The FTSE 100 slipped on Wednesday as UK CPI inflation soared to 3%, and soft results from Glencore weighed on the index.
A weaker pound helped contain losses for London’s flagship index. Still, the inevitable losses in house builders after the stronger-than-expected inflation reading meant the FTSE 100 struggled to turn positive after starting the session in the red.
UK CPI for January hit 3%, hotter than the 2.8% expected by economists, and poured cold water on hopes of a rate cut at the next Bank of England meeting.
“The FTSE 100 dipped at the open on Wednesday, dragged lower by weakness among housebuilders and as commodities giant Glencore fell on poorly received results,” said AJ Bell head of investment analysis Laith Khalaf.
“Higher-than-expected UK inflation was seen as reducing the chances of interest rate cuts from the Bank of England, which is bad news for a housebuilding sector reliant for demand on mortgage availability and affordability.”
Barratt Redrow was one of the most heavily hit housebuilders, with shares declining more than 2%. Taylor Wimpey fell by a similar amount.
Glencore was the FTSE 100’s biggest loser, falling 7%, after the diversified miner said EBITDA declined 16% due to lower coal prices. Copper was a bright spot for Glencore, with volumes growing 4% over the year.
Suggestions Glencore was considering ditching its London listing wouldn’t have helped sentiment around the stock.
“Despite returning $2.2 billion to shareholders, Glencore is propping up the FTSE this morning after posting a second consecutive year of falling profit. It should be noted this was against a very high bar when we saw soaring metals prices which have since cooled, and as such so have miners such as Glencore’s bumper profits,” said Adam Vettese, market analyst at eToro.
“Trump’s potential tariffs on cars and semiconductors also threaten to weigh on demand for metals such as copper which Glencore and many of its sector peers will be watching closely.”
Despite concerns about the impact of Trump’s tariffs, Antofagasta was again the top riser following a well-received set of results yesterday. Anto gained another 3% and is now 19% higher on the year.
HSBC shares were flat following the release of Q4 and full-year 2024 results. The stock has embarked on a sharp rally through 2024, and investors will be pleased the stock held its own today and didn’t follow peers on the recent trend after pulling back after announcing results.