FTSE 100 slides after UK inflation sticks
At close, the index was down 87.21 points, or 1.14%, to 7,588.
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Your support makes all the difference.London’s FTSE 100 has dropped after a disappointing set of inflation figures showed price rises held steady last month, casting fresh doubts over where interest rates will go.
Nearly 100 points were shaved off the UK’s top index with housebuilders among the stocks seeing the biggest losses.
At close, it was down 87.21 points, or 1.14%, to 7,588.
Barratt Developments, Taylor Wimpey and Berkeley Group were among the day’s biggest fallers, with investors nervous over the knock-on effect of persistent inflation on mortgage rates and the housing market.
Consumer Prices Index (CPI) inflation stayed at 6.7% last month, despite economists’ expectations that the rate would ease further.
Higher-than-expected UK inflation data has put the market in a spin, sending shares in housebuilders, airlines, banks and utilities into a downward trend
The biggest upward pull on the headline rate came from fuel prices, the Office for National Statistics said, with petrol and diesel going up for drivers.
Nevertheless, core inflation eased back slightly, and Tuesday’s wage data showed that the rate of pay growth slowed down in August.
Russ Mould, investment director at AJ Bell, said: “Higher-than-expected UK inflation data has put the market in a spin, sending shares in housebuilders, airlines, banks and utilities into a downward trend.
“Sticky inflation strengthens the argument for further interest rate hikes, which in turn adds to pressures for consumers and businesses.
“Banks would normally benefit from higher interest rates but the market seems to be worried that further hikes could increase bad debts.”
Other European stocks suffered on Wednesday, with Germany’s Dax closing 1.03% lower and France’s Cac 40 down 0.91%.
US stocks were also firmly on the back foot, with the S&P 500 about 0.9% lower and Dow Jones down 0.6% by the time European markets closed.
The price of Brent crude oil surged higher, with a barrel costing 90.94 US dollars, up 1.16%.
The pound was down by 0.3% against the US dollar to 1.214, and was up by 0.2% against the euro to 1.1536.
In company news, Whitbread shot toward the top of the FTSE 100 after the Premier Inn owner said it was benefiting from a rise in independent hotel closures and was eyeing up more openings to take advantage of steady demand.
The company said its accommodation sales rose by 14% in the UK in the first half of the year, and its food and beverage sales, which includes the Beefeater and Bar + Block brands, were up by a 10th.
Its share price moved 1.3% higher at close.
Meanwhile, Barratt’s share price suffered after the company said its weekly reservations had fallen in recent months and warned that the property market will remain affected as higher mortgage costs hit demand.
The update to investors added to warnings voiced by rivals, with Bellway on Tuesday saying it will build nearly a third fewer homes in the year ahead compared to last. Shares in Barratt fell by 5.1%.
The biggest risers on the FTSE 100 were Centrica, up 2.3p to 160.35p, Reckitt, up 78p to 5,950p, Whitbread, up 43p to 3,366p, CocaCola HBC, up 18p to 2,131p, and BT, up 0.95p to 118.3p.
The biggest fallers on the FTSE 100 were AstraZeneca, down 658p to 10,612p, Barratt Developments, down 21.8p to 402.1p, Taylor Wimpey, down 4.75p to 107p, Rolls-Royce Holdings, down 7.8p to 207.8p, and Howden Joinery Group, down 23.2p to 638.6p.