By Pranav Kashyap
(Reuters) -Britain’s FTSE 100 stock index hit a two-week low on Wednesday as slower-than-expected deceleration in Britain’s inflation knocked off hopes of a June interest rate cut by the Bank of England, while Marks & Spencer’s gained on upbeat annual profit.
The blue-chip FTSE 100 index fell 0.3%, set for its biggest drop in more than a month. The pound strengthened against the dollar and touched a two-month high of $1.2732.
British consumer prices rose 2.3% in April, slowing from a 3.2% increase in March, while economists polled by Reuters expected a 2.1% rise.
The two-year gilt yield that moves closely with expectations of interest rates rose to its highest in three weeks at 4.462%.
“There’s a bit of a slump… but still quite a bit of good news in this print, but the BoE cut in June is essentially off the table,” said Thomas Gehlen, senior market strategist, SG Kleinwort Hambros.
A stronger pound and a falling bond is “just indicating that the rate cutting path is pushed backwards by a month or two.”
Money markets are now pegging a mere 14% chance of a BoE rate cut in June, with a cut now fully priced only in November.
Among sectors, rate-sensitive homebuilders were the worst hit after the inflation data, sliding 1.6%.
Nvidia’s quarterly results, due later in the day, are also on the market’s radar, and could spark a $200 billion swing in the AI-darling’s shares.
Keeping losses in check, Marks & Spencer jumped 8.9%, after the retailer reported a 58% rise in annual profit, beating market expectations.
Mitchells & Butlers gained 13.7% after the pub group forecast its annual results to be at the top end of consensus expectations.
RS Group fell 5.0% after the electronics products distributor posted weak full-year results.
The mid-cap FTSE 250 dropped 0.4% to 20,707.59 points.
(Reporting by Pranav Kashyap in Bengaluru; Editing by Rashmi Aich)
