The FTSE 100 gained 22 points to reach 10,250 on Wednesday, as investors rotated into defensive and property stocks while technology shares faced pressure across global markets.
Property developers Tritax Big Box, Land Securities and British Land led the blue-chip risers, with bookmaker Entain, insurer Admiral and grocer Tesco also finishing near the top of the leaderboard.
Shell and BP provided a significant boost to the index, rising alongside BAT, Unilever, GSK and Compass, all gaining between 1% and 2% during the session.
HSBC remained the heaviest drag on the index, falling 1.6%, while AstraZeneca, Glencore and other miners also declined alongside Barclays, Lloyds and other lenders.
Analyst Patrick Muinnelly at Tickmill described it as a “choppy Wednesday session,” noting that “the tone was cautious rather than panicked” as Middle East risk remained firmly on the desk.
“Investors faded early strength, cut exposure to China- and commodity-linked names, then selectively bought back defensives, property and consumer stocks as the morning progressed,” Muinnelly added.
US CPI rose 0.5% month-on-month in May, with the headline annual rate climbing to 4.2% from 3.8%, matching economists’ forecasts and marking the hottest reading since April 2023.
Barclays economist Pooja Sriram said the data “provides little reason to alter views on inflation” and that expected inflation will “likely keep the FOMC on the sidelines,” maintaining a call for rates to remain unchanged through 2026 followed by a 25bp cut in March 2027.
Chris Zaccarelli, chief investment officer for Northlight Asset Management, warned that with CPI at 4.2%, the Fed “will be in no position to cut rates if this continues” and that “the Fed’s next move may need to be a hike.”
Zaccarelli noted the market “has been climbing a wall of worry and has been able to rally on stronger earnings and stable interest rates, but a rising rate environment is another thing altogether.”
James Knightley at ING pointed out that slowing wage growth should help moderate core inflation, saying “we don’t expect a rate hike either” while no longer forecasting a cut this year given improved economic momentum.
Joe Mazzola, market analyst at Charles Schwab, observed that “Treasury yields retreated and stocks pared earlier losses in the immediate aftermath of the report, but the market remained red as Middle East tension mounted.”
President Trump threatened Iran with new strikes during the session, posting on social media that Iran had “taken too long to negotiate a deal” and “will have to pay the price,” briefly lifting Brent crude to $92.30 a barrel.
The Nasdaq bore the brunt of the sell-off in the US, with major chipmakers including Broadcom, AMD, Arm Holdings, Nvidia, Micron, Qualcomm and Marvell Technology among the biggest fallers on the index.
Tesla, AppLovin and software group Intuit also fell more than 2%, extending a broader retreat from AI-linked and high-growth technology stocks that has rattled global markets through the week.
WH Smith tumbled 15.2% in early trading after issuing a profit warning and launching a cash call, with the FTSE 250 retailer cutting its headline pre-tax profit guidance to £75 million to £90 million from a prior range of £90 million to £105 million.
EnQuest shares surged 20% after the company agreed a proposed $833 million acquisition of offshore Malaysian oil and gas interests through farm-out agreements with Petronas, a deal large enough to qualify as a reverse takeover.
Deutsche Bank market strategist Jim Reid captured the broader mood, saying markets are “oscillating between deal or no deal with the US and Iran” while “swinging between 1999-style AI exuberance and 2000-type tech crash fears.”
