Source: Sharecast
The FTSE 100 ended the session down 0.4% at 7,291.78, and the FTSE 250 was off 0.95% at 22,927.71.
Sterling was in the green, meanwhile, last trading 0.36% stronger against the dollar at $1.3269, and gaining 0.13% on the euro to change hands at 1.1722.
“It looks to be a subdued end to the week across equity markets, as stocks pause for breath following the big gains in the first half of the week,” said IG chief market analyst Chris Beauchamp.
“US CPI came in line with expectations, but prices continue to rise, meaning that while the pressure on the Fed to raise rates hasn’t increased much as a result of today’s data, it doesn’t really lessen it either.
“The broad increases across a variety of categories suggest that this is more than just a temporary phenomenon, hence the Fed’s decision to ease away from the infamous ‘transitory’ description, but in some ways this is still the result of shutting down and reopening the US and global economy.”
Beauchamp said inflation looked set to remain in the picture for a while yet, although the last three decades suggested such spikes tended to fade in time, potentially lessening the impetus to keep raising rates in 2022.
Data released by the US Labor Department in the afternoon showed inflation stateside surging to a 39-year high in November amid supply constraints.
Consumer prices rose 0.8% on the month, down from 0.9% growth in October and taking the annual rate to 6.8%, up from 6.2% the month before.
That marked the biggest annual jump since 1982.
Core CPI, which strips out volatile items such as food and energy, rose 0.5% in November from a 0.6% increase the month before.
“The biggest problem for the Fed is the mounting evidence of a strong pick-up in cyclical price pressures,” said Paul Ashworth, chief US economist at Capital Economics.
“In addition to the big jump in food away from home prices, rents and owners' equivalent rent both increased by 0.4% month-on-month.
“The upshot is that, although we think headline inflation has now peaked, it will decline only gradually over the first half of next year and, crucially, because of that building cyclical pressure we expect core inflation to remain above the Fed's 2% target for a prolonged period.”
On home shores, figures from the Office for National Statistics showed the UK economy barely grew in October as the post-pandemic recovery stalled, with GDP advancing just 0.1%, coming in weaker than expectations for 0.4% growth and leaving the economy 0.5% below pre-pandemic February 2020 levels.
The small growth in GDP was driven mostly by a rise in face-to-face GP appointments and solid demand for second-hand cars.
The services sector expanded by 0.4%, taking it back to pre-pandemic levels for the first time, while the manufacturing sector was flat and construction fell 1.8% amid a shortage of materials.
“Although a rate rise can’t be completely ruled out next week, most bets are off that the Bank will push them up so soon, given this latest downbeat reading and the fact that the Omicron variant is still an unknown quantity in terms of the extra pressure it will put on the health service,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
“A rate rise in February is more likely to be on the table, as the inflation kettle is set to be whistling loudly by then.
“That is unless restrictions are ramped up dramatically, pushing the economy into an even tighter recovery position.”
Elsewhere, a survey suggested renewed restrictions to combat Covid-19 were threatening the fragile recovery of Britain's pubs, bars and restaurants and thousands of jobs.
Sales at managed bars and eateries rose 2% in November compared with two years earlier, the Coffer CGA business tracker showed, while pubs and bars recorded 3% growth and restaurant takings rose 2%.
However, the government announced ‘plan B’ restrictions to limit the spread of Covid-19 with the Omicron variant taking hold earlier in the week, with Prime Minister Boris Johnson telling people to work from home if possible, while floating the idea of more compulsion to encourage people to be vaccinated.
CGA said those restrictions would dent confidence and threaten the future of thousands of barely-coping businesses and jobs.
“November’s sales figures demonstrate the resilience of managed groups in the face of ferocious headwinds,” said Karl Chessell, CGA's director for hospitality and food.
“They have battled hard to shore up sales ever since their venues reopened in the spring, but the new Covid-19 variant adds yet another threat to trading in the most important month of the year.”
In equity markets, Associated British Foods ticked up 0.52% after it said trading for its Primark fast fashion business for the year-to-date was ahead of expectations.
It reported improved like-for-like sales compared to the fourth quarter of its last financial year, but warned of increasing Covid cases hitting stores in Europe.
