(Sharecast News) - London stocks flatlined on Wednesday as nerves set in ahead of a pivotal Federal Reserve policy meeting, while investors reacted to the latest UK inflation data and newsflow regarding the peace deal in the Middle East.
The FTSE 100 was trading within a narrow range during the morning session and was broadly unchanged (+0.04%) at 10,498.47 by midday, having settled at its highest in three weeks the previous session.
The first Fed policy decision under new chief Kevin Warsh on Wednesday evening is the big risk event of the day, though no change in interest rates is expected.
However, all eyes will be on the subsequent press conference to see what tone Warsh sets, with the Fed chief under pressure from the Trump administration to lower rates despite a ramp-up in inflation caused by the Iran war.
"This is a tricky time for a new Fed chair to set policy. With rates expected to remain unchanged in the coming months, the biggest focus will be on the FOMC Press conference, which could be more interesting than usual," said Kathleen Brooks, research director at XTB. "Warsh's messaging and how he frames his views on the economy and the future of monetary policy will be closely scrutinised."
The Bank of England is also scheduled to meet on Thursday, and while markets are pricing in a hold, the decision is likely to be a split vote. On Tuesday, the Bank of Japan followed the European Central Bank in hiking interest rates for the first time since the energy crisis first began in March.
Fears about energy price spikes have eased significantly in recent days after the weekend's peace deal between Washington and Tehran, even if the finer details of the agreement remain unknown. Brent, which was trading at the $90-a-barrel mark last Friday, settled at $78.96 on Tuesday - its lowest in three months - before edging 0.5% higher to $79.39 on Wednesday morning.
According to the latest reports, the agreement includes the lifting of US and Iranian blockades in the Strait of Hormuz, along with the waiver of US sanctions on Iranian oil sales.
Back on home shores, a key inflation reading from the Office for National Statistics showed that UK consumer price growth unexpectedly held steady in May. The annual rate of UK inflation was unchanged at 2.8% last month, surprising economists who had pencilled in a rise to 3.0%. The headline rate stayed at its lowest since March 2025, though core inflation edged higher to 2.6% from 2.5%.
According to Danni Hewson, AJ Bell's head of financial analysis, the acceleration in core inflation "will trouble rate setters, especially those already minded to vote for the kind of insurance hike delivered by the ECB last week".
Homebuilders rise, oil stocks fall
Homebuilders were among the day's best performers as the outlook for inflation eased, with Persimmon, Berkeley and Barratt Redrow making gains.
BP and Shell were in the red following the recent slump in oil prices, in line with FTSE 250 peers Ithaca Energy and Harbour Energy.
Recruitment firm Hays erased earlier gains to slip lower after revealing it is "exploring options" related to a further seven non-core markets across Europe and Asia following the sale of assets in six European countries.
Tool hire provider Speedy Hire fell after reporting a drop in full-year profitability as margins were hit by lower volumes, wage inflation and higher interest costs following accelerated fleet investment and its partnership with ProService transaction.
White goods retailer AO World was also lower despite posting a 11.4% jump in revenues over the most recent fiscal year. Looking to the current year, AO acknowledged that the external environment remained "uncertain", including inflationary pressures.
Market Movers
FTSE 100 (UKX) 10,498.47 0.04%
FTSE 250 (MCX) 23,257.57 -0.30%
techMARK (TASX) 5,862.14 -0.70%
FTSE 100 - Risers
Barclays (BARC) 502.40p 3.21%
Standard Chartered (STAN) 2,039.00p 2.54%
Weir Group (WEIR) 2,504.00p 2.37%
Persimmon (PSN) 1,099.50p 2.33%
Berkeley Group Holdings (The) (BKG) 3,568.00p 2.00%
Barratt Redrow (BTRW) 260.00p 1.88%
3i Group (III) 2,358.00p 1.81%
Spirax Group (SPX) 7,060.00p 1.66%
Rolls-Royce Holdings (RR.) 1,417.20p 1.62%
Lloyds Banking Group (LLOY) 105.40p 1.54%
FTSE 100 - Fallers
Compass Group 11 (CPG) 32.70p -2.62%
Halma (HLMA) 3,954.00p -2.32%
British American Tobacco (BATS) 4,507.00p -2.19%
BT Group (BT.A) 193.45p -2.12%
Centrica (CNA) 177.90p -1.98%
Rightmove (RMV) 430.80p -1.93%
Rio Tinto (RIO) 7,750.00p -1.85%
Marks & Spencer Group (MKS) 364.20p -1.83%
Entain (ENT) 583.40p -1.78%
Vodafone Group (VOD) 110.20p -1.74%
FTSE 250 - Risers
Aston Martin Lagonda Global Holdings (AML) 41.68p 2.76%
Baltic Classifieds Group (BCG) 193.10p 2.44%
Vistry Group (VTY) 235.60p 2.26%
Schroder Asian Total Return Investment Company (ATR) 708.00p 2.16%
Man Group (EMG) 299.20p 1.98%
Bellway (BWY) 1,848.00p 1.93%
Pantheon Infrastructure (PINT) 118.00p 1.72%
Taylor Wimpey (TW.) 78.36p 1.69%
Close Brothers Group (CBG) 454.20p 1.66%
Pacific Horizon Inv Trust (PHI) 1,170.00p 1.56%
FTSE 250 - Fallers
AO World (AO.) 92.00p -4.79%
SDCL Efficiency Income Trust (SEIT) 33.10p -4.06%
IP Group (IPO) 63.90p -3.77%
Chemring Group (CHG) 495.80p -3.74%
Playtech (PTEC) 322.60p -2.94%
Oxford Nanopore Technologies (ONT) 115.20p -2.78%
Utilico Emerging Markets Ltd (DI) (UEM) 284.00p -2.74%
Hilton Food Group (HFG) 508.00p -2.50%
Renishaw (RSW) 5,100.00p -2.49%
Dr. Martens (DOCS) 70.50p -2.48%
16.34 (0.16%)
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