FTSE 100 edges higher as US markets brace for tell-tale inflation figures

London Stock Exchange edged higher on Tuesday despite further gloomy warnings over energy bills and in contrast to falls in European and US markets.

Latest forecasts from consultancy Cornwall Insight set the energy price cap at more than £4,200 from January and put the Government under mounting pressure to relieve runaway costs.

But the FTSE 100 closed at 7,488.15 on Tuesday, up by 5.78 points or 0.08%. The index had briefly hit a two-month high at the start of the week.

In the States, trading dropped as investors braced for inflation figures on Wednesday and the potential for prices to edge higher.

The S&P 500 index fell 0.48% and the Dow Jones was down 0.12% at the time European markets closed.

“US markets have dented confidence this afternoon, with the FTSE 100 providing the one area of strength in an otherwise tumultuous day for equities,” said Joshua Mahony, senior market analyst at online trading platform IG.

“The fears around another potential inflation-fuelled sell-off in high multiple stocks has dented the likes of the Nasdaq in particular, with the recent earnings-based optimism starting to wane ahead of tomorrow’s crucial US inflation release.”

European markets outside London weakened amid reports that Russian oil flows to parts of central Europe had been suspended due to sanctions.

The French Cac 40 index fell 0.53% and the German Dax was down 1.12% at closing.

The pound rose marginally against the dollar, up 0.02% at 1.209, and was down 0.05% against the euro at 1.182.

“The pound has slipped back from its intraday highs on reports that the UK is making contingency plans for possible power cuts in January if cold weather prompts shortfalls in supply of gas,” said Michael Hewson, chief market analyst at CMC Markets UK.

“While it isn’t a base case scenario, the reports have prompted a little bit of weakness on concerns over the UK’s reliance on imports due to the lack of domestic storage capacity.”

In company news, shares in offices provider IWG tumbled by 11.4% after the group warned of inflation pressures and Covid-related restrictions shutting offices in parts of the world.

The group reported a 22.3% jump in revenues but pre-tax losses of £70.2 million in the first half of the year.

Shares closed down 22p at 171p.

Intercontinental Hotels Group (IHG) reported soaring half-year profits thanks to the bounce back in demand for business and leisure travel.

The Holiday Inn owner reported its half-year pre-tax profits jumping to 299 million US dollars (£248 million), up from 67 million US dollars (£55 million) a year earlier.

But its shares finished the day down 49p at 4,967p.

Housebuilder Bellway reported a rise in housing revenues but said it expects average selling prices to fall over the year ahead in a sign the market may be cooling.

The average price is expected to be around £300,000 in the year to July 2023, down from £314,400 over this year.

The firm saw its shares fall 53p to 2,288p on Wednesday.

The biggest risers on the FTSE 100 were Imperial Brands, up 31p to 1,864.5p, Pearson, up 13.8p to 893.8p, National Grid, up 17.5p to 1,152.5p, BP, up 6.25p to 422.55p, and HSBC, up 8p to 553.5p.

The biggest fallers were Abrdn, down 11.8p to 161.15p, JD Sports, down 6.85p to 126.7p, Scottish Mortgage Investment Trust, down 42p to 875.2p, Entain, down 47.5 to 1,276.5p, and Intermediate Capital Group, down 48.5p to 1,461p.