FTSE 100 Live Wednesday
- Inflation rise clouds rates outlook
- Rail fares set for big hike
- Costain revenues hit by HS2 delays
Market update: FTSE 100 lower, building stocks under pressure
10:03 , Graeme EvansHousebuilders were among today’s biggest FTSE 100 index fallers after a hot inflation print contributed to a mood of risk aversion in London.
A CPI reading of 3.8% for July, up from 3.6% the previous month, added to worries that the Bank of England may not ease monetary policy again this year.
The uncertain outlook for mortgage affordability meant Berkeley retreated 66p to 3662p, Barratt Redrow fell 5.5p to 371.5p and Taylor Wimpey dipped 1.2p to 99.6p.
The FTSE 100 index closed at a record 9189.22 last night but fell 20.26 points to 9168.96 this morning amid a weak performance for markets worldwide.
The caution reflected US interest rate jitters ahead of a speech by Federal Reserve chair Jerome Powell on Friday, as well as a rotation from tech stocks.
The Nasdaq fell 1.5% and leading semiconductor industry names including Nvidia were heavily sold amid fears of US government intervention in the sector.
The weaker sentiment meant Polar Capital Technology Trust topped the FTSE 100 fallers board with a decline of 6.5p to 395p, while Scottish Mortgage Investment Trust eased 12p to 1071p.
Other big fallers included Anglo American, down 47p to 2124p after US-listed Peabody said it no longer intended to buy the company’s steelmaking coal assets in Australia.
On the risers board, defensive plays Unilever, United Utilities and British American Tobacco offered support to the FTSE 100 after their shares rose by about 1%.
Wound care business Convatec surged 7% or 16.8p to 248p at the top of the risers board after it announced the launch of a $300 million share buyback programme.
The best performing mid-cap was Ithaca Energy, with the North Sea explorer up 9% or 16.2p to 194.4p after lifting 2025 production guidance in half-year results.
The FTSE 250 index fell 0.4% or 94.45p to 21,738.81, with WH Smith and Kier Group among the stocks down by about 2%.
Defensive stocks support FTSE 100, Convatec up 5%
08:30 , Graeme EvansThe FTSE 100 index has fallen 12.15 points to 9177.07, a resilient performance compared with declines of more than 0.5% in Paris and Frankfurt.
Last night’s weakness for US tech stocks meant Polar Capital Technology Trust topped the FTSE 100 fallers board with a decline of 6.5p to 395p.
BAE Systems also experienced a fresh fall of 18p to 1703p, while Rolls-Royce weakened 16.4p to 1043.1p.
The shares of medical devices business Convatec rose 5% or 11.4p to 242.6p after it announced the launch of a $300 million share buyback programme.
Jitters over the US interest rate outlook ahead of a speech by Federal Reserve chair Jerome Powell on Friday fuelled a flight to defensive stocks in London.
United Utilities rose 13p to 1133.5p, British American Tobacco lifted 38p to 4274p and Unilever added 37p to 4581p.
Costain revenues drop on HS2 delays, shares down 13%
08:16 , Graeme EvansCostain shares have surrendered some of this year’s strong gains, falling 13% after the infrastructure projects business released half-year results.
Revenues slid by 17.8% to £525.4 million, reflecting the impact of completed road projects and the Government’s rephasing of HS2.
The group reported strong growth from other parts of its transport business, with increased work linked to Heathrow airport.
It also highlighted momentum in its water, energy, defence and nuclear energy divisions as adjusted operating profit grew 3.1% to £16.8 million for the half-year.
Shares fell 13% or 21.2p to 142.2p, which compares with 107p at the start of the year.
Rail passengers set for another big fares hike
07:36 , Graeme EvansRegulated train fares in England may increase by 5.8% next year, based on a measure of inflation announced today.
The Retail Price Index (RPI) rate of inflation rose to 4.8% in July, up from 4.4% the previous month and well above the 4.5% forecast.
The Government has not confirmed how it will determine the cap on regulated fare rises in 2026, but this year’s 4.6% hike was one percentage point above RPI in July 2024.
If the same formula is used to set next year’s fare increase, the cost of train travel will jump by 5.8%.
Inflation rise adds to rate cut uncertainty
07:28 , Graeme EvansThe rise in CPI inflation rate from 3.6% in June to 3.8% is set to fuel speculation that further interest rate cuts are off the agenda this year.
However, Capital Economics doubts that today’s figures will move the dial too much given that the Bank of England expected such a rise in its August monetary policy report.
A rate cut in November remains the consultancy’s base case, although the decision will be a close call and will depend on the data released over the next few months.
Inflation is seen rising to 4% in September as unfavourable base effects push services inflation above 5%.
Capital Economics added: “We still think the softer labour market will prevent this rebound in inflation from supporting wage growth like it did in 2021-23.
“And we believe it’s only a matter of time before the weakness in employment leads to a big easing in services inflation.
“So we still think a November rate cut remains in play. The risk is that inflation expectations and wage growth rise further and the next move down in rates does not happen until next year.”
Inflation rate above forecast
07:06 , Graeme EvansThe UK’s annual rate of inflation today rose to 3.8%, the highest level since January 2024.
July’s reading compared with June’s print of 3.6% and City forecasts for a figure of 3.7%.
Inflation has risen from 2.6% in March, fuelled by higher employment costs and April’s surge in household bills. The rate is seen hitting 4% this autumn.
The ONS said transport costs, particularly air fares, made the largest upward contribution to the monthly change in July.
Air fares rose by 30.2% between June and July , compared with a rise of 13.3% between the same months in 2024.
The monthly rise is the largest July increase since collection of airfares changed from quarterly to monthly in 2001 and was probably influenced by the timing of school summer holidays.
FTSE 100 seen lower, tech stocks struggle
06:58 , Graeme EvansUS tech stocks last night came under heavy selling pressure as Palantir Technologies closed the session 9% lower and Nvidia down by 3.5%.
The Nasdaq Composite fell by 1.5% and the S&P 500 index weakened 0.6%, whereas the Dow Jones Industrial Average ended slightly higher.
The tech sell-off was blamed on interest rate jitters ahead of this week’s Jackson Hole economic symposium.
Tokyo’s Nikkei 225 has fallen 1.5%, while the Hang Seng index and Shanghai Composite are closer to their opening marks.
The FTSE 100 index finished last night 31.48 points higher at a record 9189.22, but is forecast to drop 0.2% at today’s opening bell.
