The FTSE 100 closed up 0.99% at 10,432.34 on Wednesday as a cooler-than-expected UK inflation print and a solid run of corporate results steadied investor nerves.
The index opened lower, weighed down by a global bond market selloff and ongoing uncertainty over the US-Iran conflict, before turning positive through the afternoon.
Inflation gives the market room to breathe
April’s UK CPI reading came in at 2.8% year-on-year, well below the 3% consensus and sharply lower than the 3.3% recorded in March. Core CPI fell to 2.5% from 3.1%, while services inflation dropped notably to 3.2% from 4.5%. The ONS attributed the easing to lower energy bills, the Ofgem cap, and falling food and holiday prices.
The data prompted investors to scale back rate hike bets, with futures markets pricing around 52 basis points of tightening for the year.
Rob Wood, chief UK economist at Pantheon Macroeconomics, said the Bank of England’s MPC was unlikely to hike in June given the dovish signals from both inflation and the labour market, though he still expects a move in July as price pressures are forecast to reaccelerate through the year.
M&S leads the risers despite profit hit
Marks & Spencer was the standout mover, gaining as much as 5% after its full-year results struck an optimistic note despite a bruising set of headline numbers.
Adjusted pre-tax profit fell 23.8% to £671.4 million for the 52 weeks to 28 March, with statutory pre-tax profit down 28.8% to £364.6 million, both reflecting the significant impact of last year’s cyberattack.
Investors chose to look through the damage, encouraged by the retailer’s decision to raise its dividend by nearly 17% and its confidence that the profit recovery seen in the second half would carry into the year ahead.
Severn Trent raises the bar
Severn Trent added 2.3% after upgrading its 2028 adjusted earnings per share target to at least 250p, up from a previous figure of 224p, following what chief executive James Jesic described as another year of exceptional growth.
Revenue for the year rose 16.6%, adjusted EPS climbed 64.5%, and the company invested £1.9 billion in capital during the period. The ordinary dividend was lifted 3.5% to 126.02p per share. Sector peer United Utilities edged higher in sympathy.
Experian slides on AI concerns
Experian fell around 3.5% despite announcing a new $1 billion share repurchase programme, funded by strong cash generation in FY26. Chief executive Brian Cassin said the data analytics firm would take a “prudent approach to macroeconomic uncertainties linked to the Middle East” in the current financial year, but still expects “another year of strong growth.”
Analysts were broadly supportive of the numbers, attributing the share price weakness largely to concerns about AI disruption to the credit data business rather than anything in the results themselves.
Bond yields set the backdrop
The global bond market provided the most unsettling backdrop of the day. The US 30-year yield touched 5.19%, its highest level in 19 years, while the benchmark 10-year rose to a one-year high of 4.687%.
Market analyst Neil Wilson at Saxo pointed to rising inflation fears from the ongoing closure of the Strait of Hormuz, compounded by fiscal concerns around the US debt trajectory and President Trump’s proposed tax legislation.
HSBC flagged that yields at these levels are approaching the “danger zone” for equity markets, though Wilson noted that in the US the backdrop remains one of a resilient economy and rising corporate earnings. European markets also pushed higher by the close, with Germany’s DAX up 1.4% and France’s CAC 40 gaining 1.7%.
Iran and Russia add to the noise
Geopolitical headlines continued to swirl. Trump said US-Iran talks were in their “final stages,” offering some hope of de-escalation, while supertanker traffic near the Strait of Hormuz remained disrupted.
Closer to home, Prime Minister Keir Starmer faced questions in the Commons over changes to Russian oil sanctions, confirming that new measures including bans on maritime services for LNG and refined oil products from Russia were being phased in, with two short-term exemption licences issued to cushion UK consumers from an abrupt transition.