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FTSE in the red again as inflation hits decade high

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Early morning light bathes the skyscrapers of the City of London financial district (Aaron Chown/PA) (PA Archive)
Early morning light bathes the skyscrapers of the City of London financial district (Aaron Chown/PA) (PA Archive)

Soaring inflation and a number of underwhelming company updates weighed on the FTSE as it once again lagged behind other global indices.

Consumer Price Index (CPI) inflation rocketed from 3.1% to 4.2% last month, the Office for National Statistics said, adding to the cost pressures facing UK firms.

The FTSE 100 closed 35.77 points, or 0.49%, lower at 7,291.2 on Wednesday.

Michael Hewson, chief market analyst at CMC Markets UK, said: “It’s been another disappointing session for the FTSE 100, once again finding itself undermined by several disappointing company earnings reports, and a rather hot October UK inflation report, which saw CPI hit its highest level in over a decade.

“The biggest fallers are all companies that appear to have underwhelmed investors with their latest trading updates.

“While the FTSE 100 and FTSE 250 have both slipped back, the Dax and Cac 40 have continued to look resilient with more record highs, although the afternoon session looked increasingly lacklustre.”

The key markets in mainland Europe finished higher for the third consecutive trading day.

The German Dax increased by 0.02% and the French Cac improved by 0.15%.

Across the Atlantic, the main US markets failed to carry on Tuesday’s rally and moved slightly lower on the opening bell due to strength in the dollar.

Meanwhile, sterling was significantly boosted by the rise in inflation and rising retail prices, with the pound hitting its highest against the euro since February 2020.

The pound was 0.11% higher versus the US dollar at 1.347, and up 0.05% against the euro at 1.191.

In company news, SSE was among the FTSE 100’s weaker performers despite it reporting a 30% increase in profits.

The energy company also announced a £12.5 billion investment in renewables but has come under pressure recently from activist investor Elliott to spin off its renewables operation and boost shareholder returns but the board has continued to push back.

It closed 71p lower at 1,587p on Wednesday.

At the other end of the index, accounting software firm Sage made gains despite revealing an 8% decline in pre-tax profits.

The company saw shares rise by 71p to 800p as investors welcomed the business’s decision to increase it dividend, while it also reported an improvement in organic returning revenue.

Online trading platform CMC tumbled after its profits dropped sharply as its pandemic-fuelled trading boom came to a shuddering halt.

The company, led by founder and Tory peer Lord Peter Cruddas reported a £36 million profit compared with £141 million in the previous year, sending shares down 28.5p to 243p.

Meanwhile, McColls finished 3.35p lower at 14.65p after the convenience store chain said mounting supply chain issues impacted stocks of popular items such as snacks and beers, causing it to downgrade its earnings guidance.

The price of oil suffered another drop in anticipation of a possible release from the US Strategic Petroleum Reserve (SPR) in an effort to keep control of petrol prices.

Brent crude decreased by 1.53% to 81.17 dollars per barrel.

The biggest risers on the FTSE 100 were Sage, up 71p at 800p, Aveva, up 98p at 3,459p, Smiths Group, up 42.5p at 1,507.5p, and Glencore, up 8.25p at 371.95p.

The biggest fallers of the day were LSE, down 428p at 6,666p, Spirax-Sarco, down 840p at 16,165p, SSE, down 71p at 1,587p, and Experian, down 139p at 3,373p.

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How is inflation hitting households and what can we expect in the months ahead?

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