- FTSE 100 rises 98 points to 9,288
- Index hits record intraday high of just over 9,301
- UK inflation rises to 3.8%, highest since Feb 2024
- UK house prices rise 3.7%
4.55pm: New highs
It was a stellar day for the FTSE 100, with the index adding 98 points at 9,288.
“The FTSE 100 has happily surged to a new high while the rest of the world seems consumed by worries about AI and what Powell might say at Jackson Hole,” IG chief market analyst Chris Beauchamp said.
“After two weeks of a dash back to growth stocks, the dividend payers of London’s top index have regained their lustre; solid but perhaps somewhat dull stocks like United Utilities and Unilever dominate, a dramatic change from the tech-fuelled gains seen of late.”
4.10pm: FTSE 100 the standout on Wednesday
The FTSE 100 looks to have enjoyed its best day in over a month.
Up around 100 points with less than half an hour to go, the index is up over 1% for the first time since 10 July.
London's blue chips seem to be the main (or only) beneficiary from the selling of US and European stocks today.
Across on the Continent, the DAX is down 0.8% while the CAC and other indices are hit less hard, while across in the US, the Nasdaq is down another 1.5% and the S&P 500 is down 0.5% in the fourth day of tech-led selling Stateside.
2.55PM: Wall Street extends losses
US stocks have not started well, it's fair to say.
The S&P 500 is down over 0.5% and the Nasdaq Composite is down 1.2%, with the Dow Jones just below flat.
Nvidia is down almost 2%, while Applke, Alphabet, Amazon, Meta, Broadcom and Tesla are all down at least 1%.
Biggest fallers on the S&P are Target and Intel, down 8.6% and 6.6% respectively.
1.41pm: Is this a proper pullback?
Has the US market pullback begun, wonders market analyst Kenny Polcari at Slatestone Wealth in the US, as the last week of August comes into view and we are poised to enter September, always an “interesting” month for markets, as he says.
"Let’s rewind. Over the summer, the Nasdaq kept powering to new highs while the broader indexes just churned. A handful of names gave the illusion of a 'healthy' market – new high after new high – but beneath the surface, the story wasn’t nearly as pretty."
While the Nasdaq looked "shiny" the S&P was making incremental gains driven by the big tech heavyweights, but the Equal-Weight S&P and the Dow were "flashing caution", which is now "showing up".
The Nasdaq fell 315 points or 1.5% while the Mag 7 index dropped 502 pts or 1.7%.
"Now, you might say, 'Down 1.7% isn’t a big deal.' Fair. But pull back the sheets and it gets more interesting," Polcari says, pointing to Palantir down 9.5% and around 17% off summer highs, Nvidia down 3.5%, Meta 5% and Microsoft down 7.25% off their highs surge, AMD down 5.4% yesterday and 11% in four days, Alphabet 3% in two days, CoreWeave down 4% and 40% this month.
"Suddenly, traders and algos (notice I didn’t say investors – because investors define investing differently) are paring back positions, worried the rally’s gone too far, too fast."
Polcari says part of this pullback "comes from the realization that those 100 bps of rate cuts priced in for 2025 were always a pipe dream" and that UK is a "cautionary tale" for the US as inflation has flared up.
"July’s UK inflation ran 3.8% . While the UK is struggling with services and food, they also face labor and policy-driven pressures," he says, which is exactly what Jerome Powell is worried about.
"For those not around in ’79/’80 – trust me, you’d prefer JJ stay cautious.
"Back then, the Fed cut too soon, declared victory, and the monster came roaring back. By 1980, inflation spiked to 13%, Fed funds hit 21%, mortgage rates pushed 18%, and housing collapsed (for the record, that’s how I was able to buy a home in 1985)."
At the bottom line, Polcari says "investors are preparing for a slower economy with sticky prices. Indexes are near record highs, so traders and algos are taking money off the table – it makes sense... I remain in the camp that we are toppy. Which only means I’m more cautious about allocation.
"Doing nothing is a decision. Let your portfolio do the work. And brace yourself for a volatile September."
12.16pm: Europe mixed, Wall Street futures still red
While the Footsie has picked up, European markets are mixed, though France's CAC has also broken into the black.
US stock index futures remain in the red.
Traders are "maintaining a cautious stance ahead of the release this evening of minutes from the Federal Reserve’s July meeting", says market analyst David Morrison at Trade Nation.
"Looking ahead, the spotlight is firmly on Fed Chair Jerome Powell’s speech on Friday at the Jackson Hole Economic Symposium, which starts tomorrow.
"Markets are already pricing in an 85% probability of a 25-basis point rate cut at the September meeting, but there’s always a danger that Mr Powell delivers a more hawkish perspective."
