UK’s FTSE 100 ticked up on Wednesday as investors weighed December inflation data which eased further from the previous month but still hovered in double-digit territory, stoking worries the Bank of England would continue with a tight monetary policy.
The internationally focussed FTSE 100 edged 0.1%, hovering at over four-year highs.
Basic material stocks, which houses miners such as Rio Tinto, were the top gainers with a 1.1% jump as iron ore and copper prices advanced on strong demand prospects out of top-consumer China.
Data showed British headline inflation dropped further away from a four-decade peak of 11.1% in October, and is expected to drop to 5% by the end of 2023. But, worries loom that a tight job market would make the journey to lower inflation more painful. The pound was up 0.4%.
FTSE 100 in sight of record high as financial stocks gain
“The labour market in the UK is fundamentally imbalanced due to the shocks of Brexit and the pandemic,” said Stefan Koopman, senior macro strategist at Rabobank.
“Inflation figures clearly indicate the labour market needs cooling if policy makers want to bring inflation back to 2%.”
Markets expect the Bank of England to raise interest rates by 50 basis points in February.
The FTSE 100 has gained around 7% since a potential inflation peak of 11.7% in October, with improving economic growth data and upbeat trading updates from a few firms further aiding sentiment.
The domestically oriented FTSE 250 added 0.3%.
Shares of Currys rose 9.3% after the retailer retained its recently downgraded full-year financial forecast, though it noted further deterioration in trading at its Nordics business during Christmas.
TI Fluid Systems tanked 11.9% on the automotive fluid storage maker’s unexpected negative sales impact in China during the fourth-quarter of 2022.
London-listed shares of Just Eat Takeaway.com NV jumped 14.7% as it confirmed putting profitability over growth.
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