FTSE 100 inches higher as UK inflation cools, eyes turn to Bank of England decision

• FTSE 100 adds 9 points
• UK inflation remains at 3.4% in May, well above BoE target
• ONS misreports reports that annual inflation fell, when it was flat
• Israel-Iran tensions remain, oil prices volatile  

4.58pm: FTSE closes higher

Britain’s blue-chip FTSE 100 index ended slightly higher on Tuesday, buoyed by cooling inflation data that reinforced expectations of a Bank of England rate cut later this summer.

The FTSE 100 closed up 9 points, or 0.1%, at 8,843.

4.08pm: FTSE 100 heading quietly towards close

Nothing much happening on the FTSE in the past hour. 

Banks, tobacco companies, grocers are all driving forces for the London index today. 

In the top 30 stocks, HSBC, BAT, Lloyds, 3i Group, Cocal Cola and Tesco are all up over 1% after inflation numbers and rising energy futures (high food prices, Bank of England cuts possibly pushed back).

Top of the leaderboard are Melrose Industries, Aviva, IAG and Entain, all up over 2%. 

Shell and BP are flat and down 0.8% respectively, even as Brent crude was up above to $75.8 not long ago, before dropping right back to $73.5 a barrel. 

Brent crude is continuing to extend declines. Once again President Trump has pushed out a deadline to do a very big thing to Iran.

We don’t know what this ‘big’ event is, or if he’ll do his usual TACO.

Undoubtedly the stakes are high, but oil traders not falling for it @XTBUK

— kathleen brooks (@KATHLEENBROOKS) June 18, 2025

Fallers of note are AstraZeneca and GSK on Donald Trump's latest tariff threat. 

Meanwhile, across the pond, US stocks have picked up since the open, with the big three indices all up 0.5-0.6%.

Oil back in the news - not a bad return for 3 out of 4 majors, and the ETF. pic.twitter.com/GfuRTmIwGy

— Chris Beauchamp (@ChrisB_IG) June 18, 2025

2.51pm: Wall Street on the front foot

US stocks have opened on the front foot, and that has given the FTSE a little extra lift too. 

The Nasdaq Composite started with a 0.3% gain, while the Dow Jones and S&P 500 are up 0.2%. 

Steel producer Nucor is the top riser on the S&P, up 5% as Japan's Nippon closes its US Steel acquisition. 

Texas Instruments is up 0.8% as it announced plans to invest more than $60 billion in US semiconductor manufacturing.

2.28pm: Analysis of US data

"Despite the slight decline in initial jobless claims in the week ending June 14, both initial and continuing unemployment claims are trending higher, consistent with a gradual softening in labor market conditions," says Michael Pearce, deputy chief US economist at Oxford Economics.

"Even so, with inflation risks looming, we do not think the economy is weakening by enough to force the Federal Reserve into rate cuts in the coming months."

The initial claims data suggests payroll growth slowed this month, with the upward trend in continuing claims indicating the number of people on permanent layoff is "rising steadily" too.

Jobless claims by former federal workers remain low relative to February levels, Pearce notes, adding that based on recent court rulings he recently shifted his forecast of the timing of federal worker layoffs later into this year.

Oliver Allen at Pantheon Macroeconomics says other indicators such as WARN layoff notices and the Challenger job cuts series "suggest layoffs are starting to rise from a low base, while weak hiring means newly laid-off workers will find it increasingly difficult to get a new job quickly. This pressure on the labor market will grow as the tariff shock works its way through the economy." 

Housing starts also are "exceptionally volatile", he points out, so there is little signal to take from the 9.8% plunge in total starts in May, which he says was mostly due to a near-30% collapse in multi-family starts "that will probably unwind over the next month or two".

Building permits are less volatile, however, and were "notably weak" in May.

"Confidence among homebuilders has collapsed recently, weighed down by relatively weak home sales and mounting inventory, suggesting that further declines in new single-family construction probably lie in store.

"If so, construction payrolls should start falling slightly within a few months, compared to the typical gain of 5-to-10K over the past six months." 

2.05pm: US data

Some US data on jobs and housing. 

Initial jobless claims dipped slightly in the past week, easing to 245K from 250K, bang in line with the consensus forecast. 

Continuing claims fell slightly to 1,945K in the prior week, from 1,951K, a little higher above the 1,941K expected. 

Meanwhile, May's housing starts plummeted to 1,256K from 1,392K, missing the consensus forecast of 1,350K by some way.

Building permits dropped to 1,393K from 1,422K, also lower than the 1,422K expected.