Meanwhile, US earnings season continues to wind down, with a clutch of updates from retailers this week. Target is today's name, down around 10% after a choice of new CEO that seems to have disappointed.
Yesterday, positive results from Home Depot helped the Dow to edge into positive territory by the close, even as the other major indices posted losses, while Walmart will report tomorrow.
11.32am: New high for FTSE
The FTSE 100 has notched another new all-time high a few minutes ago, up over 9,214.
Heavyweights such as AstraZeneca, HSBC, Unilever, BAT, RELX and Lloyds are helping drive this, all up close to or above 1%.
Top riser is ConvaTec Group after it unveiled a new $300 million buyback.
11.20am: CPI today does not change BoE rates story
Hotter than expected UK inflation was driven primarily by airfares and the Bank of England "won’t be too concerned", says ING economist James Smith.
This "doesn’t mean the central bank will relax entirely", he says, with officials keeping an "unusually keen eye on food inflation right now", which picked up further to 4.9%, from 2% at the end of last year.
Food prices are particularly interesting to the BoE for two reasons, Smith reckons.
"First, because there is a loose correlation between supermarket and restaurant prices. And those restaurant/cafés make up 40% of that services inflation measure which excludes volatile/indexed items."
Second, food prices are seen as an important driver of household inflation expectations, and Smith notes that "some BoE officials worry that, with headline inflation close to 4%, there’s a risk that these expectations become less anchored".
He think these concerns are "overblown", as the cooling jobs market "should exert further downward pressure on wage growth" in the remaining months of 2025.
"That all leads us to think a November rate cut is still more likely than not, though it’s not a particularly high conviction call right now given the very evident division on the rate-setting committee.
"Much also hinges on the jobs market, where employment has fallen in eight out of the past nine months, but where the survey data is looking a little less worrisome than it did earlier this year.
"For now, we expect a rate cut in November to be followed by two further moves next year."
11am: Grocery prices up, sales volumes down
Warm British weather has been influencing supermarket shopper behaviour, with NIQ reporting an easing in grocery sale momentum to 3.7% in the four weeks to 9 August versus 12-week growth of 4.5%.
This was all about food prices rising, with volumes marginally down, notes analyst Clive Black at Shore Capital.
The listed players, including Ocado Retail, continue to gain share, he notes, with Lidl the strongest growing chain, albeit the convenience channel has had a weaker spell.
"Such trading momentum makes us continue to be quite relaxed about our current earnings expectations for Sainsbury and Tesco, we await further clarity on M&S' recent disruptions albeit 12-week food sales are strong at 6.7% and its equity rating feels too low, to us".
10.16m: Anglo still falling
Anglo American PLC (LSE:AAL) shares continue to fall after US rival Peabody yesterday pulled out of a $3.8 billion deal to buy its coking coal assets.
This follows an explosion at the Moranbah North mine in Australia earlier this year, with the site still closed.
Peabody had agreed to buy the assets in a competitive bidding process last year.
Anglo's position has been that the gas ignition event on the 31st Mar '25 does not constitute a material adverse change under the agreement, and said yesterday they reserve their rights and legal position under the agreement and will shortly initiate an arbitration to seek damages for wrongful termination.
Citi analysts say: "This has largely been expected by the market over the last couple of months in our view.
"While it does delay the process of simplifying the portfolio by selling steel making coal assets, Anglo's statement suggests there could be alternative buyers for the assets already and the transaction may proceed, albeit to a different party."
9.44am: UK house prices spike
UK house prices grew 3.7% compared to last year, in June, according to the ONS official house price data.
This annual growth rate is up from 2.7% in May.
ONS Head of Housing Market Indices Aimee North said: "House price annual inflation continues to pick up with the average UK house price now at around £269,000.
"Annual private rents inflation has slowed across the whole of the UK for the seventh consecutive month.”
Meanwhile, rises in rents eased.
Average UK monthly private rents increased 5.9% in July, down from the 6.7% annual rate in June.
9.05am: European markets down - defence and tech in focus
Why are markets down?
European markets are echoing declines in Japan and on Wall Street, says market analyst Victoria Scholar at Interactive Investor.
Defence and aero stocks are under pressure, extending losses after their worse day in over a month, she also notes, with Rolls, Melrose Industries and Babcock down, a theme also seen on the Continent, where Rheinmettal and Hensoldt are under pressure in Germany as Ukraine peace talks continue.
In terms of other movers, Convatec is at the top of the FTSE 100 after announcing a $300 million share buyback.
US futures are pointing to losses being extended after yesterday’s tech driven sell-off.
Scholar notes that Palantir led the declines, shedding over 9%, while Nvidia and Arm were also lower, "sparked by concerns about overexcitement and overvaluations in AI stocks".
