The FTSE 100 ended Wednesday in positive territory, shrugging off a combination of rising US inflation, fresh military tension involving Iran and a sharp sell-off across Wall Street, with strength in property shares helping London outperform both European and US counterparts.
The blue-chip index gained 0.3% to finish at 10,254.81, while the FTSE 250 added 0.5% to close at 22,951.34. Across the Channel, sentiment was far less upbeat as Paris’ CAC 40 fell 0.5% and Frankfurt’s DAX 40 dropped 1.0%.
Investors in New York faced a tougher session after fresh inflation figures highlighted the impact of higher energy costs. The Dow Jones Industrial Average was down 1.8%, the S&P 500 lost 1.6% and the Nasdaq Composite retreated 1.9%.
Data from the US Bureau of Labor Statistics showed consumer inflation accelerated to 4.2% in May from 3.8% in April, marking the highest annual reading in more than three years. Energy prices remained the main driver, rising 3.9% month-on-month after increasing 3.8% in April and surging 11% in March.
Core inflation, which excludes food and energy, edged up to 2.9% annually from 2.8%, while monthly core price growth slowed to 0.2% from 0.4%, coming in below expectations.
The inflation figures arrived against a backdrop of renewed geopolitical uncertainty after US military action against Iran followed the reported downing of a US helicopter near the Strait of Hormuz. The escalation came only days after signs that regional tensions had eased following an agreement between Iran and Israel relating to Lebanon.
US President Donald Trump said Iran had taken too long to negotiate and would now “have to pay the price”, a remark that added to investor caution.
Oil prices continued to react to developments in the region, with Brent crude rising to $92.98 a barrel from $90.90 at Tuesday’s London market close, although prices remained below recent highs.
In London, Tritax Big Box REIT topped the FTSE 100 leaderboard with a 4.9% gain after receiving government approval for its proposed Manor Farm data centre development near Heathrow Airport.
The logistics property specialist said the decision by the secretary of state for Housing, Communities and Local Government cleared the way for the project to proceed.
WH Smith tumbled 16% after raising £106 million from shareholders and cutting profit guidance for the second time in three months. The travel retailer said trading had been affected by the Middle East crisis, particularly in North America.
The latest setback follows last year’s disclosure that expected North American trading profit had been overstated by around £30 million, an episode that ultimately led to the departure of former chief executive Carl Cowling.
Elsewhere, fuel cell technology company Ceres Power fell 6.2% after announcing a fundraise, while Raspberry Pi shed 12% as weakness across US technology stocks weighed on sentiment.