Stock prices in London were in the red at midday Tuesday as eurozone consumer prices were confirmed to have risen as expected in October, while global geopolitical tensions rose.
Ukraine is utilising its new ability to hit Russia with US missiles, reportedly prompting stocks to fall as investors lose their appetites for risk.
Investors are also starting to scale back expectations for interest rate cuts, AJ Bell’s Russ Mould said.
‘It could be down to sticky inflation, worries about government borrowing levels, or the absence of a long-awaited recession, but investors are starting to cut back on the number of interest rate cuts they are expecting from both the US Federal Reserve and the Bank of England,’ Mould commented. ‘A month or two ago, markets were pricing in a Fed funds rate and a Bank of England base rate as low as 3.5% by next Christmas, but 4% now seems to be the current consensus for 12 months’ time.’
He added: ‘The Fed is expected to cut by 0.25% to 4.50% on 18 December but markets seem less convinced the Bank of England will act the following day, as an easing of policy is currently seen as a 50-50 chance, despite last week’s uninspiring print for GDP growth in the third quarter.’
The FTSE 100 index was down 32.72 points, 0.4%, at 8,076.60. The FTSE 250 was down 55.02 points, 0.3%, at 20,340.39, and the AIM All-Share was down 3.69 points, 0.5%, at 723.86.
The Cboe UK 100 was down 0.3% at 812.09, the Cboe UK 250 was down 0.3% at 17,836.57, and the Cboe Small Companies was down 0.1% at 15,793.82.
DCC led the FTSE 100, up 2.7%.
Jefferies maintained a ’buy’ rating for the Dublin-based sales and marketing company, and increased the price target to 7,950 pence from 7,600p.
International Consolidated Airlines lost 2.9%, ahead of biggest loser Diploma which lost 7.1%.
IAG owns British Airways, which was hit by a ‘technical issue’ on Monday as frustrated customers around the world complained of delays.
Reports suggested dozens of BA flights had been grounded after an IT failure hit the airline. In a statement, BA said: ‘Our flights are currently operating, but are experiencing delays as our teams work to resolve a technical issue affecting some of our systems.’
Vesuvius led the FTSE 250, rising 7.3%. Burberry led the laggers with a 5.3% decline.
Vesuvius, a London-based molten metal flow engineering company is starting a new £50 million share buyback programme on Tuesday, which it aims to complete by late May.
For smaller caps, Avon Technologies gained 7.3%.
The Wiltshire, England-based protective gear company’s annual revenue rose 13% to $275.0 million and Avon swung to pretax profit of $2.3 million from the prior year’s $20.2 million loss.
It also declares a final dividend of 16.1 US cents, up from 15.3 cents. The total dividend however is 23.3 cents, down from 29.6 cents.
Gear4Music lost 3.2%.
The York-based music equipment online retailer reported a 1.4% decline in total revenue to £61.7 million despite 6% growth in the UK market. Revenue fell 12% in Europe and the rest of the world due to a ‘challenging consumer environment’.
In European equities on Tuesday, the CAC 40 in Paris was down 1.3%, while the DAX 40 in Frankfurt was down 1.2%.
Consumer prices rose as expected in October, data published by Eurostat showed Tuesday.
The harmonised consumer price index rose 2.0% on-year in October, in line with the flash estimate, accelerating from 1.7% in September.
On a monthly basis, the harmonised CPI rose by 0.3% in October, as expected, compared to deflation of 0.1% in September.
The pound was quoted at $1.2635 at midday on Tuesday in London, lower compared to $1.2649 at the equities close on Monday. The euro stood at $1.0563, lower against $1.0572. Against the yen, the dollar was trading at JP¥154.08, down compared to JP¥155.01.
Stocks in New York were called lower on Tuesday. The Dow Jones Industrial Average was called down 0.6%, the S&P 500 index down 0.5%, and the Nasdaq Composite down 0.4%.
Brent oil was quoted lower at $72.76 a barrel at midday in London on Tuesday from $73.08 late Monday.
Gold was quoted higher at $2,634.16 an ounce against $2,610.04 late Monday.
Still to come on Tuesday’s economic calendar, there are the US building permits and Redbook index releases.
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