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London stocks slightly declined on Wednesday, following the release of stronger-than-expected domestic inflation data, which led investors to reduce their expectations for an interest rate cut by the Bank of England in August. The FTSE 100 index was flat to down, marking a potential third consecutive session of decline, while the FTSE 250 also dipped. The latest British consumer prices data revealed that inflation remained at 2%, contrary to predictions of a slight decrease, adding to the uncertainty surrounding the timing of the BoE's easing measures. The likelihood of a rate cut in August decreased to 33% from 49% prior to the data release. Yields on the 2-year government bond rose slightly, and the pound strengthened against the dollar, further impacting market sentiment.

The Bank of England requires a higher level of certainty in order to actually lower rates. Some aspects of the report were disappointing, particularly the service inflation component. Industrial metals miners were a drag on the market, with a 0.9% decline, led by Antofagasta dropping 3.8% after announcing lower copper output expectations. However, losses were offset by a 1.1% gain in the automobile and parts sector, rebounding from three consecutive sessions of losses. Precious metal miners also rose by 0.7% due to record high gold prices. 

Legal & General, a British life insurer, experienced a 1.8% drop in its shares to 226.3 pence, making it the top percentage loser in the FTSE 100 index. This decline came after RBC downgraded its rating to "sector perform" from "outperform" following LGEN's June strategy update and the emergence of "disruptive forces" in the UK bulk purchase annuity/pension risk transfer market. In June, LGEN announced plans for a 200 million pound share buyback and a merger of its investment units. The Bank of England also recently stated its intention to increase scrutiny of risks such as bulk purchase annuities, which is a growing area in the sector. Additionally, RBC reduced the target price for LGEN to 245p from 295p, citing expectations for earnings growth within the target range but limited potential for surpassing expectations, particularly in FY24. Overall, the stock has seen a nearly 10% decline this year, including losses in the current session.

HSBC has upgraded the UK's Spirax to a "hold" rating after the stock experienced a 16% decline year-to-date. Spirax's shares were up 0.1% at 8,810 pence, but had previously risen as much as 0.5%. The upgrade from HSBC comes after the stock fell 16% year-to-date, compared to a 6% increase in the FTSE 100. It is suggested that Spirax may need to adjust its forecast for 2024 due to high implied growth needs in the second half of the year. The market is already aware of the potential for a guidance revision and has factored this into the stock price, according to HSBC. The price target has been raised to 8,700p from 8,600p, indicating a potential 2% downside to the stock's closing price on July 15. Data from the London Stock Exchange Group shows that the average recommendation of 16 analysts on SPX is equivalent to a "hold," with a median price target at 9,800p.

FTSE Bias: Bullish Above Bearish below 8225

• Above 8363 opens 8500
• Primary support 8000
• Primary objective 8023
• 5 Day VWAP bullish
• 20 Day VWAP bullish

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