By Ragini Mathur
(Reuters) -Britain’s FTSE 100 held steady on Wednesday as gains in consumer and healthcare sectors offset losses in energy and mining stocks, while investors assessed a hotter-than-expected inflation report.
As of 0945 GMT, the blue-chip index FTSE 100 was largely flat. Meanwhile, the FTSE midcap index dropped 0.4%, on pace to mark its steepest fall in over two weeks.
The UK’s consumer price inflation hit its highest in 18 months in July when it increased to 3.8% from 3.6%, once again leaving the country with the fastest rate of price increases among the world’s largest rich economies.
“Inflation was always likely to rise today, but this report is definitely on the hotter side,” said Luke Bartholomew, deputy chief economist at Aberdeen.
“In particular, services inflation, which the Bank of England watches very closely as a measure of underlying inflation pressure, popping higher will be a source of concern among policymakers.”
The data led to a shift in market expectations on BoE’s monetary policy, with traders now betting on a quarter-point reduction in March next year. Earlier this month, markets had anticipated a cut before the end of 2025.
Sterling also strengthened slightly following the data release.
The inflation report’s interest rate implications led to a 1.3% fall in homebuilders on concerns about mortgage affordability.
Energy sector declined 0.7% as heavy-weight BP dropped 1.3% after the oil major said operations at its refinery at Whiting, Indiana, were affected due to flooding.
Metal mining stocks dropped 0.8%.
Aerospace and defence index came under pressure for a second consecutive day, dipping 1.2%, after marking its largest single-day decline since early April in the previous session.
On the flip side, consumer stocks and healthcare companies supported gains on the blue-chip index, rising 0.7% and 0.5% respectively.
Among individual movers, Ithaca Energy jumped 8% after the oil and gas company lifted its 2025 production forecast.
Medical equipment maker Convatec rose 5.5% after it announced $300 million share buyback programme.
(Reporting by Ragini Mathur in Bengaluru; Editing by Leroy Leo)