A report from MIT and comments from OpenAI’s CEO Sam Altman about 'over-excitement’ fuelled those concerns.
Danni Hewson at AJ Bell notes that the AI theme has been pretty much on a "one-way track upwards but there have been occasions when the enthusiasm has been punctured", such as the Deepseek shock earlier this year.
A report produced by a branch of the Massachusetts Institute of Technology (MIT) is being pegged as the culprit, she says, after several AI-related names slumped overnight.
"The research strikingly suggested 95% of companies are getting zero return on their investment in generative AI."
While it comes hot on the heels of comments from Altman's comments that suggested investors are ‘over excited’ in this area, Hewson feels this "looks like a mild and possibly necessary correction after an extremely strong run for this space and the companies within it.
"Investors will be watching closely to see if AI stocks stabilise from here or the selling continues. Nvidia’s quarterly earning next week now look even more crucial than they already were."
8.37am: Costain shares crumble
Costain is one of the big fallers this morning, down 15% despite hiking its dividend and launching a new £10 million buyback.
Analyst Andrew Nussey at Peel Hunt says weaker-than-expected performance from the Transportation division, including HS2 rail work being pushed back, was mitigated by a stronger-than-expected Natural Resources result to leave operating profit up 3%.
"The outlook is confident, supported by the quality and shape of the growing order book. The margin target was reiterated. Growth step up in 2027 still expected."
Nussey says he is keeping his profit forecasts unchanged for the next two years, noting also that the shares had risen 54% in the year to date to trade at 10.4 times forecast 2026 earnings.
8.15am: Footsie starts lower
The FTSE 100 has started in the red, as expected, dropping 14 points to 9,176.
Biggest fallers are led by housebuilder Berkeley Group, engine maker Rolls-Royce, and Polar Capital Tech Trust, followed by more housebuilders, aerospace names, investments groups and retailers.
The FTSE 250 is down too, falling 77 points to 21,756.
Challenger bank OSB is bottom of the pile there, down 2.8%.
7.46am: Pound rises, BoE will be watching CPI
The pound is up 0.1% against the euro and after an initial spike against the dollar is back to where it was.
Inflation data for both June and July have surprised on the upside, notes Jeremy Batstone-Carr, European strategist at Raymond James.
Today’s July data is a reflection of both rising fuel and food prices, with groceries "now on a clear upward trajectory which may not peak until later in the year", he says.
"With the Bank of England’s Monetary Policy Committee (MPC) paying close attention to trends in service sector inflation, today’s confirmation that prices nudged higher again last month, from 4.7% to 5%, will cause concern."
While the MPC cut interest rates at this month's meeting, it was accompanied by a "hawkish tilt" in the Committee’s statement to reflect concerns about rising price pressures.
"Today’s data is likely to harden rate-setters’ resolve that any future rate cuts will be conditional on consumer prices adjusting to a lower pathway.
"With a peak in prices not anticipated until later in the year, the Bank’s scope to provide much by way of monetary policy offset will be severely limited, in the wake of what looks likely to be another tough Budget."
7.23am: ONS corrects error
The ONS says it has "identified a minor error" but that it has "no impact" on the headline inflation rates.
It said the error was "in the imputation of missing seasonal item indices", which has now been redesigned as part of a modernisation process.
Looking at the details, the statistical body's explanation is that there was a 0.1 percentage point impact on annual growth of two 'divisions' of price data – furniture, household equipment and maintenance, and recreation and culture – for the period between February to June 2025.
As per its normal correction practice, the ONS said the indices have not been corrected for those months, but the correction of the error is reflected in the July indices.
Away from that, ONS chief economist Grant Fitzner noted that inflation rose to its highest annual rate since the beginning of last year.
"The main driver was a hefty increase in air fares, the largest July rise since collection of air fares changed from quarterly to monthly in 2001. This increase was likely due to the timing of this year’s school holidays," he said.
Petrol and diesel prices also increased, compared with a drop this time last year, while food price inflation continues to climb.
He said items such as coffee, fresh orange juice, meat and chocolate saw the biggest rises.
7.13 am: Inflation print surprises... and not in a good way
Morning all. The major economic talking point of the morning is likely to be the latest inflation print, which has come in at a worse-than-expected 3.8%. This is likely to dampen expectations for further cuts to the base rate – at least in the near term.
The main driver, according to the ONS data, was rising air fares, an anomaly linked to the timing of the school holidays.
Ahead of the open, the spread betting firms are calling the FTSE 100 13 points lower at 9,173.22, reflecting the declines seen in Asia overnight and on Wall Street rather than the surprise cost of living news.