London stocks ended higher on Wednesday, with the FTSE 100 climbing 0.7% despite hotter-than-expected US inflation figures, as comments from the Bank of England’s chief economist eased concerns over aggressive UK interest rate increases.
The FTSE 100 gained 74.53 points to close at 10,724.86, while the FTSE 250 edged up 0.1% to 24,360.77. The AIM All-Share moved in the opposite direction, falling 0.4% to 767.91.
Bank of England Chief Economist Huw Pill supported investor sentiment by questioning market expectations for four interest rate increases totalling 100 basis points.
Pill suggested that further evidence of sustained wage and inflation pressures would be needed to justify tightening monetary policy by that amount, providing relief to interest rate-sensitive sectors.
Housebuilders were among London’s strongest performers, with Barratt Redrow rising 4.0% and Persimmon gaining 2.8% as investors reassessed the outlook for borrowing costs.
Attention also turned to Chancellor John Healey’s 28 October Budget, following reports that additional spending commitments and tax measures would be funded through higher revenues or spending reductions rather than increased borrowing. <Cite refs={[“turn348336news24″,”turn348336news25”]}/>
However, global markets faced renewed inflation concerns after US consumer prices rose faster than expected in September.
Annual US inflation accelerated to 3.7% from 3.4% in August, exceeding forecasts of 3.6%, while core inflation increased to 2.6% from 2.4%.
Energy prices were a major contributor, rising 20% annually, with gasoline prices surging 34%.
The stronger figures increased expectations of another Federal Reserve interest rate rise, pushing US Treasury yields higher and strengthening the dollar.
The benchmark US 10-year Treasury yield rose to 5.26%, compared with 5.22% on Tuesday, while sterling weakened to $1.3152 from $1.3249.
Wall Street traded lower following the inflation report, with the S&P 500 declining 0.8% and the technology-heavy Nasdaq falling 1.2% around the London close.
Bank of America shares slumped 7.7% after US authorities announced penalties exceeding $1.2 billion relating to anti-money laundering and sanctions violations. The charges also weighed on the bank’s quarterly earnings.
European markets performed better, with France’s CAC 40 advancing 0.6% and Germany’s DAX gaining 0.2%.
Dutch semiconductor equipment manufacturer ASML rose 1.2% following stronger-than-expected quarterly results, reporting net income of €4.96 billion and sales of €11.66 billion, up 55% year-on-year.
Back in London, gold miners came under pressure as the stronger dollar weighed on precious metal prices. Fresnillo fell 4.6% and Endeavour Mining declined 3.4%, while gold dropped to $4,089.77 an ounce from $4,163.06.
On the FTSE 250, Big Yellow Group jumped 5.4% after activist investor Ancora Holdings called for a strategic review of the self-storage company, including a potential sale.
Recruitment specialist Robert Walters gained 3.9% after reporting a 1% increase in third-quarter net fees at constant currency, marking an improvement from the 3% decline recorded during the first half of the year.
Other notable FTSE 100 gainers included GSK, Burberry, AstraZeneca and Babcock International, while Computacenter, Airtel Africa and Standard Chartered were among the session’s largest fallers.
Brent crude remained relatively stable at $105.67 a barrel, compared with $105.83 on Tuesday.
Investors now face a key test of interest rate expectations, with Thursday bringing UK economic growth figures, French inflation data and US wholesale inflation numbers.
London’s corporate calendar will also feature trading updates from Antofagasta, Dunelm and Travis Perkins, providing further insight into mining, consumer spending and construction-related demand.
Despite renewed US inflation pressures, the FTSE 100’s strong finish highlights continued support for UK equities, particularly sectors that could benefit if the Bank of England raises interest rates less aggressively than markets previously anticipated.
