FTSE 100 slips as miners slide, inflation hits 41-year high

Article content

The FTSE 100 fell on Wednesday in choppy trading as weakness in mining stocks weighed on the commodity-heavy index, while hotter than expected inflation data highlighted a severe cost of living crisis and dragged the retail sector lower.

The blue-chip FTSE 100 closed 0.3% down.

Article content

Miners fell 1.4% tracking the drop in copper prices as weak Chinese economic data added to signs of low demand and ample supply.

Surging household energy bills and food prices pushed British inflation to a new 41-year high in October, according to data published a day before finance minister Jeremy Hunt is due to announce tax hikes and spending cuts to control price growth.

Article content

“With the Autumn Statement coming tomorrow, fiscal consolidation could outweigh any of the hawkish surprises we’ve seen on the labor market and inflation fronts,” said Sanjay Raja, senior UK economist at Deutsche Bank Research.

“Beyond the scale of fiscal consolidation, what markets will be paying very close attention to is the timing of the fiscal tightening – as this will ultimately have the biggest impact on the Bank’s forecasts and rate path ahead.”

Retailers slid 2.8%.

“The CPI data has raised concerns again about consumer appetite for discretionary spending and how much disposable income they will have to spend in the shops,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

Article content

Bank of England Governor Andrew Bailey said that Britain’s “very tight” labor market was a key reason why further interest rate increases were likely.

The midcap index fell 1.8%, with shares of Carnival Plc dropping 13.8% to the bottom of the index after the cruise operator said it was planning $1 billion convertible debt deal.

Britain’s biggest defense company BAE Systems jumped 4.2% as geopolitical tensions rose after a missile hit a village in Poland on Tuesday, close to the Ukraine border.

Software company Sage Group jumped 7.3% after reporting a 8% rise in full-year organic operating profit. (Reporting by Shashwat Chauhan, Bansari Mayur Kamdar, Shristi Achar A and Sruthi Shankar in Bengaluru; Editing by Sherry Jacob-Phillips, Savio D’Souza, William Maclean)