The FTSE 100 index closed 0.4% up at 7,566.8 points after starting the day on a shaky note. The FTSE 250 was down by 21 points at 18,757.8.
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The day started with the news of higher inflation data in February after falling continuously since October 2022. British CPI increased to 10.4%, against expectations of a decline from 10.1% to 9.9%. The number was mainly pushed by higher prices of vegetables, alcohol, and energy.
Experts are convinced of another round of rate hikes as the higher inflation number came in as a surprise. The markets await the decision ahead of the Bank of England’s monetary policy meeting today.
The head of investment at Interactive Investor, Victoria Scholar, said, “This is likely to embolden the Bank of England to continue pursuing its rate-hiking path despite the potentially deflationary impact of the turmoil in the banking sector.”
The British pound soared 0.6% to $1.229 against the dollar after the higher inflation data. The other major currencies also jumped after the U.S. Federal Reserve hiked its rates by 0.25% yesterday.
Amid the inflation, recession, and all the banking drama, the Fed’s approach to rate hikes was termed “pragmatic.”
On the company front, the CEO of British utility company Centrica PLC (GB:CNA), Chris O’Shea, will receive a five-fold increase in his compensation to £4.5 million. The company posted record profits in its 2022 annual results, driven by higher energy prices. The stock traded up by 1.77% on Wednesday.
UK-based semiconductor company Arm Limited is planning to increase its chip prices with the aim of enhancing its top line. With this move, Arm, which is owned by Japan’s SoftBank Group Corp. (DE:SFT) (GB:0L7L), is looking to attract more investors for its IPO on the U.S. stock market due this year.
The U.S. listing will come as a blow to UK ministers who are pushing London as an attractive financial destination for IPOs.
Among the gainers, Marks & Spencer (GB:MKS) topped the list on the FTSE 250. The stock gained 4.46% yesterday after receiving three upgrades from brokerages based on the company’s growth initiatives for its brand and higher profitability.
On the FTSE 100, grocery technology company Ocado Group (GB:OCDO) increased by 1.94%.
UK-based housing company Vistry Group (GB:VTY) was up 0.9% after the company forecast higher profits for 2023. The company reported its 2022 earnings yesterday, with higher revenues but lower profits.
On the bottom side, British Land Company (GB:BLND) lost almost 6% in a day on the overall concerns about interest rates and the UK’s real estate industry. On similar lines, Land Securities Group (GB:LAND) was down 3.75%.
