with network-based competition.”
9.38am: Housebuilders knocked by rising rate expectations
The sticky inflation figures have led to markets pricing in expectations of further increases in borrowing costs sending rate-sensitive stocks such as housebuilders lower.
Prospects of further increases in mortgage rates could dampen an already fragile housing market, investors fear.
Russ Mould at AJ Bell explained: "Bond markets took one look at the latest inflation figures and took the view that interest rates are going to keep going up."
"The UK 10-year Gilt rate jumped to 4.3% on the news, the highest level since last October and significantly ahead of the 3% level seen only three months ago.”
“Sticky inflationary pressures, particularly in food, will strengthen the argument for the Bank of England to raise rates again," he added.
Markets are now pricing in a peak of UK interest rates of 5.35% in December before falling back.
Oof
After today’s higher-than-expected inflation, traders in financial markets are now betting that UK interest rates will rise well above 5% later this year, perhaps close to 5.5%.
Not long ago they thought they’d peak BELOW 5%. pic.twitter.com/tjNPX9sPeO
— Ed Conway (@EdConwaySky) May 24, 2023
Top of the FTSE 100 fallers are Persimmon PLC and Taylor Wimpey PLC (LSE:TW.) down 4.5% and 4.4% respectively with Barratt Developments not far behind, down 3.9%.
9.15am: Thermal standout performer in strong SSE results
Not many risers in the FTSE 100 but one of those is SSE PLC (LSE:SSE) which produced a strong set of results today sending shares up 1.6%.
Peel Hunt said adjusted EPS was 166.0p, compared with the latest guidance of “at least 160p”, and well ahead of its forecast of 150.1p.
“The result demonstrated the strength of the group’s balanced and integrated renewables, thermal and regulated networks businesses,” the broker said.
Peel Hunt said the Thermal division was the standout performer, with adjusted operating profit of £1,244mln, way ahead of the £726mln forecast.
Renewables' adjusted operating profit performed slightly less well at £580mln, compared with its forecast of £793mln, resulting from a less windy year compared to expectations.
But group adjusted operating profit of £2,529.2mln was 11% ahead of its forecast of £2,286.1mln.
The rebased dividend of 60p was in line with its expectations.
Meanwhile the FTSE 100 stands 107 points lower at 7,655, above an earlier low of 7,640.86.
8.55am: M&S soars as results smash expectations
The FTSE 100 remains in the doldrums spooked by the failure to break the deadlock in US debt ceiling with stubborn inflation figures not helping the mood.
The lead index is now down 113 points, or 1.5%, to 7,650.
Victoria Scholar at interactive investor said: “The FTSE 100 has opened lower amid a broader sell-off across global markets driven by concerns about the looming US debt ceiling deadline after Wall Street closed in the red.”
But Marks & Spencer continues to buck the trend after its forecasting beating results.
M&S’s house broker Shore Capital said the retailer “smashed our expectations,” with pre-tax profit of £482mlm compared to its £431mln forecast driven “by a major beat on Food, with strong progress in Clothing and Home and International.”
As a result, the broker has upgraded its pre-tax profit estimate for financial year 2024 by 14% to £475mln.
ShoreCap feels M&S is “in good shape with more to come, including a modest dividend in FY24.”
It reckons the current share price is “a very attractive entry point.”
Shares sit top of the FTSE 250 risers, up 8.4%.
8.15am: Stubborn inflation sets scene for further rate hikes
The FTSE 100 tumbled as inflation fell, but far less than the City had hoped, prompting concerns of further interest rate increases.
At 8.15am, London’s lead index was down 77.42 points at 7,685.53, down 1.0%, while the FTSE 250 slipped to 19,013.22, down 195.09 points, or 1.02%.
Susannah Streeter at Hargreaves Lansdown said: “Inflation has soared up like an eagle and taken a ferocious bite out of our standard of living, but it’s coming down at a snail’s pace and leaving a sticky trail of prices in its wake.”
Consumer price inflation eased to 8.7% in April from 10.1% in March but below expectations for a fall to 8.2%.
Energy prices dropped but food prices remained close to record highs.
Streeter pointed out “more worryingly, core inflation, which strips out volatile food and energy prices crept back upwards to 6.8%.”
“It shows that the price spiral is still proving to be a stubborn beast to conquer for the Bank of England.”
“A further increase in Bank Rate to 4.75% at the MPC’s next meeting on June 22, from 4.50%, now is firmly on the table,” said Samuel Tombs at Pantheon Macroeconomics.
Talk of further rate hikes saw the pound rise 0.2% to $1.2438 against the US dollar.
Marks & Spencer Group PLC soared 6.7% after announcing plans to restore its dividend alongside profit growth in the year April 1.
Pre-tax profits in the year jumped 21% to £475mln, while revenues grew 9.9% to £11.9bn, the retailer said in a statement.
"One year in, our strategy to reshape M&S for growth has driven sustained trading momentum, with both businesses continuing to grow sales and market share,” said M&S chief executive Stuart Machin.
Richard Hunter, head of markets at interactive investor, said: “M&S continues with its transformation apace, boosted not only by its traditionally strong Food business but also by strengthening signs of a revitalised Clothing & Home unit.”
SSE PLC (LSE:SSE) firmed 2% in early exchanges as it announced increased investment plans alongside soaring profits.
In the year to March 31 the FTSE 100-listed generator reported pre-tax profit of £2.18bn, up 89% from £1.16bn the year prior while EPS of 166p, jumped 75% from 94.8p a year ago.
The company has increased its investment plans as part of the "NZAP Plus" five-year strategic plan to 2027 with £18.0bn of capital investment planned, an increase of more than 40% on the previous plan.
