FTSE 100 slips as Bank of England chief flags inflation risks

Stock prices in London have closed lower as Bank of England Governor Andrew Bailey warned of upside inflation risks amid elevated energy prices, while Computacenter reversed an early rally to finish at the bottom of the FTSE 100. The FTSE 100 index closed down 10.47 points, 0.1%, at 10,811.66. The FTSE 250 ended down 157.83 points, 0.6%, at 24,348.85, and the AIM all-share closed down 2.38 points, 0.3%, at 796.75. In European equities on Tuesday, the CAC 40 in Paris closed 0.1% higher, while the DAX 40 in Frankfurt ended down 0.1%. Bank of England Governor Mr Bailey and other senior members of the Monetary Policy Committee faced MPs at Parliament's Treasury Committee on Tuesday to discuss interest rates, inflation and ongoing economic pressures in the UK. Mr Bailey said the market curve, which is currently pricing in three BoE interest rate hikes over the next 12 months or so, looks fair given that global inflationary risks are tilted to the upside. The governor also warned that energy prices could rise even further as a result of the US-Iran war, noting that some of the pressure on oil prices has also stemmed from the Russia-Ukraine conflict. Brent oil was quoted at 98.00 US dollars a barrel at the time of the London equities close on Tuesday, up from 97.89 dollars late on Monday. It had hit a session high of 99.46 dollars earlier, keeping investors' focus firmly on the inflationary risks posed by higher energy prices. Oil prices rose after Iran-allied militants in Yemen attacked several energy facilities in Saudi Arabia, forcing a temporary halt to some operations. Back in London, Computacenter ended 9.0% lower, the biggest faller on the FTSE 100, despite having jumped as much as 6.8% in early trading. The Hatfield-based technology services provider reported that first-half profit nearly doubled and revenue jumped 72%, as the FTSE 100 newcomer benefited from increased data centre spending. Computacenter has been one of the London market's standout performers so far this year, with its shares more than doubling over the past 12 months. The company explained that growth in North America 'was achieved through buoyant data centre demand, including AI-related infrastructure, as well as growth with enterprise customers across a variety of sectors'. Smith & Nephew fell 2.3% after launching a cash tender offer of up to 250 million dollars for bonds due in 2030. Supporting the FTSE 100 were some of its heavyweight constituents. BP and Shell tracked oil prices higher, climbing 0.7% and 0.5%, respectively. Miners were also firmly in the green as copper continued to trade at exceptionally high levels. Antofagasta climbed 4.7% and Glencore gained 4.1%. On the FTSE 250, Goodwin plummeted 23% after the Financial Times reported that Cerberus was nearing a £1 billion deal for Goodwin's defence unit. Home furnishings retailer Dunelm fell 14% after reporting steady annual profit and a slight increase in revenue, while also unveiling a three-year growth plan. The company noted the impact of the UK's 'unusually hot weather', which it said caused 'significantly softer sales in the first six weeks of financial 2027'. Trading improved after cooler weather arrived, Dunelm said. Alongside an aim to trim £100 million from its cost base, Dunelm expects non-recurring expenditure totalling £30 million to £40 million over the next two years. This is 'primarily to strengthen our foundational infrastructure', it said. Atalaya Mining, in the FTSE 250, rose 3.4%, also benefiting from elevated copper prices. Among smaller caps, GreenRoc Strategic Materials jumped 54%, while AI diagnostics company Renalytix surged 30% as its shares resumed trading following a fundraise. Cambridge Nutritional Sciences fell 24% after the London-based medical diagnostics company swung to a £4.4 million pre-tax loss in the financial year ended March 31 from a £1.6 million profit the year before. Cambridge Nutritional said the loss included a £3 million impairment of goodwill, while the previous year's profit included £1.8 million in net exceptional income. On an adjusted earnings before interest, tax, depreciation and amortisation basis, the company swung to a £400,000 loss from a £400,000 profit. Cambridge Nutritional also noted 'challenging market conditions' that necessitated internal restructuring. The pound was quoted at 1.3548 US dollars at the time of the London equities close on Tuesday, up from 1.3516 dollars late on Monday. Against the euro, sterling rose to 1.1643 euro from 1.1638 euro a day prior. The euro stood at 1.1631 dollars, up from 1.1629 dollars. The Japanese yen continued the strengthening trajectory it has shown over the past week, following around a month of cajoling from US Treasury Secretary Scott Bessent and members of the Bank of Japan. Against the yen, the dollar was trading at 154.18 yen on Tuesday, down from 154.33 yen on Monday. At the beginning of September, the dollar was trading at around 160.00 yen. Stocks in New York were lower. The Dow Jones Industrial Average was down 1.0%, the S&P 500 index down 0.3%, and the Nasdaq Composite down 0.1%. The yield on the US 10-year Treasury was quoted at 4.80%, widening from 4.78% at the time of the London equities close on Friday. The yield on the US 30-year Treasury widened to 5.25% from 5.24%. Meanwhile, US consumers' medium-term inflation expectations edged lower in August, while expectations that unemployment will rise climbed to their highest level since April 2020, according to the Federal Reserve Bank of New York's survey of consumer expectations. Median inflation expectations at the three-year horizon fell by 0.1 percentage points to 3.2% in August. Inflation expectations one year ahead were unchanged at 3.6%, while five-year expectations remained steady at 3.0%. The average probability that the US unemployment rate will be higher in one year's time increased by 1.6 percentage points to 44.4%, its highest level since April 2020. The increase was broad-based across age, education and income groups. Gold was quoted at 4,494.00 dollars an ounce late Tuesday, up from 4,412.10 dollars on Monday. The biggest risers on the FTSE 100 were Antofagasta, up 183.00p at 4,081.00p, Glencore, up 25.20p at 629.00p, Weir, up 104.00p at 2,828.00p, Halma, up 102.00p at 3,750.00p and Anglo American, up 116.00p at 4,306.00p. The biggest fallers on the FTSE 100 were Computacenter, down 435.00p at 5,165.00p, Smith & Nephew, down 38.00p at 1,026.00p, JD Sports Fashion, down 2.12p at 80.88p, Convatec Group, down 5.40p at 221.40p and GSK, down 41.00p at 1,796.50p. On Wednesday's economic calendar are Chinese consumer and producer price inflation figures and French industrial production data. On Wednesday's UK corporate calendar, Energean, Gym Group and WAG Payment Solutions report half-year results, while Frontier Developments and Pan African Resources publish full-year results. Contributed by Alliance News. To receive the best stories in your inbox every day, click here to register for one or more newsletters from The Standard.