London stocks made modest progress on Wednesday, with the FTSE 100 closing up 19.88 points, or 0.2%, at 10,752.88, supported by strong results from SpaceX even as UK inflation accelerated. The FTSE 250 gained 75.02 points, or 0.3%, to 24,439.78, while the AIM all-share index edged up slightly to 763.12.
The blue-chip index had opened lower after inflation figures came in stronger than expected, intensifying pressure on the Bank of England to raise interest rates next month. The rise in inflation, alongside higher-than-forecast public borrowing, also adds to the challenges facing Chancellor John Healey ahead of next week’s Budget.
Inflation hits 3.5% in September
The Office for National Statistics reported that annual consumer price inflation picked up to 3.5% in September from 3.1% in August, exceeding the FXStreet-cited market consensus of 3.4%. This marks the highest annual rate since October 2025, driven largely by higher transport costs, particularly motor fuels.
Core inflation, which excludes food and energy costs, was estimated at 2.8% year-on-year in September, up from 2.6% in August. Services inflation rose to 3.7% year-on-year from 3.4% in August.
Cathal Kennedy, senior UK economist at RBC Capital Markets, said the CPI rise “removes any final obstacles to November BoE (Bank of England) hike”. He added: “Not only is inflation ahead of projections, but it is also set to rise further as the 4% increase in domestic utility bills on October 1 are reflected in next month’s data.” Kennedy also noted that the MPC (Monetary Policy Committee) must factor in stronger-than-expected GDP growth and a labour market that isn’t as weak as feared.
Following the data, Peel Hunt’s chief economist Kallum Pickering shifted his interest rate call for the November Bank of England meeting, now expecting a quarter-point rate hike rather than a hold. Pickering cited “today’s upside surprise, the strong likelihood that both the Fed and the ECB (European Central Bank) hike again, and continued bond market worries about the longer-run sustainability of the UK’s oversized state and debt trajectory”. He said: “The underlying disinflationary story remains intact and evidence of second-round effects remains limited. But, to maintain credibility with markets, we expect the BoE (Bank of England) to hike at the November meeting, shifting our call from a hold.”
European and US markets react
The pound was quoted at 1.3389 US dollars, up from 1.3376 dollars, while against the euro sterling firmed to 1.1930 euros from 1.1901 euros. In European equities, the CAC 40 in Paris ended up 1.1%, and the DAX 40 in Frankfurt leapt 1.4%.
In Paris, EssilorLuxottica soared 16% after reporting better-than-expected third-quarter revenue after the market close on Tuesday. However, Carrefour plunged 13% as it revised down its outlook, citing “the social and security situation in France” and an impact on trading with lower customer footfall, reduced opening hours related to curfews, and precautionary closures.
The statement affected London-listed companies with exposure to France. Kingfisher, owner of French chains Castorama and Brico Depot, fell 0.9%, while 3i, which has exposure through its investment in discount retail chain Action, dropped 3.9%.
In New York, markets were higher, with the Dow Jones Industrial Average up 0.2% at the time of the London close, the S&P 500 up 0.4%, and the Nasdaq Composite climbing 0.9%. SpaceX was the focus after better-than-expected third-quarter results and as chief executive Elon Musk said the firm was looking at the possibility of merging with Tesla. SpaceX rose 9.7%, while Tesla climbed 3.5% ahead of its results after Wednesday’s closing bell. Meta Platforms also reports earnings on Wednesday, along with SAP and Texas Instruments.
UK energy and commodity moves
Against the dollar, the euro eased to 1.1225 dollars from 1.1234 dollars, while the dollar traded at 158.05 yen, down from 158.13 yen. The yield on the US 10-year Treasury was quoted at 5.11%, unchanged from Tuesday, and the 30-year yield narrowed to 5.41% from 5.43%.
In London, the Government announced plans to start drilling at the Jackdaw gas field. Prime Minister Andy Burnham said his administration had made a “pragmatic” decision. He said: “At a time when people are really struggling, it’s right that we look in a responsible way at maximising the existing energy reserves we have in Britain that could help.” Investors hope this could signal the green light for Rosebank, the largest untapped oil field in the North Sea, in which Ithaca Energy holds a 20% stake. Ithaca Energy closed up 1.0%.
Brent crude was quoted at 109.14 dollars a barrel, up from 106.65 dollars. David Morrison, analyst at Trade Nation, noted: “An end to the war seems less likely than ever now, and the growing involvement of the Iranian-backed Yemeni Houthis is evidence of how the conflict is spreading. This week has already seen two tankers taken out of action after hitting mines in the Strait of Hormuz, and it is obvious that there’s a significant danger to shipping attempting to transit the strait.”
FTSE movers and corporate news
On the FTSE 250, recruiters Michael Page and Hays led the way, up 8.4% and 5.7% respectively, after staffing firm Randstad surged 20% in Amsterdam on well-received earnings. However, Halfords fell 8.6% as its trading update failed to inspire investors. AJ Bell investment director Russ Mould said the statement “suggesting a weaker second-half is in store has helped put the brakes on Halfords’ recent share price recovery”, calling it the “cue for some profit taking” but unlikely to “puncture” enthusiasm around chief executive Henry Birch’s turnaround plan in the longer term.
Mobico jumped 33% after the National Express owner confirmed it had received a possible cash takeover proposal worth 46 pence per share from Autobuses de Leon, with its independent directors indicating they would be minded to recommend an offer on those terms. Gold was quoted at 4,139.04 dollars an ounce, up from 4,131.02 dollars.
The biggest risers on the FTSE 100 were Computacenter, up 180.00p at 5,120.00p, Lion Finance Group, up 380.00p at 12,700.00p, Experian, up 77.00p at 2,986.00p, Convatec Group, up 4.60p at 240.00p and BP, up 11.30p at 617.10p. The biggest fallers were Aberdeen Group, down 9.60p at 225.40p, 3i Group, down 95.00p at 2,325.00p, Burberry Group, down 26.00p at 1,072.00p, Fresnillo, down 57.00p at 2,632.00p and Antofagasta, down 68.00p at 3,224.00p.
Thursday’s local corporate calendar includes half-year results from grocer J Sainsbury, third-quarter results from Barclays, and trading statements from London Stock Exchange Group, Rentokil Initial, InterContinental Hotels Group and Relx. The global economic calendar has wholesale inflation figures in Canada, consumer confidence reports in the eurozone and the UK, and initial jobless claims data in the US.
