A quiet Thursday saw the FTSE 100 trade sideways as investors appeared subdued following shocking inflation figures yesterday, which saw UK inflation hit the dreaded double-digit level at 10.1% in July.
Meanwhile, a slate of blue chip companies traded ex-dividend, sending Anglo American shares falling 2.4% to 2,893.7p, GSK dipping 0.3% to 1,410.2p and Aviva down 4.1% to 439.6p.
Additionally, M&G shares decreased 2.6% to 208.1p, Hikma Pharmaceuticals fell 3% to 1,444.5p and Legal & General slid 3.8% to 271.3p.
“After yesterday’s UK inflation figure shock, it’s no wonder investors weren’t feeling too hungry for equities on Thursday. European markets didn’t want to get out of bed, with minimal movements across the main indices,” said AJ Bell financial analyst Danni Hewson.
“The FTSE 100 was dragged down by some big names trading without the rights to their next dividend.”
Inflation sparks potential interest rates hike
Yesterday’s inflation data also sparked speculation that the Bank of England would move with more aggression in its next interest rates decision.
The UK economy reached double-digits far ahead of spring estimates, which reported estimates of the bone-chilling mark by October this year. However, recent revisions hiked inflation predictions to 13% by October, with a potential recession looming on the horizon.
Unlike the US, which reported lowered inflation of 8.5% from 9.1% the month before on lower energy expenses, the UK has shown no sign of prices slowing down, with energy prices yanking the cost of living higher for consumers going forward into a cold, harsh winter.
“The inflation reading will only add to conviction that the Bank of England will hike rates a further 50 basis points at the next opportunity – providing consumers with a double whammy of rising food and energy bills as well as higher mortgage costs,” said Hewson following the inflation figures on Wednesday.