London close: Stocks mixed on higher-than-expected UK inflaton
By Josh White
Date: Wednesday 21 May 2025
(Sharecast News) - London stocks ended Wednesday on a mixed note as investors digested hotter-than-expected UK inflation figures and monitored rising geopolitical tensions in the Middle East.
The FTSE 100 index edged up 0.06% to close at 8,786.46 points, while the FTSE 250 underperformed, falling 0.7% to 20,949.67 points.
In currency markets, sterling advanced 0.4% on the dollar to trade at $1.3446, while it slipped 0.13% against the euro, changing hands at €1.1855.
"It's too early to say that the rally from April's lows has run its course, but the going continues to get tougher for stocks," said IG chief market analyst Chris Beauchamp.
"The US budget continues to dominate newsflow, but it takes place in a market atmosphere that's now much less forgiving of Washington's propensity to spend, spend, spend without regard for the consequences.
"To add to that, the economy that supports the whole tottering edifice continues to give cause for concern; Target has reduced its annual forecast as spending comes under pressure."
Beauchamp said stocks had a "remarkable ability" to recover from bad news, but investors were not taking it for granted at the moment.
"Brent and WTI have eased back from their overnight highs but worries about an Israeli strike on Iran could easily send them flying once again.
"Without a comprehensive deal to restrain Tehran's nuclear programme, Tel Aviv may feel it has run out of road and needs to act now.
"Such a move would prompt a much bigger move higher in oil than that seen yesterday."
UK inflation rises more than expected, house prices grow
In economic news, UK inflation accelerated more than expected in April, driven by a rise in household bills, according to data from the Office for National Statistics.
Consumer price inflation rose to 3.5% year-on-year from 2.6% in March, the highest reading since January and above economists' expectations of 3.3%.
The surprise increase may heighten concerns over the Bank of England's interest rate outlook.
"Significant increases in household bills caused inflation to climb steeply," said ONS director general Grant Fitzner.
"Gas and electricity bills rose this month compared with sharp falls at the same time last year due to changes to the Ofgem energy price cap.
"Water and sewerage bills also rose strongly this year, as did vehicle excise duty, which all pushed the headline rate up to its highest level since the beginning of last year."
Meanwhile, UK house prices posted a sharp rise in March, with the average home value climbing 6.4% in the year to March to £271,000.
The strongest gains were recorded in England, where prices rose 6.7% to £296,000.
Growth was more subdued in Wales and Scotland, at 3.6% and 4.6% respectively.
Despite the surge in property prices, rent inflation showed signs of easing.
Private rents rose 7.4% in the 12 months to April, down from 7.7% the previous month and continuing a gradual retreat from the 9.1% peak recorded in March 2024.
Regional disparities remained, with the North East seeing a 9.4% increase, compared to just 4% in Yorkshire and The Humber.
"The stamp duty deadline almost certainly played a role in this house price data as demand soared in the latter stages of 2024 and early 2025," said Katy Eatenton, mortgage and protection specialist at Lifetime Wealth Management.
"Following this morning's inflation data, more rate cuts from the Bank of England are no longer guaranteed this year, so this, on top of the increased stamp duty now payable, is likely to see house price growth taper off."
Across the Atlantic, mortgage demand in the US declined last week as interest rates climbed.
Data from the Mortgage Bankers Association showed applications fell 5.1% in the week ending 16 May, marking the first drop in three weeks.
Refinance applications dropped 5% on the week, though they remained 27% above year-ago levels.
Purchase applications also slipped 5% but were up 13% year-on-year.
Gold miners in the green, JD Sports slides on US demand warning
On London's equity markets, Babcock International rose 3.55% after JPMorgan lifted its price target on the engineering firm to 1,100p, citing a promising outlook for the next five years.
Intermediate Capital Group gained 1.2% following what it described as a "milestone" financial year, during which assets under management climbed 14% to $112.4bn.
Severn Trent advanced 2.34% after publishing its full-year results, while Zigup added 4.12% as it reported strong end-of-year trading, particularly in Spain, with full-year results set to exceed market expectations.
Gold and silver price gains buoyed precious metals miners, with Fresnillo up 4.03% and Hochschild Mining gaining 0.96%.
