The FTSE 100 slipped by 0.4% on Wednesday, lurking at a 19-day low of 6,679. The news came as the Office for National Statistics (ONS) confirmed the UK inflation rate fell to 0.4% last month, down from 0.7% in January.
“Given the extent to which inflation fears have impacted the markets in recent week, one would think a UK CPI reading of 0.4%, half of the 0.8% forecast, would be a boost to the FTSE,” said Connor Campbell, financial analyst at Spreadex.
“A dulling of recovery hopes as Europe tackles a third wave of coronavirus are a bit of a double-edged sword for the market as they also seem to have cooled the inflation fears which have had investors in a tizz,” added AJ Bell investment director Russ Mould.
“What markets would really like is a Goldilocks situation where the recovery is neither too hot to avoid causing prices to rise uncontrollably, nor so cold that it prompts another downturn,” Mould continued.
FTSE 100 Top Movers
IAG (3.3%), Kingfisher (2.43%) and Whitbread (1.99%) were the top risers on the FTSE 100 post-lunchtime.
Taylor Wimpey (-2.71%), Polymetal International (-1.62%) and BT Group (-1.59%) were the top fallers on the UK index.