LONDON (ShareCast) - (Sharecast News) - London stocks ended slightly higher on Wednesday as investors weighed the latest UK inflation data and awaited upcoming policy decisions from the US Federal Reserve and the Bank of England.
The FTSE 100 edged up 0.14% to close at 9,208.37, while the more domestically focused FTSE 250 gained 0.6% to 21,619.81.

In currency markets, sterling strengthened, rising 0.13% against the dollar to last trade at $1.3665, and climbing 0.31% against the euro, changing hands at €1.1535.

"It's the big day investors have been anticipating all year - the first likely rate cut from the Federal Reserve in 2025," said AJ Bell's Russ Mould.

"It's a question of how much, not if. The market expects a quarter percentage point cut in recognition of a cooling jobs market.

"That result could help financial markets to keep trucking along, but a half a percentage point cut could spook investors that the Fed has become more concerned about the economic outlook."

Patrick Munnelly, market strategy partner at TickMill, said "investors are closely monitoring the Fed meeting for hints about interest rate movements that will influence the economic outlook in the coming months".

He noted that "some bond traders have increased their bets on options that predict the central bank will implement at least one half-point reduction in the remaining three policy meetings of the year" while "money markets are fully anticipating a quarter-point reduction from the Fed, along with a series of cuts expected over the next year."

UK inflation holds steady as house price growth slows

In economic news, UK inflation held steady in August, while house price growth slowed and supermarket sales surged, setting the backdrop for Thursday's Bank of England policy decision.

Official data from the Office for National Statistics showed the consumer prices index rose 3.8% in the year to August, unchanged from July and in line with forecasts.

Core inflation, which strips out energy, food, alcohol and tobacco, eased to 3.6% from 3.8%.

Grant Fitzner, ONS chief economist, said price movements had "offset each other during the month," noting that slower airfare rises were counterbalanced by higher fuel costs, smaller declines in hotel prices, and a further rise in food prices.

Food price inflation climbed to 5.1% from 4.9%, its highest rate since January.

Including housing costs, inflation rose 4.1% year-on-year, down from 4.2% in July.

The data was expected to strengthen the case for the Bank of England to hold interest rates at 4% on Thursday.

Matt Swannell of the EY Item Club said September would "likely mark the peak for CPI inflation" and that pressures on food prices should fade by year-end, though the Bank was unlikely to cut rates again this year.

ING analysts said they still expected "two or three" cuts by next summer as services inflation eases and wage growth slows.

Fresh ONS figures meanwhile showed average UK house prices rose 2.8% in the year to July to £270,000, down from 3.6% in June, as high borrowing costs curbed momentum.

Prices increased 2.7% in England, 2.0% in Wales and 3.3% in Scotland, while Northern Ireland saw a 5.5% rise in the second quarter.

London posted the weakest growth among English regions at 0.7%, while the North East saw the strongest at 7.9%.

Average private rents rose 5.7% in the year to August to £1,348, easing from 5.9% in July.

Mark Harris of SPF Private Clients said the figures could encourage policymakers "to monitor the situation a little longer before committing to the next rate reduction," noting that lenders have "plenty of liquidity and are keen to lend" but are making "small tweaks upwards" to mortgage rates.

Elsewhere, supermarket sales accelerated in August as consumers sought out promotions and back-to-school deals.

NielsenIQ said total till sales rose 4.1% in the four weeks to 6 September, up from 3.7% a month earlier, with food inflation at 4.1%.

Shoppers purchased 23.5% of items on promotion, while loyalty card use remained heavy.

Tesco sales rose 5.0% in the 12 weeks to 6 September, while Sainsbury's climbed 5.6% and Ocado jumped 14.3%.

Aldi and Lidl saw growth of 5.2% and 11.4% respectively, while Marks & Spencer sales surged 8.5% as one in four shoppers visited the chain, up 11.9% on last year.

On the continent, Eurostat revised eurozone inflation down to 2.0% for August, while US housing market data signalled weakness.

Building permits fell 3.7% to 1.312 million, their lowest since May 2020, and housing starts dropped 8.5% to 1.307 million, near five-year lows.

In Canada, the central bank cut interest rates 25 basis points to 2.5%, its first reduction since March.

The Bank of Canada cited a "weaker economy and less upside risk to inflation" and pledged to proceed "carefully" given ongoing trade disruptions.

TD Securities said the tone was "dovish" and forecast another cut in October, though it warned a pause next month would require "a material reversal in both the economic data and the sentiment around Canada-US trade."

M&S and housebuilders in the green, miners sink

On London's equity markets, Marks & Spencer climbed 4.19% after the NielsenIQ data showed its sales rising 8.5% in the 12 weeks to 6 September.