FirstGroup motored ahead 5.94%, having tumbled a day earlier after it warned of uncertainty around the pace of recovery amid fresh developments in the pandemic.
Dr Martens also clawed back some gains, closing up 2.56% after falling on Thursday following higher first-half profits and a warning of supply delays in the US.
On the downside, housebuilder Berkeley Group reversed earlier gains to close down 0.4%, despite price target upgrades at Citigroup, Barclays and JPMorgan.
Peer Taylor Wimpey also gave up earlier gains to slip 0.92%, even after upbeat comments from JPMorgan, which upped its price target on the overweight-rated stock to 230p from 220p.
Cybersecurity firm Darktrace tumbled 4.2%, while AstraZeneca fell 2.02%, giving back some gains after saying on Thursday that its Evusheld Covid-19 antibody combination had been granted emergency use authorisation by the US Food and Drug Administration.
Moonpig plunged 10.27% after surging in the previous session, which followed the online greeting card retailer upping its full-year revenue guidance despite interim sales coming up against tough lockdown comparatives.
Food packaging business Hilton Food Group lost 1.51% after saying it had agreed to buy smoked salmon producer Dutch Seafood Company as part of an effort to expand its presence in a growing protein category and enter the US.
It also announced an equity placing in connection with the acquisition.
Investment manager Ashmore Group was knocked 2.66% lower by a downgrade to ‘neutral’ at Goldman Sachs.
Market Movers
FTSE 100 (UKX) 7,291.78 -0.40%
FTSE 250 (MCX) 22,927.71 -0.95%
techMARK (TASX) 4,449.59 -0.35%
FTSE 100 - Risers
British American Tobacco (BATS) 2,759.00p 2.53%
London Stock Exchange Group (LSEG) 6,742.00p 1.51%
BT Group (BT.A) 178.45p 1.02%
Croda International (CRDA) 10,410.00p 0.97%
GlaxoSmithKline (GSK) 1,612.00p 0.93%
Unilever (ULVR) 4,015.50p 0.84%
Polymetal International (POLY) 1,327.50p 0.76%
Sage Group (SGE) 824.40p 0.71%
Associated British Foods (ABF) 1,944.00p 0.52%
Tesco (TSCO) 284.40p 0.49%
FTSE 100 - Fallers
Darktrace (DARK) 397.00p -4.20%
Entain (ENT) 1,633.00p -3.00%
Ocado Group (OCDO) 1,585.00p -2.94%
Kingfisher (KGF) 332.90p -2.49%
Antofagasta (ANTO) 1,371.00p -2.28%
JD Sports Fashion (JD.) 220.00p -2.22%
Next (NXT) 8,242.00p -2.09%
Ashtead Group (AHT) 6,200.00p -2.02%
AstraZeneca (AZN) 8,193.00p -2.02%
Scottish Mortgage Inv Trust (SMT) 1,394.00p -2.00%
FTSE 250 - Risers
FirstGroup (FGP) 101.60p 5.94%
Dr. Martens (DOCS) 400.00p 2.56%
Syncona Limited NPV (SYNC) 197.20p 2.28%
Contour Global (GLO) 191.40p 1.92%
BH Macro Ltd. GBP Shares (BHMG) 3,760.00p 1.62%
National Express Group (NEX) 235.40p 1.55%
AO World (AO.) 98.25p 1.39%
Babcock International Group (BAB) 312.80p 1.36%
HICL Infrastructure (HICL) 174.00p 1.28%
Lancashire Holdings Limited (LRE) 518.00p 1.17%
FTSE 250 - Fallers
Moonpig Group (MOON) 335.60p -10.27%
Harbour Energy (HBR) 351.80p -7.32%
Cineworld Group (CINE) 47.08p -5.58%
Volution Group (FAN) 511.00p -5.19%
Reach (RCH) 271.50p -4.90%
Watches of Switzerland Group (WOSG) 1,416.00p -4.45%
Liontrust Asset Management (LIO) 2,170.00p -4.19%
Restaurant Group (RTN) 82.90p -4.16%
TUI AG Reg Shs (DI) (TUI) 216.50p -3.99%
Aston Martin Lagonda Global Holdings (AML) 1,293.50p -3.86%