Aviva PLC (LSE:AV.) slipped 1.8% despite what it called an “encouraging” start to the year.
Amanda Blanc, group chief executive officer, said: “We have delivered an encouraging start to 2023 and continue to build clear trading momentum.
“New business volumes are good, despite persistent economic uncertainty, and we delivered another quarter of strong growth across our diversified business.”
But the insurer did report wealth net flows of £2.3bn were 15% lower year-on-year due to the impact of the challenging market volatility on Platform.
7.55am: SSE beefs up investment plans, profit soars
SSE PLC (LSE:SSE) beefed up investment plans as it reported soaring profits but geared shareholders to lower dividends going forward.
In the year to March 31, 2023, the FTSE 100-listed generator reported pre-tax profit of £2.18bn, up 89% from £1.16bn the year prior while EPS of 166p, jumped 75% from 94.8p a year ago.
The company has increased its investment plans as of the "NZAP Plus" five-year strategic plan to 2027 with £18.0bn of capital investment planned, an increase of more than 40% on the previous plan.
Alistair Phillips-Davies, SSE chief executive, said: "Action, not just ambition, is what is needed to provide lasting solutions to the problems of climate change, energy affordability and security - and, with a record-breaking investment programme, that is what we are delivering.”
“The "NZAP Plus" raises the bar on our ambitions to 2027, and provides a solid platform for growth that could see us invest up to £40bn over the next decade,” he added.
Looking ahead, the company guided investors to lower earnings and dividends in the year ahead.
SSE forecast adjusted EPS of more than 150p for 2023/24, with capital expenditure and investment of more than £2.8bn in 2023/24, exceeding the record investment in 2022/23.
A rebased 60p pence dividend for 2023/24, enabling growth with annual dividend increases of between 5-10% is now targeted to 2026/27.
This compares to the 96.7p total dividend SSE announced today.
7.35am: Aviva makes "encouraging" start to 2023
Aviva reported continued growth across the group in the first quarter although net flows to its wealth business fell after a volatile period for markets.
Amanda Blanc, Aviva group chief executive officer, said: “We have delivered an encouraging start to 2023 and continue to build clear trading momentum.”
“New business volumes are good, despite persistent economic uncertainty, and we delivered another quarter of strong growth across our diversified business.”
The FTSE 100-listed insurer said general Insurance gross written premiums (GWP) rose 11% at constant currency to £2.4bn with UK&I GWP improved 13% to £1.5bn and Canadian GWP increased 9% to £0.8bn.
Insurance (Protection & Health) sales, climbed 11% with strong growth in Health and Individual Protection but wealth net flows of £2.3bn were 15% lower year-on-year due to the impact of the challenging market volatility on Platform. Workplace net flows were up 25% to £1.8bn.
Aviva reported a strong group combined operating ratio of 95.4%, marginally lower than 95.7% a year ago, reflecting “our pricing strength, our continued disciplined response to inflation, our risk selection and the diversification within our portfolio.”
Costs fell 1% to £675mln and the firm said it was on track to deliver savings target of £750mln by 2024.
Dividend guidance of around £915mln remains unchanged and the firm said while it continues to see opportunities for further investment in the growth of our business, it will remain disciplined in its approach to capital deployment.
“We are financially strong with an attractive and growing dividend, and we are confident in the prospects for Aviva," Blanc said.
7.10am: Inflation falls but by less than expected
UK inflation fell back into single digits in April as energy prices fell but by less than the City expected, figures from the Office for National Statistics showed.
The Consumer Prices Index rose by 8.7% in the 12 months to April, down from 10.1% in March; on a monthly basis, CPI rose by 1.2% in April 2023, compared with a rise of 2.5% in April 2022. Analysts had predicted a fall to 8.2%.
The Consumer Prices Index including owner occupiers’ housing costs rose by 7.8% in the 12 months to April, down from 8.9% in March; on a monthly basis, CPIH rose by 1.2% in April, compared with a rise of 2.1% in April 2022.
Electricity and gas prices contributed 1.42 percentage points to the fall in inflation in April as last April’s rise dropped out of the annual comparison.
Food and non-alcoholic beverage prices continued to rise in April but the annual inflation rate of food and non-alcoholic beverages eased, from 19.2% in March to 19.1% in April.
Core CPI (excluding energy, food, alcohol and tobacco) rose by 6.8% in the 12 months to April, up from 6.2% in March, which is the highest rate since March 1992.
7.00am: Weak start expected in London
The FTSE 100 is expected to open weaker on Wednesday ahead of an inflation reading and after falls in the US and Asia.
Spread betting companies are calling London’s lead index down by 44 points.
Analysts are expecting a significant drop in UK CPI, to 8.2% from 10.1% in March.
Otherwise, updates from Aviva, Kingfisher, M&S and SSE will grab investor’s attention first thing.
US stocks slipped on Tuesday as the deadline to resolve the debt ceiling crisis crept closer with no resolution in sight.
On Wall Street, the Dow Jones Industrial Average fell 231.07 points, or 0.7%, to 33,055.51. The S&P 500 declined 47.05 points, 1.1%, 4,145.58 and the Nasdaq Composite slid 160.53 points, 1.3%, at 12,560.24.
The White House says some progress was made in the latest round of talks with Republican negotiators to avert a catastrophic US debt default before a June 1 deadline.
"We are seeing movement", White House Press Secretary Karine Jean-Pierre told reporters Tuesday afternoon, adding: "Both sides have to understand that they're not going to get everything that they want."
In Asia, the Nikkei 225 index in Tokyo was down 0.5%, in China, the Shanghai Composite was down 0.8%, while the Hang Seng index in Hong Kong was down 1.2%.