Soaring inflation fails to spook markets

FTSE 100 closed the day up 26.11 points, or 0.35%, at 7589.66.

Markets held up despite high inflation. (Aaron Chown/PA)
Markets held up despite high inflation. (Aaron Chown/PA)

The highest inflation rate since 1992 and a strong selloff in Asia failed to spook investors in London on Wednesday as early falls in the markets soon recovered.

Strong trading updates from a handful of FTSE 100 businesses also helped ease the mood, as the FTSE 100 closed the day up 26.11 points, or 0.35%, at 7589.66.

Chris Beauchamp, chief market analyst at online trading platform IG added that investors are starting to become accustomed to the frequent talk of higher US interest rates.

He said: “Crucially, the more the Fed talks about higher rates, the more investors will acclimatise themselves to the prospect.

“While there wasn’t much appetite to chase stocks at the highs of late December, we should not lose sight of the fact that an improving economy will still provide the chance for earnings to grow, and the current reporting season should help remind investors of that fact.”

Germany and France also put in decent performances, with the DAX up 0.14% and the CAC up 0.38%.

As markets closed in Europe the pound was flat against the euro and dollar at 1.20 and 1.363 respectively.

In company news, the decent performance on the FTSE 100 was helped by a strong update from luxury fashion brand Burberry.

Bosses said profits are likely to be at the top end of expectations, with strong growth in the US and Asia.

Shares closed up 111p, or 6.3%, at 1866.5p.

Pearson also put in a strong performance, with bosses revealing annual sales rose 8% along with an increase of a third in adjusted operating profits.

Shares closed up 27.6p at 660p.

Pub chain Wetherspoons revealed a 16.6% fall in sales over the 12 weeks to mid-January as the impact of the Omicron variant took hold.

There were few details in the trading update, with founder Tim Martin preferring to use it as an opportunity to criticise the Government over its lockdown rules. Shares closed up 16p at 919.5p.

Housebuilder Crest Nicholson revealed another £29 million bill for high-rise cladding and fire safety measures following a new assessment in the wake of the Grenfell Tower tragedy.

It also said the company swung to a pre-tax profit of £86.9 million for the year to October 31, 2021, against losses of £13.5 million the previous year.

Shares closed up 8p at 347.6p

WHSmith updated the market on its trading in the run-up to Christmas, revealing sales struggled in travel locations, including airports and train stations, due to the pandemic.

But high streets fared slightly better, although the day was marred for the company as 45% of shareholders voted against the pay packets for executives at its annual general meeting.

Shares closed up 110p at 1,662.5p.

And eve Sleep revealed it suffered during the Christmas period from delays in shipping and in customer services as staff were off sick due to catching Covid.

Despite bosses saying the issues were temporary, investors piled out, with shares closing down 29%, down 1.03p at 2.52p.

The biggest risers on the FTSE 100 were Polymetal up 86p at 1,218.5p; Burberry up 111p at 1,866.5p; Fresnillo up 39.2p at 839.2p; Unilever up 159p at 3675.5p and Pearson up 27.6p at 660p.

The biggest fallers were Ashtead down 238p at 5,216p; IAG down 5.64p at 160p; DCC down 176p at 6,306p; Sainsbury’s down 7.4p at 291.3p and Melrose down 3.45p at 162.8p.

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