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Soaring US inflation drags London stocks to negative territory

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The FTSE 100 dropped in value on Wednesday (Kirsty O’Connor/PA) (PA Wire)
The FTSE 100 dropped in value on Wednesday (Kirsty O’Connor/PA) (PA Wire)

London stocks closed firmly in the red after Wall Street trading hit the brakes following a surge in inflation.

European markets had already been lower but cemented their position in the red after US price inflation surpassed expectations for June and put more pressure on the Fed.

Airline stocks were also a drag on the markets after US operator Delta saw profits hit by cost increases, pulling UK-listed firms such as IAG lower.

The FTSE 100 ended the day down 53.49 points, or 0.74%, at 7,156.37.

“The ongoing theme of stock weakness and dollar dominance continue to play out in the wake of the latest US inflation data,” commented Joshua Mahoney, senior market analyst at IG.

“While markets had expected to see prices increase for June, the actual figure of 9.1% represents a whopping 40-year high that does little to instil confidence that things are about to turn around.

“Higher rates, sharp increases in costs, and lagging wage growth all amount to an environment that will be tough for businesses and consumers alike.”

Elsewhere in Europe, the German Dax decreased by 1.16% by the end of the session while the French Cac fell by 0.73%.

Meanwhile, sterling dropped against a dollar which had been buoyed by speculation of further Fed rate increases.

Meanwhile, the pound was down 0.24% against the dollar at 1.192 and was 0.02% higher against the euro at 1.182 at the close.

In company news, pub giant JD Wetherspoon warned over annual losses after hiking staff wages and ramping up spending on repairs and marketing, sending shares significantly lower.

The group, which runs more than 800 pubs, said it is now expecting losses of around £30 million for the year to the end of July after investing to attract and retain workers, and on the wider business.

Shares dropped by 52.5p to 577.5p as a result.

Shares in Countryside drifted lower after the housebuilder told shareholders its non-executive chairman John Martin has stepped down with immediate effect.

The move comes a month after the company put itself on the market for sale following investors’ pressure, after Countryside rebuffed a £1.5 billion takeover proposal.

The group finished the day down 6.8p at 238.2p.

Elsewhere, Clarkson made gains after the shipping services business forecast higher profits amid strong growth across the business, with its broking arm performing particularly well.

Shares floated 270p higher to 3,225p after it told investors it expects to report an improved pre-tax profit of no less than £42 million for the six months to the end of June.

The price of oil hit a three month low as waning consumer spending and pressures in the Asian market continued to drive demand concerns.

Brent crude decreased by 0.21% to 99.28 US dollars per barrel when the London markets closed.

The biggest risers in the FTSE 100 were Fresnillo, up 25.4p at 684.6p, Endeavour Mining, up 27p at 1,656p, Segro, up 15p at 1,031.5p, Land Securities, up 8.8p at 671.2p, and Harbour Energy, up 3.8p at 328p.

The biggest fallers of the session were Abrdn, down 8.15p at 154.15p, Mondi, down 62.5p at 1,427p, IAG, down 4.44p at 105.98p, DS Smith, down 10.4p at 277.1p, and GSK, down 47.6p at 1,695p.

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