Another red-hot UK inflation report put retail shares under pressure on Wednesday, with Next and JD Sports among the worst London-listed blue-chip performers in a drab day for global stock markets.
The UK inflation data put the Bank of England under the spotlight and focus will also turn to the UK government, ahead of Thursday's autumn statement.
Investors were earlier troubled by the news of a missile hitting Poland, as the Nato member found itself in the cross-hairs of the Russia-Poland conflict. While the strike is now believed to have not been pre-meditated, it was nonetheless a reminder of the fragile geopolitical situation stemming from the ongoing conflict.
The FTSE 100 index ended 18.25 points lower, 0.3%, at 7,351.19 on Wednesday. The FTSE 250 ended down 343.48 points, or 1.8%, at 19,112.40, and the AIM All-Share ended down 8.58 points, 1.0%, at 839.88.
The Cboe UK 100 ended marginally lower at 735.56. The Cboe UK 250 closed down 1.9% at 16,460.30, while the Cboe Small Companies closed down fractionally at 12,872.47.
Stocks on the continent closed lower. The CAC 40 index in Paris ended down 0.5%, while the DAX 40 in Frankfurt retreated by 1.0%.
In New York, the Dow Jones Industrial Average traded flat at the time of the London equities close, the S&P 500 lost 0.5% and the Nasdaq Composite was 1.2% lower.
Markets struggled to find their foot in a tepid day for stocks on Wednesday. The mood was initially hit by the missile report in Poland.
Western leaders, however, have since played down fears that a deadly missile blast in eastern Poland could herald a dangerous escalation in the war Russia launched against Ukraine, blaming stray anti-aircraft fire.
Poland and Nato said the explosion was likely caused by a Ukrainian air defence missile launched to intercept a Russian barrage, but that Moscow was ultimately to blame for starting the conflict.
'Officials offered a calmer reaction to yesterday's missile strike on Poland, and this has helped ease market anxiety. Nato consultations are likely, but it does not look like it will necessarily lead to an escalation,' Bannockburn Global Forex analyst Marc Chandler commented.
The pound was quoted at $1.1883 late on Wednesday afternoon in London, down a touch from $1.1891 late Tuesday. The euro traded at $1.0405, up from $1.0385 late Tuesday. Against the yen, the dollar was quoted at JP¥139.43, up from JP¥139.16 on Tuesday.
Annual inflation in the UK reached a never-before-seen high last month, data from the Office for National Statistics showed.
The consumer price index rose 11.1% in October from a year before, and up from 10.1% in September.
This was the highest annual CPI rate in the current National Statistic series, which began in January 1997.
The reading will keep the Bank of England on its toes, though focus for now shifts to fiscal policymakers. UK Chancellor Jeremy Hunt announces an autumn statement on Thursday.
In London, blue-chip retail shares ended lower, spooked by another robust UK inflation reading.
JD Sports fell 4.0%, Next lost 3.0% and Sports Direct owner Frasers gave back 2.6%.
At the other end of the large-caps, Sage added 7.4% after the enterprise software company reported strong annual revenue growth, lifted its total payout, and guided 'strong momentum' moving forward.
In the financial year that ended September 30, Sage posted a pretax profit of £337 million, down 2.9% from £347 million the previous year.
Revenue, however, rose 5.4% to £1.95 billion from £1.85 billion, underpinned by its Sage Business Cloud arm, which reported 24% revenue growth on an organic recurring basis.
CMC Markets tumbled 13% as it issued a slight caution on costs. The London-based financial trading platform maintained annual operating cost guidance of £215 million, but warned that ongoing sterling weakness and the 'rate of recruitment' could result in higher expenses.
For the six months to September 30, CMC said profit modestly increased amid an acceleration in its foreign exchange and commodities activity, alongside normal index flow operations.
Chief Executive Peter Cruddas said CMC is on track to deliver on its three-year expansion initiatives, aimed at driving higher revenue.
Hill & Smith added 5.3%, after a robust trading performance in the four months to October 31 prompted the infrastructure engineering firm to up guidance.
The company now expects full-year operating profit from continuing operations to be 'ahead of the top end of current analyst consensus' of between £84.9 million and £89.7 million.
On AIM, Harland & Wolff jumped 79% after it was awarded preferred bidder status on the £1.6 billion Fleet Solid Support contract, as part of a collaboration with BMT and Navantia.
The collaboration, named Team Resolute, will build three new Fleet Solid Support ships for the Royal Navy.
Gold was priced at $1,777.45 an ounce late Wednesday, up from $1,770.82 late Tuesday. Brent oil fetched $91.89 a barrel, down sharply from $93.03 as geopolitical fears ebbed.
Thursday's economic calendar has a eurozone inflation reading at 1000 GMT, before the UK autumn statement around 1230 GMT. Elsewhere, there are speeches from various US monetary policymakers, including Federal Reserve St Louis President James Bullard, Fed Atlanta President Raphael Bostic and Fed Cleveland President Loretta Mester.
The local corporate calendar has half-year results from luxury retailer Burberry, pub chain Fuller, Smith & Turner and Royal Mail owner International Distributions Services.
Copyright 2022 Alliance News Limited. All Rights Reserved.