"Government bond yields are on the rise in the USA and Japan, either down to fears over inflation, an upward spiral in national debts, or both, and precious metals are also reflecting these concerns," said Russ Mould, investment director at AJ Bell.
"Gold and silver are rising again, after a pause for breath, and mining management teams are paying attention, too, as Pan American Silver is bidding for MAG Silver, at a price that makes other listed silver miners look potentially undervalued.
"Gold is nudging its way back to $3,300 an ounce, after a pullback from April's all-time high, and silver is having another go at forging above $33 an ounce, which would be the next step on a potential return to last October's 12-year high near $35."
On the downside, JD Sports Fashion plunged 10.6% after warning of softer US demand linked to higher prices under US president Donald Trump's tariff policies.
It also reported a 2% drop in underlying sales, blaming a volatile market.
Marks & Spencer slipped 2.79% as it flagged a £300m profit hit from a major cyberattack, which was revealed alongside a 24% fall in statutory pre-tax profits to £511.8m, largely due to a writedown on its Ocado Retail stake.
Close Brothers Group and IntegraFin Holdings both declined 3.51%.
Close Brothers reported a shrinking loan book in the third quarter but said it remained confident in its full-year outlook.
IntegraFin posted a 13% rise in interim profits, but the results failed to impress investors.
Energean dropped 4.98% amid rising Middle East tensions, which weighed on sentiment around its Israel-focused operations.
Currys ended 0.24% lower after briefly rising on news it expects to beat annual profit expectations and resume dividend payments.
Reporting by Josh White for Sharecast.com.
Market Movers
FTSE 100 (UKX) 8,786.46 0.06%
FTSE 250 (MCX) 20,949.67 -0.70%
techMARK (TASX) 4,784.57 0.15%
FTSE 100 - Risers
Fresnillo (FRES) 1,085.00p 4.23%
Babcock International Group (BAB) 890.00p 3.49%
Phoenix Group Holdings (PHNX) 638.50p 2.74%
Severn Trent (SVT) 2,775.00p 2.29%
Anglo American (AAL) 2,141.00p 2.05%
Marks & Spencer Group (MKS) 374.70p 1.93%
BAE Systems (BA.) 1,819.00p 1.25%
Centrica (CNA) 158.80p 1.21%
United Utilities Group (UU.) 1,145.50p 1.19%
Haleon (HLN) 413.70p 1.15%
FTSE 100 - Fallers
JD Sports Fashion (JD.) 83.12p -10.60%
Spirax Group (SPX) 5,860.00p -2.66%
SSE (SSE) 1,756.00p -2.36%
InterContinental Hotels Group (IHG) 8,736.00p -2.26%
Smith & Nephew (SN.) 1,080.00p -2.13%
Bunzl (BNZL) 2,442.00p -1.93%
Ashtead Group (AHT) 4,305.00p -1.91%
Smurfit Westrock (DI) (SWR) 3,382.00p -1.89%
Barratt Redrow (BTRW) 468.70p -1.66%
WPP (WPP) 598.60p -1.61%
FTSE 250 - Risers
Zigup (ZIG) 354.00p 4.12%
Endeavour Mining (EDV) 2,162.00p 2.85%
Bloomsbury Publishing (BMY) 651.00p 2.84%
Raspberry PI Holdings (RPI) 521.95p 2.80%
Foresight Solar Fund Limited (FSFL) 76.90p 2.53%
Pennon Group (PNN) 515.00p 2.18%
PayPoint (PAY) 684.00p 2.09%
Aston Martin Lagonda Global Holdings (AML) 77.60p 1.70%
4Imprint Group (FOUR) 3,565.00p 1.57%
Trainline (TRN) 277.60p 1.39%
FTSE 250 - Fallers
Energean (ENOG) 872.50p -5.62%
RS Group (RS1) 570.00p -5.32%
Ferrexpo (FXPO) 63.40p -5.23%
Bridgepoint Group (Reg S) (BPT) 279.00p -4.45%
Burberry Group (BRBY) 1,005.00p -4.10%
Morgan Advanced Materials (MGAM) 211.00p -4.09%
Vistry Group (VTY) 602.00p -3.80%
Close Brothers Group (CBG) 357.20p -3.51%
Genuit Group (GEN) 392.50p -3.33%
Crest Nicholson Holdings (CRST) 185.60p -3.23%
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