London open: Stocks slip as investors await Fed decision

(Sharecast News) - UK stocks headed lower on Wednesday, pulling back from a three-week high, as investors refrained from taking on too much risk ahead of policy meetings at the Federal Reserve and Bank of England.

Markets were also digesting a key inflation reading from the Office for National Statistics early on, which showed that consumer price growth unexpectedly held steady last month.

The FTSE 100 was down 0.1% at 10,485.30 early on, after settling at 10,494.2 on Tuesday, its highest level since 27 May.

In economic data, the annual rate of UK inflation was unchanged at 2.8% in May, the ONS reported, 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%.

"It's not all good news, especially when you consider that before the start of the Iran war inflation had been expected to be back to the Bank's 2% target by now and many were expecting interest rates to be cut at least once this year," said Danni Hewson, AJ Bell's head of financial analysis.

"The all-important core inflation data edged up in May too, as the service sector passed on additional costs. This will trouble rate setters, especially those already minded to vote for the kind of insurance hike delivered by the ECB last week."

Central banks are back in focus last week, with key decisions in the US and UK expected over the next two days. The first Federal Reserve policy meeting under new chief Kevin Warsh on Wednesday evening is expected to result in no change, while the Bank of England decision on Thursday is likely to be a split vote - though the consensus is a hold.

"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."

Meanwhile, a close eye is being kept on the Middle East, where the finer details of the US-Iran peace deal remain unknown. Crude prices have collapsed in recent days, with Brent dropping from the $90-a-barrel to $78.52 on Wednedsay morning, down 0.5% on the day and its lowest level since the start of March when the conflict began.

Oil stocks fall, miners rise

There was a lack of major newsflow moving London's blue chips early on, though fluctuating commodity prices were affecting some resource producers.

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. Meanwhile, Antofagasta was tracking copper higher and Fresnillo, Hochschild Mining and Pan African Resources gained as precious metal prices rose.

Recruitment firm Hays rose 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.

Caledonia Investments edged higher on the news it is investing around �60m garden centre operator Blue Diamond.

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 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) 10,485.30 -0.08%

FTSE 250 (MCX) 23,395.99 0.30%

techMARK (TASX) 5,893.33 -0.18%

FTSE 100 - Risers

Persimmon (PSN) 1,093.50p 1.91%

3i Group (III) 2,357.00p 1.90%

Games Workshop Group (GAW) 20,640.00p 1.87%

Antofagasta (ANTO) 4,318.00p 1.65%

Barratt Redrow (BTRW) 259.20p 1.53%

Rolls-Royce Holdings (RR.) 1,412.60p 1.48%

Barclays (BARC) 493.85p 1.45%

Spirax Group (SPX) 7,035.00p 1.37%

Fresnillo (FRES) 3,323.00p 1.04%

Autotrader Group (AUTO) 482.50p 0.98%

FTSE 100 - Fallers

Rightmove (RMV) 429.00p -2.48%

Vodafone Group (VOD) 110.10p -1.69%

Entain (ENT) 582.00p -1.61%

Compass Group 11 (CPG) 33.10p -1.61%

British American Tobacco (BATS) 4,533.00p -1.52%

Halma (HLMA) 3,986.00p -1.48%

Centrica (CNA) 179.00p -1.46%

BT Group (BT.A) 194.95p -1.44%

Rio Tinto (RIO) 7,771.00p -1.32%

BP (BP.) 505.80p -1.27%

FTSE 250 - Risers

Raspberry PI Holdings (RPI) 875.00p 3.86%

Vistry Group (VTY) 238.60p 3.74%

Foresight Environmental Infrastructure Limited (FGEN) 85.40p 2.89%

Hays (HAS) 36.74p 2.68%

Ashoka India Equity Investment Trust (AIE) 249.50p 2.67%

Hochschild Mining (HOC) 620.50p 2.48%

Bellway (BWY) 1,855.00p 2.37%

Pan African Resources (PAF) 117.40p 2.35%

RTW Biotech Opportunities Ltd (RTW) 2.23p 2.29%

PPHE Hotel Group Ltd (PPH) 2,050.00p 2.24%

FTSE 250 - Fallers

AO World (AO.) 93.70p -3.54%

SDCL Efficiency Income Trust (SEIT) 33.30p -3.48%

Chemring Group (CHG) 501.00p -2.43%

Diversified Energy Company (DI) (DEC) 980.00p -1.91%

Helios Towers (HTWS) 217.80p -1.54%

Derwent London (DLN) 1,887.00p -1.52%

Harbour Energy (HBR) 241.60p -1.39%

AEP Plantations (AEP) 1,636.00p -1.09%

Ithaca Energy (ITH) 229.40p -1.07%

Drax Group (DRX) 754.00p -0.92%