Shore Capital said the figure was "a bit ahead of what we would have expected", noting that about a third of Ocado Retail's sales are M&S-branded products not included in the total.

Analysts Clive Black and Darren Shirley said the data showed "healthy share gains" and supported their view of "the potential for the firm to deliver a robust second half".

Ocado shares also gained 0.98%.

Centrica advanced 3.58% after Morgan Stanley upgraded the British Gas owner to 'overweight' from 'equalweight', naming it its top pick among UK utilities.

Housebuilders were firmer, with Barratt Redrow up 1.86% after posting annual profits ahead of forecasts and raising its dividend more than expected, despite completions falling short of its initial guidance range.

"The housebuilding sector is nervous about the impact of the upcoming Budget on the property market as speculation continues around how chancellor Rachel Reeves might seek to plug the black hole in the UK's finances," Mould said.

"Barratt achieving its guidance on completions for the current financial year is contingent on buyer confidence coming through this period without serious impairment.

"Like much of its peer group, Barratt can only lay the foundations ahead of what it will hope are better market conditions to come, and perhaps even some support from government."

Persimmon rose 1.78% and Taylor Wimpey added 1.81%.

Moonpig surged 6.96% as it said it was on track to meet its full-year guidance, with trading momentum continuing into the start of the year.

PRS REIT jumped 5.84% after agreeing non-binding heads of terms to sell its main operating subsidiary, which holds its entire property portfolio, to a vehicle backed by Waypoint Asset Management in a deal expected to deliver about £633m in net proceeds to shareholders.

On the downside, precious metals miners Fresnillo and Endeavour Mining fell 2.5% and 2.03% respectively, retreating after gains on Tuesday when gold prices hit fresh highs.

Broader weakness in the mining sector followed a decline in copper prices, with Anglo American down 2.25%, Rio Tinto off 0.85%, Antofagasta easing 0.57% and Glencore losing 1.4%.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 9,208.37 0.14%
FTSE 250 (MCX) 21,619.81 0.60%
techMARK (TASX) 5,384.07 0.24%

FTSE 100 - Risers

Marks & Spencer Group (MKS) 357.80p 3.05%
Croda International (CRDA) 2,580.00p 2.50%
SEGRO (SGRO) 646.00p 2.44%
Informa (INF) 915.40p 2.23%
Berkeley Group Holdings (The) (BKG) 3,704.00p 2.21%
Kingfisher (KGF) 248.60p 2.18%
Associated British Foods (ABF) 2,002.00p 2.06%
Sainsbury (J) (SBRY) 323.80p 1.89%
The Sage Group (SGE) 1,085.50p 1.88%
Persimmon (PSN) 1,112.00p 1.83%

FTSE 100 - Fallers

easyJet (EZJ) 453.40p -4.14%
Haleon (HLN) 342.70p -3.92%
BAE Systems (BA.) 1,955.50p -3.00%
Coca-Cola HBC AG (CDI) (CCH) 3,592.00p -2.66%
Rolls-Royce Holdings (RR.) 1,116.00p -2.58%
NATWEST GROUP (NWG) 525.20p -2.34%
London Stock Exchange Group (LSEG) 8,540.00p -2.31%
Standard Chartered (STAN) 1,415.50p -2.11%
Imperial Brands (IMB) 3,101.00p -2.05%
WPP (WPP) 389.90p -1.91%

FTSE 250 - Risers

Trustpilot Group (TRST) 232.80p 16.05%
Aston Martin Lagonda Global Holdings (AML) 81.95p 9.27%
Kier Group (KIE) 206.00p 7.29%
PRS Reit (The) (PRSR) 110.80p 5.73%
Vistry Group (VTY) 641.40p 5.49%
Moonpig Group (MOON) 212.00p 4.43%
Dr. Martens (DOCS) 93.80p 4.05%
Pollen Street Group Limited (POLN) 910.00p 3.88%
Burberry Group (BRBY) 1,113.00p 3.82%
B&M European Value Retail S.A. (DI) (BME) 251.90p 3.20%

FTSE 250 - Fallers

Diversified Energy Company (DEC) 1,053.00p -6.90%
IP Group (IPO) 52.80p -5.38%
Trainline (TRN) 285.20p -4.93%
Bridgepoint Group (Reg S) (BPT) 319.20p -4.72%
PPHE Hotel Group Ltd (PPH) 1,304.00p -4.68%
Hochschild Mining (HOC) 312.60p -3.99%
W.A.G Payment Solutions (EWG) 101.50p -3.79%
Avon Technologies (AVON) 2,065.00p -3.73%
Anglo-Eastern Plantations (AEP) 1,295.00p -3.72%
ITV (ITV) 80.10p -3.26%

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