Stock prices in London closed lower on Wednesday, ahead of an announcement from Westminster calling a general election on July 4, and amid hotter-than-expected inflationary figures from the UK.
The FTSE 100 index closed down 46.12 points, 0.6%, at 8,370.33. The FTSE 250 ended down 73.30 points, 0.4%, at 20,710.07, and the AIM All-Share closed down 3.22 points, 0.4%, at 803.87.
The Cboe UK 100 ended down 0.5% at 835.50, the Cboe UK 250 closed down 0.4% at 18,134.32, and the Cboe Small Companies ended up 0.3% at 16,703.20.
In European equities on Wednesday, the CAC 40 in Paris ended down 0.6%, while the DAX 40 in Frankfurt ended down 0.2%.
The pound was quoted at $1.2732 at the London equities close Wednesday, up compared to $1.2715 at the close on Tuesday. It had spiked as high as $1.2761 after the UK data, its best level in almost two months.
The euro stood at $1.0840 at the European equities close Wednesday, lower against $1.0856 at the same time on Tuesday. Against the yen, the dollar was trading at JP¥156.55, down compared to JP¥156.10 late Tuesday.
The UK consumer price index rose by 2.3% in April from a year before, slowing from a 3.2% annual increase in March, according to the Office for National Statistics.
Though inflation was hotter than market consensus of 2.1%, which would have been only a hair above the Bank of England’s 2% target, the latest figure still is the coolest rate of inflation since July 2021.
Since then, inflation pressure has been robust, with the annual rate hitting a recent peak of 11.1% in October 2022.
‘A slower than expected drop in the rate of UK inflation has spooked the market, pushing back the likely point at which the Bank of England will cut interest rates. Naturally, that led to a sudden jump in sterling and gilt yields and pulled down the FTSE 100,’ said Russ Mould, investment director at AJ Bell.
London’s housebuilders fell amid falling hopes for early interest rate cuts.
Barratt Developments, Persimmon, and Taylor Wimpey were down 2.5%, 1.3%, and 1.4%.
Eyes are also on UK Prime Minister Rishi Sunak and the 2024 election.
During Prime Minister’s Questions on Wednesday, he declined to rule out a summer vote – which some believe could take place on July 4 – when challenged over the timing.
SNP Westminster Leader Stephen Flynn said: ‘Speculation is rife, so I think the public deserve a clear answer to a simple question. Does the prime minister intend to call a summer general election or is he feart?’
Sunak replied: ‘There is, Speaker – spoiler alert – there is going to be a general election in the second half of this year.’
In the FTSE 100, Anglo American fell 0.2%, whilst BHP lost 4.3%.
Anglo American on Wednesday rejected a third takeover proposal from BHP but gave the Melbourne-based miner another seven days to formalise a bid.
Under the terms of the latest proposal, submitted by BHP on Monday, Anglo American shareholders would receive 0.8860 BHP shares and shares in each of Anglo American Platinum and of Kumba Iron Ore for each share owned.
Anglo American said the latest proposal represents a total value of around 2,934 pence per share.
‘The board continues to believe that there are serious concerns with the structure given that it is likely to result in material completion risk and value impact that disproportionately falls on Anglo American’s shareholders,’ the company said.
Elsewhere in the FTSE 100, Marks & Spencer closed up 5.2% to the top of the index.
The London-based retailer said statutory revenue in the year to March 30 rose 9.3% to £13.04 billion from £11.93 billion a year prior. Pretax profit jumped 41% to £672.5 million from £475.7 million.
M&S, which recently restored its dividend after a four-year hiatus, declared a 2.0 pence per share final payout. It means its total dividend for the year amounts to 3p, having not paid one in financial 2023.
In the FTSE 250, IntegraFin jumped 11%.
The London-based holding company and operator of the investment platform Transact said pretax profit rose 16% to £32.4 million in the six months that ended March 31 from £27.9 million the previous year. Revenue increased 6.9% to £70.4 million from £66.5 million.
At 3.20 pence per share the interim dividend remains unchanged from last year.
Mitchells & Butlers shares fizzed 10%.
The Birmingham, England-based operator of restaurants and pubs, including Harvester and All Bar One, said revenue in the half year ended April 13 rose 8.9% to £1.40 billion from £1.28 billion a year prior. Pretax profit jumped to £108 million from £40 million.
AJ Bell analyst Russ Mould believes Mitchells could be shaking off its less than stellar pre-Covid reputation.
On London’s AIM, Powerhouse Energy shares jumped 29%.
The Bingley, England-based non-recyclable waste-to-energy conversion company said it has secured a patent in the UK for its technology, and is ‘already in discussions with a number of clients’.
‘We are delighted to have secured this GB patent, which will allow us to accelerate the development of commercial applications for our technology,’ commented Chief Executive Officer Paul Emmitt. ‘This also validates the engineering work that has gone into getting us to this point, and the company’s continuous drive towards our first commercial application.’
Stocks in New York were mixed at the London equities close. The DJIA was down 0.2% and the S&P 500 index down 0.1%, whilst the Nasdaq Composite was up 0.1%.
Brent oil was quoted at $82.21 a barrel at the London equities close Wednesday, down from $82.66 late Tuesday.
Gold was quoted at $2,389.20 an ounce at the London equities close Wednesday, down against $2,425.40 at the close on Tuesday.
In Thursday’s UK corporate calendar, there is a trading statement from Aviva. There are also full year results due out from National Grid.
The economic calendar for Thursday has a slew of composite PMI data from the eurozone, Germany, and the UK. There is also the weekly initial jobless claims data from the US.
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