FTSE 100 Rallies as UK Inflation Falls
London's FTSE 100 closed 1.28% higher on Wednesday as investors welcomed a cooler-than-expected UK inflation reading, helping offset concerns over rising oil prices amid escalating tensions in the Middle East.Britain's annual inflation eased to 2.6% in June from 2.8% in May, according to data from the Office for National Statistics, coming in below the 2.7% consensus forecast. The softer reading was driven by slower growth in motor fuel and food prices."Far lower food prices than the Bank of England (BoE) expected should help relieve rate setters' fears about increases in salient prices fueling inflation expectations. Alongside the slowdown in services price growth, that rules out a rate hike at next week's 30 July BoE meeting. In any case, we think the labour market is too weak for second round effects (a new price-wage spiral) to take hold," Berenberg said.Meanwhile, oil prices remained elevated as geopolitical tensions intensified. Brent crude settled above $90 a barrel for the first time in more than a month. "And this morning we've seen a further rise above $92/bbl, so there's little sign of oil prices easing as the US confirmed overnight they'd completed an 11th consecutive evening of strikes against Iran," Deutsche Bank Research said.Markets also kept a close watch on diplomatic efforts regarding the ongoing Middle East conflict after US Secretary of State Marco Rubio confirmed that the US remains prepared to negotiate with Iran. However, uncertainty remains over whether Tehran will return to talks.In corporate news, Segro (SGRO.L) jumped 3.15% to land among top stocks on the blue-chip index after Prologis (0KOD.L) raised its takeover offer for the industrial and data center property company to 14 billion pounds sterling. US-based real estate investment trust Prologis said the offer is "final and will not be increased." Segro rejected its previous offer of 13.5 billion pounds.Fresnillo (FRES.L) gained 3.55% after saying it is on course to meet expectations. For 2026, the miner affirmed production guidance of 42 million ounces to 46.5 million ounces for attributable silver, as well as for gold, lead and zinc. The company also maintained its production outlook for 2027 and 2028.Mid-cap constituent easyJet (EZJ.L) tumbled 11.82% after Reuters reported that the European Union is preparing to review its airline ownership rules to prevent foreign investors from gaining effective control of carriers in the region. The move could create fresh hurdles for competing bids for the budget airline from US-based Apollo Global Management and Castlelake.
