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LONDON MARKET CLOSE: Stocks mostly up despite hawkish Fed, UK inflation

Stock prices in London closed largely up on Wednesday, as the FTSE 100 shrugged off hotter-than-expected UK inflation data.

The FTSE 100 index closed up 27.63 points, 0.4%, at 7,847.99. The FTSE 250 ended down just 4.40 points at 19,340.14, and the AIM All-Share closed up 4.84 points, or 0.7% at 743.12.

The Cboe UK 100 ended up 0.6% at 785.06, the Cboe UK 250 closed up 0.1% at 16,784.15, and the Cboe Small Companies ended up 0.5% at 14,771.78.

The UK consumer price inflation rate was a touch loftier than expected last month, numbers on Wednesday showed, though it cooled to its tamest level since September 2021.

According to the Office for National Statistics, the year-on-year rate of consumer price inflation ebbed to 3.2% in March, from 3.4% in February.

A slowdown to 3.1% was expected, according to FXStreet cited consensus, however. Nonetheless, it was still the tamest rate of inflation since it sat at 3.1% in September 2021.

The next Bank of England decision is on May 9. Wednesday’s inflation reading following data on Tuesday showing wage growth was loftier than expected.

Stocks in New York were lower at the London equities close, with the DJIA and the S&P 500 both down 0.4%, while the Nasdaq Composite was down 0.6%.

The US Federal Reserve’s ongoing fight against inflation could take ‘longer than expected,’ the head of the US central bank said Tuesday, further paring back the chances of early rate cuts.

But three months of higher inflation data since the start of 2024 have threatened to undermine the expectation of interest rate cuts this year, with one senior Fed policymaker recently suggesting that rates could remain at their current levels until 2025.

‘The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,’ Chair Powell said.

In European equities, the CAC 40 in Paris ended up 0.6%, while the DAX 40 in Frankfurt ended up 0.1%.

Annual inflation in the eurozone abated in March, numbers confirmed.

The annual rate of consumer price inflation ebbed to 2.4% in March from 2.6% in February, according to a Eurostat.

On a monthly basis, consumer prices rose 0.8% in March, picking up speed from a 0.6% rise in February from January.

The annual core rate of inflation - excluding energy, food, alcohol and tobacco - slowed to 2.9% last month from 3.1% in February.

Against the dollar, sterling rose to $1.2447 at the London equities close on Wednesday from $1.2435 at the time of the London equities close on Tuesday. The euro was up $1.0637 from $1.0629. Against the yen, the buck bought JP¥154.67, rising from JP¥154.51.

A barrel of Brent oil slumped to $88.68 at the London equities close on Wednesday from $90.21 at the European equities close Tuesday. Gold traded at $2,383.47 an ounce, up from $2,379.66.

In London’s FTSE 100, mining shares were ‘doing their very best to recharge the market’ AJ Bell analyst Russ Mould commented, with Rio Tinto up 2.6%, Anglo American up 3.5%, Fresnillo up 2.9% and Antofagasta up 2.8%.

Rio Tinto rose despite it reporting lower quarterly iron ore shipments and production at its key Pilbara operation. Antofagasta said copper output was weaker in its first-quarter, though it maintained guidance. Anglo American said the latest rough diamond sales by its De Beers arm were up against the previous sales round of 2024, but they remained below a year before.

Mining shares had fallen on Tuesday following mixed Chinese data. China is a major buyer of minerals. The nation’s gross domestic product grew in the first-quarter, though industrial production and retail sales readings were weaker than expected.

Entain rose 1.0%, after the bookmaker brands Ladbrokes and Coral owner said its first-quarter performance was in line with expectations, the betting operator having had ‘successful’ Super Bowl and ’March Madness’ events in the US.

In the FTSE 250, International Distribution Services rose 29%, after the Royal Mail owner rejected a takeover proposal from billionaire Daniel Kretinsky’s EP Corporate Group, the latter said.

EP Corporate, is a 100% direct shareholder of Vesa Equity which holds an around 28% stake in IDS.

EP Corporate said it submitted a non-binding indicative proposal to IDS, seeking its recommendation for a possible cash offer for the shares it does not already own.

Although this was rejected, EP Corporate said it looked forward to continuing to engage constructively with IDS and would consider ‘all options’.

EP Group said it viewed the UK as an attractive and dynamic market for investment. It recognises that Royal Mail is in a ‘challenging situation’.

Among London’s small-caps, Severfield surged 19%.

The North Yorkshire, England-based structural steel group said it plans to launch a £10 million share buyback programme, as it hailed good progress during the second half of its financial year that ended on March 30.

Severfield expects to report a full year results slightly above its own previous expectations.

On AIM in London, Scirocco lost 9.1%.

The investment firm, focused on European sustainable energy assets, said it plots an exit from the AIM market.

‘The considerable cost and management time and the legal and regulatory burden associated with maintaining the company’s admission to trading on AIM are, in the board’s opinion, disproportionate to the benefits,’ it said.

Scirocco expects the final day of trading of its shares to be May 16, before cancellation a day later.

In Wednesday’s UK corporate calendar, budget airline easyJet and resource miner BHP both post trading statements.

The economic calendar has US initial jobless claims data out at 1330 BST.

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