(Alliance News) - The FTSE 100 closed above 8,800 for the first time on Wednesday, after another record-breaking day, despite heavy falls on Wall Street following a stronger-than-expected inflation print.
The FTSE 100 index closed up 30.05 points, 0.3%, at 8,807.44. It had earlier hit a new all-time high of 8,810.62.
The FTSE 250 ended down 39.22 points, 0.2%, at 20,880.50, and the AIM All-Share closed down 1.15 points, 0.2%, at 723.39.
The Cboe UK 100 ended up 0.3% at 882.38, the Cboe UK 250 closed down 0.2% at 18,224.86, while the Cboe Small Companies climbed 1.3% at 16,083.43.
In European equities on Wednesday, the CAC 40 in Paris ended up 0.2%, while the DAX 40 in Frankfurt closed 0.5% higher, hitting another record peak.
Stocks in New York were lower at the London equities close after strong inflation figures, with the DJIA down 0.8%, the S&P 500 0.6% lower and Nasdaq Composite 0.4% worse off.
According to the US Bureau of Labor Statistics, consumer prices rose 3.0% on-year last month, picking up speed from a 2.9% advance in December.
The pace of consumer price inflation had been expected to remain at 2.9% last month, according to FXStreet cited consensus, so the reading was hotter than expected.
Consumer prices rose 0.5% in January from December, topping the forecast of 0.3% growth. In December, prices rose 0.4% from November.
Excluding food and energy, annual core consumer price inflation accelerated to 3.3% in January from 3.2% in December. It had been expected to cool to 3.1%, according to FXStreet.
Core consumer prices rose 0.4% in January from December, topping expectations of a 0.3% rise, after a 0.2% increase in December from November.
"US inflation came in well ahead of expectations, prompting the market to dramatically reprice the prospect of rate cuts," analysts at ING said.
Sarah House at Wells Fargo expects a "prolonged hold" from the US central bank.
"FOMC officials have made clear that they are in no hurry to adjust the current stance of monetary policy. With inflation still running above the FOMC's target, the labor market looking sturdier after last summer's wobble and heightened uncertainty around economic policy changes, we believe the Committee has settled into a prolonged hold. We have not changed our expectations for two 25 bps rate cuts in September and December of this year, but we believe the risks are skewed toward no cuts this year if the inflation data do not cool further in the months ahead," she wrote.
The data saw strong initial gains for the dollar, although these were pared as the afternoon wore on. The pound was quoted at USD1.2415 at the London equities close Wednesday, just lower compared to USD1.2421 at the close on Tuesday.
The euro stood at USD1.0364 at the European equities close Wednesday, higher against USD1.0349 at the same time on Tuesday.
Against the yen, the dollar was trading higher at JPY154.77 compared to JPY152.31 late Tuesday.
Back in London, the Financial Times reported preliminary forecasts from the Office for Budget Responsibility show the fiscal headroom that Chancellor Rachel Reeves had in October against her key budget rule has been wiped out by factors, including poor economic data.
The forecasts, which were sent to the Treasury last week, could force the chancellor to pencil in tighter spending by government departments or find extra tax revenue in her statement on March 26, the FT said.
On Thursday, all eyes will be on the latest UK growth figures, as pressure mounts on Reeves to get the economy moving.
Unfortunately for her, the news is not expected to be good.
Sanjay Raja at Deutsche Bank expects economic growth to stall in December, with services output flatlining, and manufacturing and construction activity both declining.
This will leave fourth quarter GDP shrinking – albeit marginally – by 0.1% quarter-on-quarter, he estimates. This would leave annual GDP growth at 0.7%, he added.
Bank of England policymaker Megan Greene said recent weakness in the UK economy is likely more driven by supply than demand, in a speech at the Institute of Directors.
She said it is less likely that inflation persistence will "fade on its own accord" and instead more likely that monetary policy will have to remain restrictive.
On the FTSE 100, Prudential rose 7.7% after it said it is evaluating a partial divestment and potential listing of ICICI Prudential Asset Management.
The London-based Asia-focused insurer, focused on Asia and Africa, said net proceeds would be returned to shareholders following a sale.
Prudential holds a 49% stake in ICICI Prudential Asset Management. Indian financial services company ICICI Bank Ltd holds the rest of the joint venture.
Bank of America estimates the stake could be worth around USD5 billion, based on peer multiples.
Barratt Redrow rose 5.5% after it said it expects annual earnings at the upper end of market expectations amid signs of improving market conditions.
The Coalville, England-based housebuilder said the integration of Redrow is "progressing well" with GBP100 million of cost synergies expected, GBP10 million ahead of the original target.
Pretax profit improved 23% to GBP117.2 million in the 26 weeks to December 29 from GBP95.2 million a year earlier. Revenue rose 23% to GBP2.28 billion from GBP1.85 billion.
Chief Executive David Thomas said he is "pleased" with the performance.
"As the economic, political and lending environments have stabilised, there has been some recovery in customer demand and we have seen solid reservation activity since the start of January, building a strong forward sales position.
"As a result, we now expect our full year adjusted profit before tax will be towards the upper end of market expectations."
Barratt Redrow puts adjusted pretax profit consensus at GBP542 million, with a range between GBP506 million to GBP588 million.
Elsewhere, Croda climbed 2.7% after UBS reiterated a 'buy' rating.
Noting the firm's poor share price performance, the broker outlined a potential pathway to an at least partial reversal of this derating.
It suggested more meaningful cost savings plans, a share buyback programme and the disclosure of margin trends would all help.
TBC Bank led the way among the FTSE 250, jumping 8.5%. It hailed record profit in 2024, highlighting economic growth in Georgia and a solid expansion in Uzbekistan.
The Tbilisi, Georgia-headquartered lender said pretax profit in 2024 rose 16% to GEL1.54 billion, around GBP443.0 million, from GEL1.33 billion in 2023.
Net profit climbed 15% to a record GEL1.31 billion.
Also on the up in London were easyJet and Wizz Air. Wizz Air added 1.1%, while easyJet rose 2.1%. Kepler Cheuvreux started easyJet at 'buy' but Wizz Air at 'hold'. It started IAG at 'buy', though Bernstein cut the British Airways parent to 'market-perform' from 'outperform'.
IAG shares were down 0.8%.
Brent oil was quoted lower at USD75.81 a barrel at the London equities close Wednesday from USD76.81 late Tuesday.
Gold was quoted lower at USD2,897.30 an ounce at the London equities close Wednesday against USD2,906.30 at the close on Tuesday.
Thursday's UK corporate calendar sees full-year results from high street lender Barclays, tobacco seller BAT and Marmite and Ben & Jerry's owner, Unilever.
The economic calendar for Thursday has UK economic growth data at 0700 GMT and US PPI and weekly initial jobless claims figures at 1330 GMT.
By Jeremy Cutler, Alliance News reporter
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