London equities opened lower on Wednesday after hotter-than-expected UK inflation data dented hopes of a Bank of England rate cut in November.
The consumer price index rose 3.8% year-on-year in July, ahead of forecasts of 3.7%. On a monthly basis, CPI unexpectedly climbed 0.1% against expectations for a decline.
The FTSE 100 fell 0.2% to 9,173.46, the FTSE 250 dropped 0.3% to 21,758.95, and the AIM All-Share slipped 0.3% to 760.74.
Among mid-caps, OSB lost 1.1% after reporting a 20% fall in half-year pretax profit to £192.3 million. The lender cited weaker net interest income, a swing to fair value losses on financial instruments, higher impairments, and rising costs. Net interest margin narrowed to 230 basis points from 237 a year ago.
Across Europe, the CAC 40 was down 0.5% and Germany’s DAX 40 slipped 0.8% after data showed producer price deflation unexpectedly deepened in July. Annual PPI fell 1.5%, steeper than June’s 1.3% drop, while energy prices slid 6.8%.
In Paris, Airbus shares dropped 1.3% as UK workers announced a ten-day strike in September, threatening output of commercial and military aircraft wings.
Asian trade was mixed, with the Nikkei down 1.5% but Shanghai’s Composite up 1.1%.
Wall Street closed mostly lower on Tuesday after Big Tech sold off sharply. An MIT report revealed that 95% of firms investing in generative AI have yet to see returns, while OpenAI chief Sam Altman warned valuations in the sector were “insane”. The remarks triggered pullbacks in names such as Nvidia, Palantir and Arm.
Attention now turns to Federal Reserve Chair Jerome Powell’s speech at Jackson Hole on Friday, with markets increasingly betting on a September rate cut.