1.22pm: HS2 an 'apalling mess'

UK transport secretary Heidi Alexander has confirmed the HS2 delay in a House of Commons speech, saying the construction of the rail line was an "appalling mess".

"Billions of pounds of taxpayer’s money has been wasted by constant scope changes, ineffective contracts and bad management," she said. "It is an appalling mess, but it is one we will sort out."

There was no confirmation of a new date or cost for completing the high-speed London to Birmingham lines, though some Westminster scribes are bandying about a number above £100 billion at current prices.

1.08pm: Could TSB be combined with Santander UK?

One of the companies that has made takeover enquiries about TSB is Santander, according to Sky News.

Santander said earlier this year that, despite speculation it might be looking to exit the UK, it was not planning to sell off its UK arm.

It has not tabled a formal offer for TSB, the report added, citing City sources, and is not certain to do so.

12.23pm: Oil prices rebound amid Iran, Israel, Trump, Russia etc

Iran’s Supreme Leader has rejected Donald Trump’s call for an "unconditional surrender" in his first remarks this week.

"Intelligent people who know Iran, the Iranian nation, and its history will never speak to this nation in threatening language because the Iranian nation will not surrender," Ayatollah Khamenei said in a statement read by a television presenter, per a Reuters report.

"The Americans should know that any US military intervention will undoubtedly be accompanied by irreparable damage."

Israel says it has attacked 40 Iranian targets today, including missile infrastructure, storage sites and military operatives.

Meanwhile, Russia, a key partner of Iran, has warned the US against wading into the conflict, with Moscow's foreign minitser saying this "would radically destabilise the entire situation".

Oil prices have been rising in the past couple of hours, with Brent crude up to $76.78 now. 

Russian ForMin: 'We Are Milimetres Away From Catastrophe' Due To Daily Israeli Strikes On Iran's Nuclear Infrastructure - RIA

— LiveSquawk (@LiveSquawk) June 18, 2025

12.05pm: FTSE and US futures drop

The FTSE 100 has dropped into the red, down just a handful of points, though. 

Falls for drug giants AstraZeneca, the largest company on the index, and GSK are contributing factors, down 1.4% and 1.9% respectively.

This is likely to be after Donald Trump threatened drug import tariffs. The US president said tariffs on imported drugs could be imposed “very soon”, echoing comments from two months ago.

Speaking to reporters on Air Force One, he said: "We’re going to be doing pharmaceuticals very soon. That’s going to bring all the companies back into America. It’s going to bring most of them back into, at least partially back in."

Earlier in the week, US health secretary Robert F Kennedy was reported to be looking at a crackdown on drug ads.

Fallers are led by Howden Joinery, down 3%, Ashtead down 2.4%, and Compass, down 2.1%.

Miners, airlines, housebuilders and financials are also down.

Meanwhile, US futures have flattened off, with those for the Dow Jones in the red, while S&P 500 and Nasdaq 100 futures are now up less than 0.1%.

11.20am: Raspberry Pi bosses sell shares

Raspberry Pi Holdings PLC (LSE:RPI) shares are down 2.75% this morning after CEO Eben Upton and finance chief Richard Boult both sold big chunks of shares after the expiry of their one-year IPO lockup period. 

Upton sold £1.8 million worth, offloading 400,000 at 454.55p apiece. 

Boult offloaded 100,000 at the same price. 

Raspberry Pi floated in London last June, with the shares priced at 280p with Upton and Boult having watched the shares surge up to above 760p early this year.  

10.40am: Further HS2 delay

Reports are suggesting that completion of the HS2 rail project will be pushed back past its 2033 target completion date to around 2035.

Transport secretary Heidi Alexander will tell MPs there is “no reasonable way to deliver” the 2033 target for the high-speed rail line from London to Birmingham, the Guardian reported.

Two reviews into HS2 have found "billions of pounds of taxpayers’ money has been wasted by constant scope changes, ineffective contracts and bad management," Alexander will say in a Commons speech today. "It’s an appalling mess. But it’s one we will sort out."

10.13am: S&U reports improved trading, Tiger Royalties hails new 'node'

More movers, this morning, including S&U PLC (LSE:SUS), up 10% after the motor and property lender said trading in the first two months of its financial year had exceeded expectations.

Advantage, its motor finance division, has bounced back from a regulatory review, with lending volumes up 50% and customer payment performance at its best since last October.

