MARKETS LIVE: London opens lower as inflation climbs above forecasts Proactive uses images sourced from Shutterstock
FTSE 100 falls 0.2% to 10,708
Inflation climbs above forecasts
Government borrowing reaches £24.5 billion
Oil shares limit losses
8.15am BST: Rate concerns weigh on London
London stocks opened lower after UK inflation accelerated more sharply than expected, strengthening expectations that the Bank of England will raise interest rates in November.
The FTSE 100 fell 25 points, or 0.2%, to 10,708, while the FTSE 250 declined 51 points, or 0.2%, to 24,314.
The FTSE 350 and All-Share also lost 0.2%, while the AIM All-Share dropped 0.4%.
Consumer price inflation rose to 3.5% in September from 3.1% in August, exceeding the 3.4% forecast as higher motor fuel, airfare and entertainment prices increased pressure on household budgets.
Core inflation, which excludes volatile food and energy costs, increased to 2.8% from 2.6%, while services inflation climbed to 3.7%.
Government borrowing also exceeded expectations at £24.5 billion in September as debt interest payments reached a record for the month, adding to the pressure on Chancellor John Healey before next week’s Budget.
Energy shares provided the strongest support after oil prices resumed their advance, with Ithaca Energy climbing 4%, BP gaining 2% and Shell adding almost 1%.
Brent crude rose about 2% to $110.60 a barrel, while the government’s approval of Shell’s Jackdaw gas project provided an additional positive catalyst for the sector.
Technology-linked shares also recovered from Tuesday’s sell-off as Scottish Mortgage Investment Trust gained 1.5%, Computacenter rose 1.1% and Polar Capital Technology Trust added 1%.
ConvaTec and Admiral Group were among the other blue-chip risers, advancing about 1% each.
7.00 am BST: London eyes cautious rebound
London stocks are expected to open slightly higher as investors await UK inflation and borrowing figures that could influence expectations for the Bank of England’s November interest-rate decision.
The FTSE 100 is called around 14 points higher after finishing Tuesday down 0.3% at 10,733, while December futures were little changed at 10,773 shortly before 7 am.
Economists expect annual consumer-price inflation to have accelerated to 3.4% in September from 3.1% in August, reinforcing concerns that the Bank may need to raise interest rates despite subdued economic growth.
Public-sector borrowing figures are also due, with the deficit forecast at approximately £23.9 billion ahead of Chancellor John Healey’s first Budget.
Wall Street provided a broadly supportive lead as strong company results lifted the Dow Jones Industrial Average 1% and the S&P 500 0.3%, although renewed caution towards expensive technology shares left the Nasdaq virtually unchanged.
Asian markets were mixed as technology shares rebounded from Tuesday’s rout, with South Korea’s Kospi gaining about 3% and Japan’s Nikkei rising around 1%, while Hong Kong and mainland Chinese shares edged lower.
Australia’s ASX 200 closed broadly unchanged at 8,813 after trading within a narrow range.
Oil prices resumed their advance amid continuing uncertainty over Middle East supplies, with Brent crude rising 1.7% to about $110.60 a barrel and West Texas Intermediate adding 1.6% to $99.30.
Gold was little changed near $4,138 an ounce, while silver fell about 1% and copper remained broadly flat.
Sterling traded near $1.334 before the inflation release, while Bitcoin strengthened above $82,000.