Stocks in London ended lower on Wednesday as UK inflation accelerated at the fastest pace in 40 years in July, while housebuilders weighed on the FTSE 100 on a profit drop from Persimmon.
The FTSE 100 closed down 20.31 points, or 0.3%, at 7,515.75. The FTSE 250 index ended down 309.37 points, or 1.5%, at 20,027.04. The AIM All-Share index closed down 4.87 points, or 0.6%, at 926.67.
The Cboe UK 100 index closed down 0.3% at 750.82. The Cboe 250 gave back 1.7% at 17,349.68. The Cboe Small Companies lost 0.2% at 14,418.18.
In Paris, the CAC 40 closed down 1.0%, while the DAX 40 in Frankfurt shed 2.0%.
The UK consumer price index surged by 10.1% on an annual basis in July, topping FXStreet-cited market consensus of 9.8% and quickening from 9.4% in June.
According to the Office for National Statistics, it was a fresh high for the annual inflation rate in the current series, which began in January 1997. Modelling would suggest the last time inflation was this red-hot was in 1982, 40 years ago.
A year earlier, the inflation rate was just 2.0% - matching the Bank of England's target. However, there has been an acceleration in annual inflation every month since last October.
Earlier this month, the UK central bank lifted borrowing costs by 50 basis points to 1.75% - marking its highest rate increase since 1995.
In the FTSE 100, Permission ended the worst performer, down 7.8%, after the housebuilder said half-year earnings declined.
The York-based company said revenue in the half-year to June 30 fell 8.3% to £1.69 billion from £1.84 billion a year ago. Completions during the half amounted to 6,652 new homes, down from 7,406 a year earlier, as expected.
‘Legal completions, as anticipated, were lower than the prior year and reflect delays in achieving planning consents on our new outlet openings,’ it said.
Pretax profit declined 8.4% to £439.7 million from £480.1 million.
Despite the fall in profit, the housebuilder remained optimistic: ‘While near term uncertainties continue the longer-term fundamentals remain strong,’ it said.
It continues to target around 10% growth in active outlets by the end of 2022.
Rivals Barratt Developments, Taylor Wimpey and Berkeley closed down 3.6%, 3.1% and 3.0% respectively in a negative read-across.
In the FTSE 250, Balfour Beatty ended the standout performer, up 9.8%, after the construction company raised its profit outlook.
For the half year ended July 1, the firm's revenue was largely unchanged year-on-year at £4.15 billion. Pretax profit more than doubled to £83 million from £35 million.
Balfour raised its dividend by 17% to 3.5 pence per share from 3.0p.
At the other end of the mid-caps, Asos ended the worst performer, down 11%, after the online fashion retailer said Chief Operating Officer & Chief Financial Officer Mat Dunn will step down.
In October, Chief Executive Nick Beighton said he would step down after 12 years with Asos, including six as CEO. At the time, the company said it intends to shake-up the board to ‘underpin delivery of the next phase of its global growth strategy’.
Following Beighton's departure, Dunn, who joined Asos in April 2019 as CFO, took on the additional role of COO.
In June, Jose Calamonte joined Asos as its new CEO, while the company also appointed Jorgen Lindemann as chair.
Asos said that Dunn will continue in his role until at least October 31 and will remain employed until the end of the year to provide ‘transitional support’.
The process to appoint a new CFO is now underway, the company added.
Elsewhere, Cineworld plunged 60%, hitting a record low of 7.77p during the session, after the movie theatre operator said the number of film goers has been ‘below expectations’ recently, which it put down to a weaker film slate.
‘Consequently, the group has been taking proactive steps to ensure it has the balance sheet strength and flexibility to adapt to market conditions. This includes significant previously disclosed operational and financial initiatives to manage costs and enhance liquidity,’ Cineworld warned.
Cineworld said it is in ‘active discussions with various stakeholders’ to mull ways to bolster its coffers and possibly restructure its balance sheet, though a ‘comprehensive deleveraging transaction’.
It cautioned that any deleveraging is likely to dilute the value of its shares.
On AIM, Revolution Beauty rose 15%, while boohoo lost 5.5%.
Online-only retailer boohoo said it has made a ‘strategic investment’ in beauty products seller Revolution Beauty Group. It now has a 7.1% stake.
‘The investment builds upon the existing relationship between boohoo and Revolution Beauty, under which Revolution Beauty products are sold through several of the group's direct to consumer brand websites and its online digital department store, Debenhams. The investment reflects boohoo's belief in the growth potential of Revolution Beauty and it intends to be a supportive stakeholder and long-term partner,’ boohoo explained.
Revolution Beauty stock has been hit in recent weeks by a warning on cost inflation and a statement that its auditors found ‘certain accounting issues’ that could have a ‘material impact’ on results for the year ended February 28, 2022.
The dollar was higher across the board. The pound was quoted at $1.2040 at the London equities close, down from $1.2099 at the close Tuesday.
Sterling spiked to an intraday high of $1.2144 against the greenback after the inflation data was released.
The euro stood at $1.0155 at the European equities close, down from $1.0177 late Tuesday. Against the yen, the dollar was trading at JP¥135.44, up from JP¥134.28.
Stocks in New York were lower at the London equities close ahead of the release of the latest meeting minutes from the US Federal Reserve at 1900 BST.
The DJIA was down 0.8%, the S&P 500 index down 0.9% and the Nasdaq Composite down 1.5%.
Brent oil was quoted at $93.38 a barrel at the equities close, firm from $93.04 at the close Tuesday.
Gold stood at $1,753.55 an ounce at the London equities close, lower against $1,774.80 late Tuesday.
The economic events calendar on Thursday has eurozone inflation readings at 1000 BST and the latest US jobless claims numbers at 1330 BST.
The UK corporate calendar on Thursday has annual results from gambling company Rank Group and online appliance retailer AO World. Paving specialist Marshalls will report interim results.
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