London shares close lower amid concerns over continued inflation

London’s top markets slipped again on Wednesday amid concerns over persistent inflation and the potential for economic slowdown.

The recent strong spell for oil prices helped drive more concerns among analysts over inflationary pressures, weighing on the main markets, despite also guiding FTSE giants BP and Shell higher again.

The FTSE 100 moved 0.16%, or 11.79 points, lower to finish at 7,426.14.

Chris Beauchamp, chief market analyst at IG, said: “It seemed that the FTSE 100 was fated to suffer a sharp down day, but as the session wore on buyers came in to defend the 7400 level.

“But with little in the way of heavyweight news, and despite gains for the oil giants BP and Shell, the mood in London remains cautious.

“UK inflation remains an untamed beast, and oil’s rise threatens to upend the Bank of England’s plans for the year.”

Across the Channel, concerns over the German economy were crystallised by awful German factory orders number for July saw output plunge by 11.7% for the month, adding pressure to equities.

Germany’s Dax index was 0.19% lower for the day and the Cac 40 closed down 0.84%.

In the US, opened lower on the back of worries over sticky inflation as traders took their cues from weakness in Europe.

Meanwhile, in currency, sterling dropped after Bank of England governor Andrew Bailey said he believes that current interest rates are “nearer to the top” of the potential rate cycle in the UK.

The pound was down 0.54% to 1.249 US dollars and was 0.47% lower at 1.165 euros at market close in London.

In company news, historic retailer WH Smith saw its shares fall despite a seemingly positive trading update as investors were left unimpressed by the lack of improved guidance from the firm.

It came as the London-listed firm saw a 28% rise in total group revenues over the full year to August, as the recovering travel market boosted sales.

WH Smith however saw shares drop by 94p to 1,390p.

Cyber security firm Darktrace also closed lower after it downgraded its outlook for the year and told shareholders that the second half of the 2024 financial year would be the more productive.

The company’s results therefore disappointed many analysts, sending its shares down 9.2p to 360p.

Halfords shares were driven higher by improved sales on the back of strong demand for motoring maintenance and servicing.

The retail group told shareholders that “needs-based” products and services were the main driver behind a 14.1% rise in total revenues over the five months to August 18, but said other retail trade was impacted by weak summer weather and waning consumer confidence.

Shares were up 5.5p to 192.3p at the end of the session.

The price of oil recorded a softer increase after its recent surge in value but still finished higher.

A barrel of Brent crude rose by 0.28% to 90.29 US dollars as markets were closing in London.

The biggest risers on the FTSE 100 were Johnson Matthey, up 63.5p to 1,782p, Sage Group, up 17.4p to 990.4p, Land Securities Group, up 10.2p to 585.2p, Bunzl, up 47p to 2,813p, and B&M European Value Retail, up 9.2p to 557p.

The biggest fallers on the FTSE 100 were Burberry Group, down 103p to 2,085p, IAG Group, down 5.9p to 153.75p, St James’s Place, down 19.8p to 854.2p, Prudential, down 21.6p to 933.2p, and Abrdn, down 3.35p to 157.7p.