London midday: Stocks slip as core inflation stays high

(Sharecast News) - UK stocks were trading at five-week lows on Wednesday despite some big gains from blue-chip insurers, with market sentiment hit by fears that the Bank of England may step in to raise interest rates once again.

London's FTSE 100 was down 0.4% at 7,362 just before the midday mark. The last time the index closed lower was on 11 July.

Data out on Wednesday morning showed that the annual rate of UK consumer price inflation cooled from 7.9% to 6.8% in July, in line with economists' forecasts. However, the slowdown was largely a result of falling food and energy prices. Core inflation, which strips out these volatile items, remained unchanged at 6.9%.

"The Bank of England may be glad of the breathing space provided by the scheduling of its next meeting which does not come until late September," said Russ Mould, investment director at AJ Bell.

"This will allow it to look at a few more data points before deciding its next move on interest rates. One thing is absolutely certain - the battle against inflation is far from over."

Meanwhile, futures on Wall Street were pointing to a positive start after recent losses, as investors await minutes of the last Federal Reserve policy meeting. Market sentiment on Tuesday was dampened by stronger-than-expected retail sales figures which raised concerns that the Fed may step in once again to fight inflationary pressures.

Looking ahead, US housing starts and US industrial production data for July will be released before the opening bell, along with crude oil inventories not long after.

Admiral and Aviva jump

Shares in Admiral rose after the insurer reported that pre-tax profit rose 4% to £234m in the six months to June 30 as it hiked prices in response to claims inflation.

Sector peer Aviva also impressed the market with its interim results, with operating profit rising 8% year-on-year to £715m. Looking ahead, Aviva said it remained confident over its future performance, underpinned by the strong first half.

B&M European Value Retail extended its recent gains, after being linked to takeover rumours surrounding struggling rival retailer Wilko. The latter, which fell into administration last week, gave potential buyers until today to launch a formal offer.

Mining stocks were providing a drag as risk appetite waned, with Fresnillo, Antofagasta, Endeavour and Rio Tinto trading lower.

Manufacturer Essentra rose after reporting a 54% surge in first-half results despite a fall in sales, as operating margins jumped.

Infrastructure giant Balfour Beatty was trading lower despite saying it was on track to meet full-year expectations. Investors may be reacting to the news that the value of its order book slumped £1bn over the past six months to £16.4bn.

Market Movers

FTSE 100 (UKX) 7,362.34 -0.37%

FTSE 250 (MCX) 18,661.30 0.01%

techMARK (TASX) 4,278.36 -0.40%

FTSE 100 - Risers

Admiral Group (ADM) 2,313.00p 5.18%

B&M European Value Retail S.A. (DI) (BME) 581.40p 2.87%

JD Sports Fashion (JD.) 153.10p 2.48%

Aviva (AV.) 388.30p 2.21%

3i Group (III) 1,951.50p 2.09%

Associated British Foods (ABF) 1,996.00p 1.45%

Centrica (CNA) 143.75p 1.23%

Prudential (PRU) 990.60p 1.08%

Melrose Industries (MRO) 523.80p 1.04%

Spirax-Sarco Engineering (SPX) 10,255.00p 0.94%

FTSE 100 - Fallers

Fresnillo (FRES) 515.00p -2.09%

NATWEST GROUP (NWG) 228.80p -2.05%

Flutter Entertainment (CDI) (FLTR) 13,740.00p -2.00%

Standard Chartered (STAN) 726.20p -1.71%

Antofagasta (ANTO) 1,430.50p -1.51%

Rightmove (RMV) 566.20p -1.36%

Endeavour Mining (EDV) 1,613.00p -1.35%

Entain (ENT) 1,228.00p -1.25%

Rio Tinto (RIO) 4,531.50p -1.21%

Airtel Africa (AAF) 115.60p -1.20%

FTSE 250 - Risers

Direct Line Insurance Group (DLG) 159.25p 5.36%

Marks & Spencer Group (MKS) 230.80p 4.15%

Plus500 Ltd (DI) (PLUS) 1,484.00p 3.63%

Mobico Group (MCG) 82.75p 2.48%

BH Macro Ltd. GBP Shares (BHMG) 359.00p 2.28%

Aston Martin Lagonda Global Holdings (AML) 343.60p 1.90%

Close Brothers Group (CBG) 827.50p 1.85%

Dr. Martens (DOCS) 157.60p 1.74%

Diploma (DPLM) 3,336.00p 1.71%

Tritax Big Box Reit (BBOX) 142.40p 1.64%

FTSE 250 - Fallers

Synthomer (SYNT) 75.35p -3.83%

Balfour Beatty (BBY) 333.80p -3.75%

Wood Group (John) (WG.) 152.90p -2.80%

Just Group (JUST) 80.70p -2.65%

Capita (CPI) 19.52p -1.56%

Harbour Energy (HBR) 248.40p -1.51%

Lancashire Holdings Limited (LRE) 571.50p -1.47%

Bakkavor Group (BAKK) 101.50p -1.46%

Octopus Renewables Infrastructure Trust (ORIT) 88.80p -1.44%

Virgin Money UK (VMUK) 164.35p -1.44%