Elsewhere, Tiger Royalties and Investments PLC (AIM:TIR) jumped 55% after revealing that its newly acquired Tiger Alpha Bittensor Subnet is generating nearly $70,000 in monthly revenue, just a month after going live.

The subnet, a revenue-generating node on the decentralised Bittensor blockchain, is producing over six TAO per day, worth more than $2,300 at current prices.

Tiger is an intriguing AIM beast, with serial mining entrepreneur Colin Bird and serial tech entrepreneur Jonathan Bixby both on the board as it pursues a twin investment policy focused on mining and 'utility memecoins'. 

10.01am: House price growth slows

Official UK house prices data is in from ONS, showing an average increase of 3.5% to £265,000 in the year to April.

This annual growth is down from the 7% jump seen for March.

House price inflation slowed following changes to stamp duty in England and Northern Ireland, said Aimee North, ONS head of housing market indices. 

She notes that the North East once again showed the highest annual increase, and the South West showed the lowest annual growth, while London was the only English region where annual inflation was higher in April (3.3%) than in March (0.9%).

"The rental market continues to cool," she adds, "with the fifth month of slowing average annual growth across the UK. Private rent prices in Scotland grew at their slowest annual pace in three years." 

9.58am: AO in line, but warns on mobiles business

Shares in AO World PLC (LSE:AO.) have ticked lower despite the online electricals retailer posting full-year results showing a notable improvement in profitability and a continued recovery in margins.

Broker Stifel and house Peel Hunt both said the results were in line with its upgraded forecasts and landed at the top end of AO’s own guidance.

AO said the performance in its mobile phones business has been "materially behind our expectations and a drag on profits", noting that the monthly billing post-pay market has "declined further", and customer preference has shifted towards disaggregation of mobile contracts, ie SIM only.

As Peel Hunt notes that "management is intent on either getting the non-core mobile sites back to profitability this year or shutting them down, with the direction of travel likely to be known by autumn".

Elsewhere, shares in CPP Group (LSE:CPP) have surged 37% after the company unveiled plans to exit all remaining legacy operations and focus exclusively on Blink, its high-margin parametric insurance technology platform.

The shake-up includes the completed £4.6 million sale of CPP Turkey and a three-year licensing deal worth £1.5 million for Blink’s cybersecurity product. A sale of CPP India is also on the cards, with a preferred bidder already lined up.

9.22am: A lot going on

There's a lot going on for markets to take into account this week. 

There's generally been a risk-off tone, with renewed fears around a further escalation in the Middle East, "particularly amid increasing questions over whether the US might join Israel’s strikes against Iran", says Deutsche Bank macro strategist Jim Reid.

A series of hawkish posts from President Trump towards Iran included demanding “UNCONDITIONAL SURRENDER”, that "we now have complete and total control of the skies over Iran" and suggested that Iran’s leader Ayatollah Khamenei could be targeted: “We know exactly where the so-called 'Supreme Leader' is hiding.

Axios reported that Israeli PM Netanyahu believes Trump will attack Iran's underground enrichment facility at Fordow in the coming days, with CBS also reporting that Trump was considering joining the strikes against Iran’s nuclear facilities.

However, says Reid, "direct US involvement would risk Iranian retaliation again US facilities in the region, with the New York Times reporting that Iran was preparing for such action in the event of US strikes. This renewed escalation in rhetoric has left uncertainty hanging over markets".

Those fears drove oil prices higher yesterday, but while Brent crude closed at its highest since February at $76.45 a barrel (apart from Friday's intraday high of $78.50) it is slightly lower this morning at just under $76.

Reid says views on risk weren’t helped by a soft batch of US data yesterday, including both retail sales and industrial production falling in May.

The main US focus for markets right now is the Fed announcement this evening, where the current uncertainty and the potential for fresh inflationary spikes means they FOMC is widely expected to keep rates on hold again, "and it means the focus will be on the dot plot for where they expect rates to go next".

Deutsche economists think it will only signal one rate cut this year, which would be a hawkish shift from March, when they still signalled two cuts. 

US Treasuries rallied yesterday, sending yields lower, on a flight to quality, says Reid, while for Europe "it was a different story, as inflation fears from higher energy prices dominated, pushing yields higher across the continent".

In addition, there was more upbeat data from Germany, as the expectations component of the ZEW survey bounced up.

9.03am: Markets all modestly higher

The FTSE 100 is up 0.2% and the FTSE 250 is lagging that gain at under 0.1%.

Sterling is up 0.3% against the dollar at $1.346, having fallen to a three-week low yesterday. It remains near two/three-month lows against the euro.

