Stock prices in London fell on Wednesday, after a release before the market open confirmed the UK returned to double-digit inflation last month, all but ensuring a big interest rate hike by the Bank of England next month.
The FTSE 100 index was down 16.99 points, or 0.2%, at 6,919.75 on Wednesday morning. The index is on a four-day winning streak, however.
The FTSE 250 was down 75.09 points, or 0.4%, at 17,454.22. The AIM All-Share shed 3.41 points, 0.4%, at 792.07.
The Cboe UK 100 opened 0.4% lower at 691.32, the Cboe UK 250 slipped 0.7% to 14,932.60, and the Cboe Small Companies traded 0.3% higher at 12,490.11.
In European equities on Wednesday morning, the CAC 40 in Paris fell 0.1%, though the DAX 40 in Frankfurt both rose 0.2%.
The pound fell to $1.1289 early Wednesday from $1.1291 late Tuesday, despite another hot consumer price index print lifting the likelihood of the BoE digging deeper to contain inflation.
CPI rose by 10.1% in September from a year before, according to the Office for National Statistics. The inflation rate picked up from 9.9% in August and returned to the same rate as recorded in July.
The latest figure came in marginally hotter-than-expected, with a reading of 10% foreseen by the market, according to FXStreet.
The reading is likely to ensure another chunky rate hike by the Bank of England next month, potentially a 75 basis point lift to the bank rate. Last month, the central bank raised the key rate by 50 basis points for the second time in a row. The next scheduled Monetary Policy Committee meeting is on November 3.
The inflation reading comes as the BoE also moves to contain wild bond markets.
The Bank of England has said it will delay the sale of government bonds to November 1 due to the fiscal announcement later this month. The central bank had been due to start selling new UK government bonds, called gilts, on October 31.
The announcement came after the bank denied a report earlier on Tuesday that it would postpone the bond sale programme in an attempt to allow battered gilt markets to recover following the UK government mini-budget chaos. The BoE had initially dismissed a report from the Financial Times which stated it would delay a planned sale of £838 billion of UK government bonds purchased under a quantitative easing programme.
The inflation reading also came after new UK Chancellor Jeremy Hunt reversed a litany of tax cuts outlined in last month's mini-budget.
'There is growing speculation that the UK government will need to cut budget spending further after the fiscal U-turn. We already estimate that the change in the energy price guarantee will cause higher inflation, a deeper recession, and may cause the BoE to hike by 75bp rather than 100bp,' analysts at ING commented.
The Dutch bank sees 'downside' risks to the pound persisting.
The euro traded at $0.9832 early Wednesday UK time, up slightly from $0.9826 at the time of European equities close on Tuesday. Inflation data from the eurozone is reported at 1000 BST.
The dollar rose to JP¥149.39 early Wednesday from JP¥149.24 late Tuesday.
Stocks in Asia were mixed on Wednesday. In China, the Shanghai Composite ended down 1.2%, while the Hang Seng in Hong Kong was 2.2% lower in late trade. The Nikkei 225 rose 0.4% in Tokyo, while the S&P/ASX 200 added 0.3% in Sydney.
In London, Asos shares jumped 13%. The online clothing retailer reported a swing to annual loss, though it outlined plans to revive its fortunes after performing a 'diagnostic' on its issues.
Revenue in the financial year that ended August 31 rose 0.7% to £3.94 billion from £3.91 billion a year earlier. However, Asos reported a swing to an annual pretax loss of £31.9 million of £177.1 million.
Among its issues, Asos said, is an underperforming international arm, its supply chain operations, its 'customer acquisition and commercial model', and the need for data and digital improvements.
'Over the next 12 months, ASOS will deliver on four actions targeted at improving its ability to navigate the existing uncertainty, focused on: renewing its commercial model and improving inventory management; simplifying and reducing its cost profile; ensuring a robust and flexible balance sheet; and reinforcing the leadership team and refreshing the culture,' Asos said.
It expects a £100 million to £130 million non-cash stock write-off for the new financial year. Capital expenditure, at £175 million to £200 million, will be below the mid-term range of £200 million to £250 million.
Davy Research said Asos's annual revenue of £3.94 billion was below market consensus of £4.00 billion, while adjusted pretax profit of £22.0 million was below consensus of £24 million.
'Today was all about the FY23 guide - a mass of caution and uncertainty and no guide, aside from a free cash flow move of £0 to £100 million outflow. On the face of it, not enough to stress the balance sheet, although the assumption set around FY23 trading is unknown,' Davy said.
Elsewhere in London, IOG tumbled 55%.
The North Sea-focused gas and infrastructure operator has suspended its Southwark A1 well due to more fluid losses.
'Drilling the Southwark A1 well has continued to be very challenging with further fluid losses at the base of the Bunter Shale. To preserve the opportunity to deliver first gas in this quarter, we have decided to suspend operations on A1 in order to ensure that A2 stimulation work proceeds in the scheduled window,' Chief Executive Andrew Hockey said.
Over in New York, Netflix was up 14% in pre-market trade. The streaming service reported subscriber growth in the third quarter, ahead of the launch of its advert-subsidised offering.
In the three months to the end of September, net income slipped to $1.40 billion from $1.45 billion, though revenue improved to $7.93 billion from $7.48 billion.
Global streaming paid memberships stood at 223.09 million at the end of the third quarter, up from 213.56 million a year prior and rising from 220.67 million at the end of the second quarter.
Gold traded at $1,639.56 an ounce early Wednesday, down from $1,647.70 at the London equities close Tuesday. A barrel of Brent oil rose to $90.10, from $88.97.
Still to come on Wednesday's economic calendar are US housing starts at 1330 BST.
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