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London markets struggle for direction as investors mull near decade high inflation print

The capital’s premier FTSE 100 index jumped 1.57 per cent to above 7,000 points, while the domestically-focused FTSE 250 index, which is more aligned with the health of the UK economy, climbed 2.55 per cent to 19,707.38 points

London markets struggled for direction this morning as investors mulled the possible fallout of UK inflation reaching its highest level in nearly a decade.

The capital’s premier FTSE 100 index edged down 0.06 per cent to 7,322.28 points, while the mid-cap FTSE 250 list of shares rose 0.06 per cent to 23,556.06 points.

Swelling household energy bills has pushed inflation to more than double the Bank of England’s target, strengthening the case for an interest rate hike at the Bank’s next meeting on December 16.

Inflation scaled to 4.2 per cent in October, up sharply from 3.1 per cent in the previous month, according to the Office for National Statistics (ONS).

The pound strengthened sharply on the news, knocking export-focused stocks. However, the currency is now broadly flat against the dollar.

Higher rates would likely hit the City. Equity markets tend to have less room to rise amid tighter monetary policy.

Manufacturer Spirax-Sarco led the FTSE 100 lower this morning after it warned it had not been immune to the supply chain crisis. Its shares plunged 5.85 per cent.

Energy provider SSE also weighed on the premier index, falling more than 3.60 per cent after it rejected calls for a breakup.

Meanwhile, on the mid-cap index, real estate firm Hammerson was a bright spot, climbing 2.63 per cent.