London stocks slipped on Wednesday as investors digested cautious updates from WH Smith and Bunzl, while fresh US probes into Chinese imports and semiconductor controls reignited trade war fears.
The FTSE 100 index was down 29.39 points, 0.4%, at 8,219.73. The FTSE 250 was down 107.02 points, 0.6%, at 19,160.92, and the AIM All-Share was down 0.73 points, 0.1%, at 665.28.
The Cboe UK 100 was down 0.5% at 817.53, the Cboe UK 250 was down 0.5% at 16,733.29, and the Cboe Small Companies was down 0.3% at 15,105.33.
Endeavour Mining continued to lead the FTSE 100, up 6.7% after Barclays hiked its price target to 3,500 pence from 2,215p, maintaining an ’overweight’ rating.
Bunzl continued to lead the laggers, down 24% after it lowered guidance and paused its previously announced £200 million buyback amid weaker than expected trading.
‘A profit warning and termination of a share buyback programme, the first such halt by any FTSE 100 firm since the dark days of Covid-19 and lockdowns, are both taking a heavy toll on shares in Bunzl and driving them to a four-year low,’ commented AJ Bell’s Russ Mould.
He added: ‘Whether this is a warning that the buyback boom is about to come to an end remains to be seen, but it will certainly have investors in the UK equity market on alert, given the economic uncertainty that prevails in the face of [US] President Trump’s trade and tariff policies.
‘Buybacks have been part of the investment case for the FTSE 100, and a contributor to its move to fresh all-time highs as recently as February, so any retrenchment here would be a potential blow.’
Oxford Instruments was still the best FTSE 250 performer, up 6.1%. Mitie Group came in second, up 4.8%.
The Glasgow-based engineering, security and hygiene services provider said it has upgraded its full-year profit guidance, secured a new government contract, and launched a share buyback programme as fourth-quarter trading lifted revenue and earnings for financial 2025.
It expects operating profit for the year ended March 31 to be around £230 million, up on-year from £210 million. Revenue rose 13% to around £5.1 billion and free cash flow for the year is approximately £135 million, exceeding the company’s guidance of at least £100 million.
The new buyback is worth £125 million and the contract in question is a seven-year £136 million per annum security services deal with the UK Department for Work & Pensions.
WH Smith was the second-biggest lagger, down 5.1%.
The Wiltshire, England-based news, books and convenience retailer reported a £42 million pretax loss for the six months ended February 28 against a £28 million profit for the prior year.
Revenue however rose 3.0% to £951 million from £926 million the previous year and WH Smith declared a dividend of 11.3 pence per share, up from 11.0p.
‘If there were any lingering questions about why WH Smith was prepared to let its high street operation go on the cheap they are answered in its latest first-half results with this part of the business seeing significant declines in revenue and profit,’ commented Mould.
He added that while WH Smith ‘remains effusive’ about the opportunities in North America, ‘there have been signs of reduced travel to the US under the current administration and if this becomes a trend rather than a blip it could be a significant headwind for the business’.
Among smaller caps, Mercia Asset Management gained 16%.
The specialist alternative asset manager expects earnings before interest, tax, depreciation and amortisation to be ‘materially ahead of current market expectations’, and said it has ended the year to March 31 with around £40 million in cash and no debt.
Sosandar meanwhile lost 11%.
The women’s fashion retailer expects at least £500,000 in pretax profit for the year ended March 31 against the prior year’s approximate £300,000 loss, with revenue rising on-year to £37.2 million from £46.3 million.
However, this would underperform against market consensus which guides for revenue of £38.5 million and profit of £1.0 million.
In UK news, a welcome easing in inflation in March leaves the door ‘wide open’ for an interest rate cut by the Bank of England in May, analysts on Wednesday said.
