The FTSE 100 has closed lower in London as early advances evaporated in the wake of another strong US inflation print.
The FTSE 100 index closed down 31.28 points, 0.3%, at 10,751.59. It had earlier traded as high as 10,868.51.
The FTSE 250 ended 40.31 points higher, 0.2%, at 24,746.65, and the AIM all-share shed 1.85 points, 0.2%, at 759.54.
In Europe, the CAC 40 in Paris rose 0.6%, while the DAX 40 in Frankfurt climbed 0.3%.
In the US, equity markets were lower. Around the time of the London equities close on Tuesday, the Dow Jones Industrial Average was down 0.6%, the S&P 500 was 0.7% lower, while the Nasdaq Composite gave back 1.0%.
In the US, figures released by the Bureau of Labour Statistics showed US consumer prices rose more than expected in October, as higher food, housing and energy costs continued to put pressure on households.
The consumer price index rose by 0.4% month-on-month in October on a seasonally adjusted basis, slowing from a 0.6% increase in September but exceeding the FXStreet-cited consensus forecast of 0.3%.
Core inflation, which excludes volatile food and energy prices, remained steady at 0.3% month-on-month, matching the increases recorded in September and August but coming in above expectations of 0.2%.
Leslie Preston, senior economist at TD Economics, said inflation pressures were fairly broad-based across categories, and “most importantly” show little sign of cooling.
“The source of inflation pressure has shifted from tariffs to higher energy costs and strong demand for tech-related goods due to the AI boom. Where it hasn’t shifted is lower,” Ms Preston added.
Barclays analyst Pooja Sriram noted it was the third consecutive upside surprise in core CPI, which “reinforces the message that underlying price pressures remain firm” and “strongly supports” a December Federal Open Market Committee rate hike.
Analysts at Morgan Stanley agreed.
“For the Fed, the report increases the likelihood of a more hawkish path. We expect energy pass-through to put further upward pressure on core goods prices over the next few months, with potentially a sharper acceleration in 1Q27 as firms reset prices at the start of the calendar year. If firmer core goods inflation is accompanied by continued acceleration in services, as we have seen in the past two prints, the Fed may need to do more than we currently expect. We expect two 25bp hikes, in December and March.”
Ahead of the figures, US Federal Reserve governor Chris Waller said he would support a rate hike in December and warned that if inflation continued to accelerate he would support a half-percentage-point increase to protect the central bank’s credibility.
The data lit up the dollar and saw yields on US Treasuries tick upwards.
The pound was quoted at 1.3323 dollars late Tuesday afternoon, down from 1.3415 dollars at the same time on Monday. Against the euro, sterling declined to 1.1949 euros from 1.1974 euros.
The euro was lower at 1.1150 dollars from 1.1203 dollars late Monday. Against the yen, the dollar was higher at 158.79 yen from 158.05 yen.
The yield on the US 10-year Treasury was quoted at 5.00% late on Tuesday afternoon, stretched from 4.88% on Monday. The yield on the US 30-year Treasury was at 5.36%, widened from 5.27%.
Investors will be hoping the upcoming initial public offering from Anthropic will give the market a lift.
On Tuesday, Anthropic said it could raise between 84.6 billion dollars to 93.7 billion dollars through the IPO, which could value the business at around one trillion dollars.
In a filing on Tuesday, San Francisco-based Claude chatbot maker Anthropic said it plans to sell 801.4 million shares, with a further 23.6 million shares being sold by other shareholders.
Should the underwriters sell more than 825 million shares of Class A common stock, they have the option to purchase up to an additional 123.8 million shares from Anthropic, the statement said.
Anthropic currently expects that the initial public offering price per share will be between 70.00 dollars and 78.00 dollars. This could value Anthropic at 1.02 trillion dollars, based on the shares outstanding listed in the filing.
In London, equity markets had earlier pushed higher, reflecting a further fall in the oil price as hopes grow of a peaceful resolution to the US-Iran war.
US secretary of state Marco Rubio on Tuesday said he saw no need to resume major combat operations against Iran because economic sanctions and other restrictions were working so effectively.
“The economic campaign (against Iran) is so devastating that right now there is no need for major combat operations,” Mr Rubio said after a meeting of G7 foreign ministers in Paris. “That’s what I told our allies here today.”
Brent oil was trading at 91.74 dollars a barrel on Tuesday, lower than 94.27 dollars late Monday.
Reflecting the price move, oil majors BP and Shell fell 0.8% and 2.1% respectively in London.
The strong dollar put pressure on the price of gold, sending miners Fresnillo and Endeavour Mining down 4.7% and 4.3% respectively.
Gold was quoted at 4,025.90 dollars an ounce Tuesday, lower than 4,116.80 dollars on Monday.
Marks & Spencer was a prominent gainer, up 4.1%, as it outlined the next phase of its transformation strategy at a capital markets day event.
The retailer aims to double food sales, having grown annual sales by more than 50% since financial 2022, and achieve an operating margin of around 5% in the division.
It also plans to double its financial 2027 dividend to 8.4 pence per share from 4.2 pence, with subsequent dividends intended to grow at least in line with earnings.
On the FTSE 250, Funding Circle leapt 13% as it upgraded its full-year expectations, citing resilient demand from small and medium-sized enterprises.
The company expects 2026 revenue of at least £275 million, 7.8% higher than its previous guidance of £255 million, as well as up 35% from £204.3 million in 2025, which had been 28% higher than £160.1 million in 2024.
Among smaller companies, EDX Medical Group jumped 19% after launching what it described as the first breast cancer prognostic test in the UK capable of assessing both short-term and long-term risks of recurrence, extending up to 15 years.
The Cambridge-based diagnostics company entered into an agreement with US-based Caris Life Sciences to supply its Caris MI Clarity test in the UK.
The biggest risers on the FTSE 100 were Marks & Spencer, up 17.80p, at 455.40p, Investec, up 11.50p, at 644.50p, Computacenter, up 82.00p, at 4,708.00p, Lion Finance Group, up 200.00p, at 13,480.00p and British American Tobacco, up 64.00p, at 4,541.00p.
The biggest fallers on the FTSE 100 were Fresnillo, down 125.00p, at 2,513.00p, Endeavour Mining, down 185.00p, at 4,099.00p, Antofagasta, down 71.00p, at 3,234.00p, Glencore, down by 10.80p, at 504.60p and Shell, down by 76.50p, at 3,624.50p.
Wednesday’s global economic events calendar has inflation figures in Germany and Ireland. European Central Bank president Christine Lagarde is also due to give a speech.
Wednesday’s local corporate calendar has trading statements from broadcaster ITV, industrial engineering company Spirax and housebuilder Taylor Wimpey.
Contributed by Alliance News
