UK Stock Market Update

By Sruthi Shankar

(Reuters) – The main UK stock indexes slipped on Wednesday as traders awaited key U.S. inflation data to gauge the path of monetary policy. However, defence company Smiths Group (OTC:SMGZY) rallied to record highs after upgrading its revenue outlook.

The blue-chip FTSE 100 was down 0.1% at 1146 GMT, while the FTSE 250 index of midcap companies dipped 0.2%.

Global stocks were sluggish ahead of the U.S. inflation data at 1330 GMT, which is expected to show that core consumer prices held steady in October. Traders are currently pricing a 59% chance of a 25 bps rate cut by the Federal Reserve in December.

Russ Mould, investment director at AJ Bell, commented: "The consensus is for the annual rate of inflation to move from 2.4% to 2.6%. Any higher could trouble the market, particularly given the incoming Trump administration raising the prospect of higher inflation through various policies."

UK and European markets have fluctuated since Donald Trump's re-election as U.S. president, due to concerns over a possible trade war affecting the European economy and disappointment over China's stimulus measures.

Catherine Mann, a Bank of England interest rate-setter, noted that still high inflation in Britain poses a risk that some drivers of price growth could be heading upwards. The Bank of England cut borrowing costs last week for only the second time since 2020, stating that further reductions are likely to be gradual as it assesses the persistence of inflation pressures.

Smiths Group rallied 10%, having touched a record high earlier, after the British engineering firm upgraded its annual organic revenue outlook following strong demand for its next-generation scanning and explosives detectors.

Babcock jumped 5.9% after the defence group stated it is on track to meet forecasts for the full year, driven by demand for its defence equipment and services amidst geopolitical instability.