Figures from the Office for National Statistics showed the UK consumer price index rose 2.6% in the 12 months to March, below the 2.7% FXStreet-cited consensus. Peel Hunt’s Kallum Pickering said the positive surprise is welcome news for markets and leaves door is ‘wide open’ for a May interest rate cut.
‘Money market expectations for three 25 basis point BoE cuts this year, to 3.75% by year-end have firmed up on the print - which is in line with our own call,’ he noted.
Mould, meanwhile, commented: ‘Lower than expected UK inflation opens the door for the Bank of England to cut interest rates with the possibility that the country could see a deflationary impact from a flood of cheap Chinese imports looking for a home in the face of US import levies.’
However Danni Hewson, also from AJ Bell, countered that ‘this month’s figures almost seem redundant considering all those price rises that set in at the start of April, which are expected to push inflation higher than any of us would like’.
Nonetheless, she added that the inflation print is ‘likely to be sufficiently low to give rate setters the green light to keep cutting the base rate, with markets currently pricing in an 85% chance of a quarter percentage point cut at the next meeting’.
In European equities on Wednesday, the CAC 40 in Paris was down 0.5%, while the DAX 40 in Frankfurt was down 0.4%.
Annual inflation in the euro area slowed in March, data from Eurostat showed on Wednesday, driven by weaker energy prices and easing service inflation.
The euro area annual inflation rate was 2.2% in March, slowed from 2.3% in February, and confirming the flash estimate released earlier this month. The EU-wide annual inflation rate also slowed, to 2.5% in March from 2.7% the previous month.
Services remained the largest driver of inflation, contributing 1.56 points to the headline figure, though with inflation in the category slowing to 3.5% from 3.7% in February.
The pound was quoted higher at $1.3275 at midday on Wednesday in London, compared to $1.3229 at the equities close on Tuesday. The euro stood at $1.1373, higher against $1.1303. Against the yen, the dollar was trading lower at JP¥142.65 compared to JP¥143.01.
Stocks in New York were called lower. The Dow Jones Industrial Average was called down 0.1%, the S&P 500 index down 0.6%, and the Nasdaq Composite down 1.3%.
In Asia on Wednesday, the Nikkei 225 index in Tokyo closed down 1.0%. In China, the Shanghai Composite ended up 0.3%, while the Hang Seng index in Hong Kong closed down 2.1%. The S&P/ASX 200 in Sydney closed down 2.8 points.
‘A warning from AI chips champion Nvidia that it will face a $5.5 billion hit from tightened US controls on exports to China marks a new chapter in the escalating tit-for-tat between Washington and Beijing, along with Chinese restrictions on ordering Boeing jets,’ Mould noted. ‘The deteriorating relationship between the two countries means China’s better-than-expected GDP figures for the first quarter may not attract too much attention given they cover a period before the Trump administration unleashed its trade policy.
‘Dutch semiconductor manufacturing equipment specialist ASML also warned of tariffs clouding the outlook for this year and next as talks between EU and US negotiators failed to yield much in the way of tangible progress overnight.’
China, meanwhile, has warned that it is ‘not afraid’ to fight a trade war with the US and reiterated calls for dialogue, after US President Donald Trump said it was up to Beijing to come to the negotiating table.
‘If the US really wants to resolve the issue through dialogue and negotiation, it should stop exerting extreme pressure, stop threatening and blackmailing, and talk to China on the basis of equality, respect and mutual benefit,’ foreign ministry spokesman Lin Jian said.
Also, Tokyo’s envoy for US tariff talks left for Washington on Wednesday saying he was confident of a ‘win-win’ outcome while protecting Japanese national interests.
Analysts said the result of Ryosei Akazawa’s visit could set the template for other countries’ negotiations with US President Donald Trump’s administration.
Brent oil was quoted higher at $65.22 a barrel at midday in London on Wednesday from $64.39 late Tuesday.
Gold was quoted higher at $3,303.05 an ounce against $3,223.88.
Still to come on Wednesday’s economic calendar, the US has retail sales and industrial production.
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