London close: Stocks mixed after weaker inflation data

(Sharecast News) - London stocks were in a mixed state at the close on Wednesday, with the mining sector remaining particularly weak on the top-flight index, as investors digested the latest UK inflation data.
The FTSE 100 ended the session down 0.16% at 7,169.32, while the FTSE 250 was ahead 0.6% at 23,386.37.

Sterling was in the green, last trading 0.08% stronger against the dollar at $1.3752, and gaining 0.14% on the euro to €1.1751.

"It is not often that the Reserve Bank of New Zealand commands attention at the start of the European session, but the bank's decision to hold fire on a rate rise gives 'team transitory' a bit of a lift in their view that central banks will continue to err on the side of caution when it comes to responding to inflation," said IG chief market analyst Chris Beauchamp.

"Similarly, a slower rate of price increases for the UK economy last month will give the Bank of England some respite too, although here 'team permanent' pick up some points as base effects play a part in the lower-than-expected reading.

"We can expect the debate to pick up again as September gets underway and a more active economy and stock market start to question the idea that price increases are a passing fancy."

Figures released earlier from the Office for National Statistics (ONS) showed inflation in the UK fell more than expected in July, easing pressure on the Bank of England.

Consumer price inflation declined to 2% from 2.5% in June, coming in line with the BoE's 2% target and below expectations of 2.3%.

It marked the first easing in inflation since February; the BoE had forecast inflation of 2.1%.

Core inflation - which strips out food and energy - fell to 1.8% from 2.3%, coming in below consensus expectations of 2.0%.

"Inflation fell back in July across a broad range of goods and services, including clothing, which decreased with summer sales returning after the pandemic hit the sector last year," said Jonathan Athow, deputy national statistician for economic statistics at the ONS.

"This was offset by a sharp rise in the price of second-hand cars amidst increased demand, following a shortage of new models.

"The differing patterns of movement restrictions across the last two years have affected headline inflation.

Athow noted that some of the month's fall came from products and services, such as foreign travel, where real prices were used last year but had to be imputed this year.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, put the decline in CPI inflation down to the sharp increase in prices a year ago, when the economy emerged from the first lockdown, and the ONS stopped imputing prices for goods and services that were previously unavailable.

"Looking ahead, the headline rate remains on course to rise sharply, though we think the BoE's forecast for a 4.0% average rate in the fourth and first quarters is a bit too high," he said.

UK house prices, meanwhile, rose at their fastest annual rate in June since 2004 as buyers rushed to beat the stamp duty deadline.

The ONS said house prices rose 13.2% in June from a year earlier, to £265,668, up from a 9.8% jump in May.

Compared with the previous month, house prices were up 4.5%.

The stamp duty holiday, introduced by Chancellor Rishi Sunak last July to bolster the housing market, was extended from 31 March to the end of June.

It meant that no tax needed to be paid on the first £500,000 of property purchases in England and Northern Ireland.

Across the pond, US housing starts fell by more than expected last month, pointing to a normalisation in demand for housing to pre-pandemic levels.

According to the US Department of Commerce, housing starts fell 7.0% month-on-month to reach an annualised pace of approximately 1.53m, compared to the 1.61m pencilled in by market participants.

Housing permits, on the other hand, surprised to the upside, climbing by 2.6% on the month to reach 1.64m.

Back in Britain, miners were among the biggest losers, with BHP down 5.94%, Antofagasta off 2.81%, Rio Tinto losing 2.57%, Anglo American behind 2.21%, and Glencore 1.94% weaker.

Balfour Beatty lost 7.02% even as the infrastructure group swung to profit and reinstated its dividend as it announced a withdrawal from fixed-price residential projects in London.

Luxury fashion brand Burberry was down 4.85%, with CMC Markets analyst Michael Hewson saying that the shares were lower "as concerns about the recovery in Asia weigh further on the share price".

"Comments from Chinese state media that suggested that China was looking at forms of wealth distribution also weighed on sentiment," he added.

On the upside, housebuilder Persimmon was ahead 1.46% after it said interim profits surged on the back of increased demand and government support measures as Covid curbs were eased.

Sector peers Barratt Developments and Taylor Wimpey were also above the waterline, rising 2.32% and 2.17% respectively, after the house price figures from the ONS.

Redrow was in the green by 7.11%, after Betaville reported that a predator was circling the housebuilder.

Silver and gold miner Hochschild managed gains of 0.33% after reporting a jump in first-half profit and revenue as total group production was significantly higher versus the Covid-19 impacted first half of 2020.

Payments company Network International jumped 11.26%, after saying it swung to an interim profit and backing its full-year profit expectations.

Market Movers

FTSE 100 (UKX) 7,169.32 -0.16%
FTSE 250 (MCX) 23,836.37 0.60%
techMARK (TASX) 4,818.19 0.34%

FTSE 100 - Risers

Just Eat Takeaway.Com N.V. (CDI) (JET) 6,637.00p 5.23%
International Consolidated Airlines Group SA (CDI) (IAG) 163.02p 2.37%
Barratt Developments (BDEV) 722.00p 2.32%
Taylor Wimpey (TW.) 176.60p 2.17%
Informa (INF) 553.00p 1.99%
Kingfisher (KGF) 359.90p 1.93%
Ocado Group (OCDO) 1,883.50p 1.92%
ITV (ITV) 120.20p 1.86%
AstraZeneca (AZN) 8,732.00p 1.71%
Johnson Matthey (JMAT) 2,993.00p 1.56%

FTSE 100 - Fallers

BHP Group (BHP) 2,218.00p -5.94%
Burberry Group (BRBY) 1,941.00p -4.85%
Antofagasta (ANTO) 1,470.50p -2.81%
Rio Tinto (RIO) 5,328.00p -2.57%
Anglo American (AAL) 3,220.00p -2.21%
Evraz (EVR) 559.80p -2.13%
Glencore (GLEN) 317.05p -1.94%
Sainsbury (J) (SBRY) 290.70p -1.72%
Severn Trent (SVT) 2,866.00p -1.68%
Unilever (ULVR) 4,101.50p -1.49%

FTSE 250 - Risers

Network International Holdings (NETW) 392.30p 11.26%
Redrow (RDW) 687.40p 7.11%
Ibstock (IBST) 232.00p 5.94%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,637.00p 5.23%
Trainline (TRN) 355.20p 4.96%
Future (FUTR) 3,880.00p 4.86%
Indivior (INDV) 186.00p 4.20%
Capita (CPI) 49.82p 3.79%
SSP Group (SSPG) 263.30p 3.62%
Wetherspoon (J.D.) (JDW) 1,156.00p 3.58%

FTSE 250 - Fallers

Balfour Beatty (BBY) 296.60p -7.02%
Syncona Limited NPV (SYNC) 193.00p -4.22%
Ferrexpo (FXPO) 375.80p -3.44%
Biffa (BIFF) 374.50p -3.37%
Renishaw (RSW) 5,115.00p -2.76%
Dr. Martens (DOCS) 390.00p -2.26%
Aston Martin Lagonda Global Holdings (AML) 1,989.00p -2.15%
Pennon Group (PNN) 1,297.00p -1.82%
Airtel Africa (AAF) 94.80p -1.66%
Elementis (ELM) 145.40p -1.50%