Looking across to the continent, the other major European indices are all up around 0.2%, like the Footsie.

Ahead of the Federal Reserve decision later, US futures are modestly higher too, with those for the S&P 500 and Nasdaq both pointing around 0.3% higher and Dow Jones futures up 0.2%. 

8.41am: Inflation analysis

More views on inflation, where CPI was 3.4% in May, the same as in April. The ONS said May saw a drop in the annual rate from 3.5% in April, when the figure for April was actually also 3.4%.

The ONS adjustment was due to an error in the calculation in the vehicle excise duty component, which has overstated inflation in the past. The correction is only reflected in the May figures.

"This had a small downward impact on inflation in May, but it asks more questions about the accuracy of ONS statistics," says Kathleen Brooks at XTB.

Danni Hewson, AJ Bell head of financial analysis, says: "The problem with inflation data is that it’s looking back at what has already happened, whilst households have to look forward at what is to come.

"The price at the pump played a big part in the slight fall in headline inflation but the escalating conflict between Israel and Iran has impacted the oil price in the past week, with UK motorists already bracing themselves for hikes and airfares also expected to soar."

She adds that while there has been some confusion about last month’s inflation rate because of an error in vehicle excise duty numbers, "people might be puzzled by differing headlines".

Raj Badiani, economics director at S&P Global Market Intelligence, says he had expected higher CPI inflation in May amid UK firms facing higher payroll taxes and a hike to the national living wage from April.

Like most economists, he does not expect the BoE's monetary policy committee (MPC ) will vote for a second successive rate cut at tomorrow’s meeting.

While he anticipates tamer inflation developments during the second half of this year, as soft demand conditions and accelerating employment losses are likely to result in slower earnings growth, Badiani says "the timing of the next interest rate cut is uncertain because of significant upside inflation risks" from a new spike in global oil and gas prices because of the intensifying conflict between Israel and Iran.

In this case, he says UK firms could ratchet up their prices to cover higher payroll costs and headline and services inflation rates "could be higher than we currently anticipate during the next few months, delaying the next rate cut until this November or early 2026".

Nicholas Hyett, investment manager at Wealth Club, noted that UK inflation remains "far higher than elsewhere in Europe". 

He also says the turmoil in the Middle East has upset hopes that price increases would slowly roll off over the course of the next 12 months.

"The price of Brent crude has moved sharply higher despite key global oil routes remaining largely unaffected so far, and the conflict has the potential to disrupt global energy flows much more severely than it has so far.

"As a key input into pretty much everything, a spike in oil would drive up prices across the board. The inflationary risk from the Middle East, combined with already rising prices, could change the calculus for the Bank of England and make rate cuts that bit less likely."

Matt Swannell, chief economic advisor to the EY ITEM Club, says headline inflation is "likely to edge upwards over the next few months, and the increase could be more pronounced if the recent rise in Brent Crude Oil prices is sustained.

"But we expect inflation to cool from October, as the positive contribution from the energy category wanes."

He notes that the MPC has settled into a "cut-hold tempo" for interest rate loosening, with "little in today's release that is likely to change the MPC's views" but he continues to expect a 25bps cut at August's meeting.

8.15am: FTSE 100 opens higher

The FTSE 100 has opened 10 points higher at 8,844.26.

Entain is the top riser, which seems to be on the back of a positive note from Deutsche Bank. 

Aerospace group Melrose, accountancy software developer Sage Group, defence contractor Babcock, insurer Aviva and lender Barclays are among the top risers. 

In fact, in the index's top 20 largest companies, only AstraZeneca, GSK and Compass are in the red.

The drug giants, both down 1.4%, are among the bigger fallers, with Howden Joinery bottom of the list. 

8.01am: Speedy growth remains in reverse as transformation continues

Speedy Hire PLC (LSE:SDY) has turned in final results showing lower sales and a swing to statutory losses, but said it "remains committed" to delivering its growth strategy through further investment in its fleet and transforming the business.

Revenue of £416.6 million in the year to end-March 2025 was down 1.2% compared to the prior year, blamed on challenging markets amid delays in government spending impacting major infrastructure projects, along with and slower than anticipated expansion of its new Trade & Retail business.

The dividend was kept flat on last year, with CEO Dan Evans saying: "Despite the macro-economic challenges, we have remained committed to, and in parts accelerated, the implementation of our Velocity strategy during its 'Enable' phase, which is setting the foundation for growth opportunities for the benefit of our customers and people, whilst maintaining shareholder returns."

