Britain’s FTSE holds steady after UK inflation hits 6-year high
UK shares eased only slightly on Tuesday after data showing UK inflation rose to its highest in six years pushed up the pound, with rising oil prices keeping the benchmark index in positive territory.
At 1000 GMT, the blue-chip FTSE 100 was up 0.17 percent at 7466.35 points after a 0.7 percent gain during the previous session.
Consumer price inflation hit an annual rate of 3.1 percent in November, slightly above a 3.0 economist consensus, reflecting the impact of the pound’s plunge after last year’s vote to leave the European Union.
“This was basically priced in,” said Kallum Pickering, a senior economist at Berenberg, commenting on the limited impact of the data on sterling and the FTSE.
A lower pound generally supports the FTSE as the weaker currency translates into an accounting boost for large companies with overseas revenues.
Pickering said investors would be closely watching the wording of the Bank of England’s minutes on Thursday to see whether the central bank would try to raise expectations for monetary tightening next year.
“Price developments will be decisive in determining whether and if so how soon the Bank of England will hike interest rates again,” Commerzbank strategists said earlier in a note.
Energy stocks provided the most support as Brent crude was boosted above $65 a barrel after an outage at the UK’s biggest North Sea oil pipeline.
Royal Dutch Shell and BP both added about 1.4 percent.
Supermarkets Sainsbury and Morrison were the worst performers, down 2.7 percent each, after data by market researcher Kantar Worldpanel showed both lagged behind Tesco in sales growth. Tesco rose 0.5 percent.
Industrial equipment hire company Ashtead posted the best performance in early dealings, rising 2.7 percent after it launched a share buyback programme and raised its annual results forecast.
Britain’s largest floor coverings retailer Carpetright shed 6.4 percent after lowering its full-year 2017-18 profit forecast.
Miner and trader Glencore lost 1.3 percent after a market update for its marketing division.
In the sector, Rio Tinto was also down 0.8 percent, and Fresnillo lost 1.5 percent.
Financials also weighed on the index, retreating from the previous session’s gains. HSBC was down 0.4 percent, Standard Chartered <STAN.L > and Prudential 0.7 percent each.
(Reporting by Julien Ponthus; editing by Tom Pfeiffer)
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