7.56am: PZ Cussons sells out of JV

PZ Cussons (LSE:PZC), the maker of Imperial Leather and Carex soaps, has agreed to sell its half of a Nigerian edible oils joint venture as it continues to review strategic options for its African businesses. 

The FTSE 250 London-listed small cap said it has struck a deal to sell its 50% stake in PZ Wilmar to partner Wilmar International for $70 million (£51 million), with expected net proceeds of roughly $64 million (£47 million).

It also provided an update on trading across the group, saying like-for-like revenue growth of 8% for the year to May, with adjusted operating profit guidance narrowed down to £52-55 million, from £52-58 million before.

7.31am: Ocado wins contract extension

Ocado Group PLC (LSE:OCDO) has upsold one of its longest-running overseas customers from in-store fulfilment technology to a new delivery warehouse, or customer fulfilment centre (CFC) as it calls them.

Grocer Bon Preu, based in the Spanish region of Catalonia, is getting a new CFC built with the help of the FTSE 250 group, in Parets del Vallès, just north of Barcelona.

Bon Preu first signed a contract in 2017, when it was Ocado's first overseas customer.

7.24am: Inflation buffeted by counteracting price movements 

Inflation was "little changed" in May, says ONS acting chief economist Richard Heys, due to "a variety of counteracting price movements".

He pointed to a fall in air fares in the month compared with a large rise at the same time last year, while motor fuel costs fell and the later timing of Easter and school holidays also affected pricing. 

“These were partially offset by rising food prices, particularly items such as chocolates and meat products," Heys said. "The cost of furniture and household goods, including fridge freezers and vacuum cleaners, also increased."

David Bharier, head of research at the British Chambers of Commerce, said the elevated level of CPI, above the 2% Bank of England target, "remains a real concern for businesses and confirms that price pressures persist".

He said CBI research shows that firms’ price expectations jumped after the autumn statement, which included the increase in employer NICs, and again following the US tariff announcement, while other short-term headwinds include rising energy costs and risks to global supply chains from the recent escalation of figthing between Israel and Iran.

"Any major disruption in the Strait of Hormuz could echo the supply chain shock of 2021, with surging oil and shipping costs. Many smaller businesses will have little capacity to absorb these pressures."  

7.15am: FTSE 100 called higher as inflation eases, but oil prices rise

The FTSE 100 could be lifted slightly higher on Wednesday as oil prices continue to increase, driven by the intensification of Israel's bombardment of Iran, while softer UK inflation bodes well for further Bank of England easing.

On the futures market, London's blue-chip index is seen rising around 5 points, while some European benchmarks are called lower.

Overnight, US stocks dropped, led by the tech-dominated Nasdaq, which fell 0.9%, while the S&P 500 and Dow Jones dropped 0.8% and 0.7% respectively. 

According to figures from the Office for National Statistics this morning, UK inflation eased last month.

The consumer prices index rose 0.2% month-on-month, as expected, which meant that annual inflation eased to 3.4% in May from 3.5% in April, in line with forecasts. 

Core CPI, which excludes energy and food, fell to 3.5% from 3.8%, as expected.

Services CPI, a key measure for the BoE, also softened to 4.7% from 5.4%, more than the 4.8% forecast.

5.30am What to watch on Wednesday 18 June

While a ‘no change’ decision from the Federal Reserve is expected on Wednesday, what they say alongside this is important, especially as the announcement will be alongside a summary of economic projections, also known as the "dot plot".

This will show if the Fed policymakers still expect to make two more rate cuts this year, and another two next year. 

In London company news, an insight into the UK construction sector will come from Speedy Hire PLC (LSE:SDY), where investors have been creeping back after February's profit warning.

A UK inflation reading for May will come out at the same time from the Office for National Statistics, and will be of special interest ahead of the Bank of England decision a day later. 

A month ago, higher-than-expected inflation in April was seen as likely to discourage the BoE from going too fast on rate cuts, but CPI is forecast to slow to 3.3% in May from the 3.5% in April, with core CPI inflation to slow to 3.5% from 3.8% in April, and services CPI inflation to drop to 4.7% in May from 5.4%. 

Announcements due:

Trading update: S&U

Interims: Oxford Metrics, JPMorgan Indian Investment Trust

Finals: AO World, Speedy Hire

Economic announcements: Inflation Rate (UK), Current Account (EU), MBA Mortgage Applications (US), Building Permits (US), Housing Starts (US), Crude Oil Inventories (US), Federal Reserve Policy Decision (US)