UK Stocks Dip as Investors Await U.S. Inflation Data, Smiths Group Hits Record High

UK stock indexes slipped slightly on Wednesday as investors awaited key U.S. inflation data, which is expected to influence the direction of monetary policy. By 11:46 GMT, the FTSE 100 had edged down 0.1%, while the FTSE 250 index of midcap companies dropped 0.2%.

Global markets remained subdued ahead of the U.S. inflation report, due at 13:30 GMT. Expectations are that core consumer prices held steady in October. Currently, traders are pricing in a 59% chance of a 25 basis point rate cut by the Federal Reserve in December. The consensus forecasts inflation to increase from 2.4% to 2.6%, but any upside surprise could unsettle the market amid inflation concerns linked to the economic policies of the re-elected Trump administration.

The UK and European markets have shown volatility since Trump’s re-election, as worries about a potential trade war and disappointment over China’s economic stimulus have weighed on sentiment. In the UK, persistent inflation remains a concern. Bank of England policymaker Catherine Mann highlighted the risk of renewed inflationary pressures. The BoE recently cut interest rates for the second time since 2020, signaling a gradual approach to further rate reductions while monitoring inflation trends.

Despite broader market caution, Smiths Group saw a significant rally, jumping 10% and hitting record highs after the company raised its annual organic revenue forecast. The engineering firm cited robust demand for its advanced scanning and explosives detection technology as a key growth driver.

Defence company Babcock also rose 5.9%, as the firm announced it was on track to meet full-year forecasts. The ongoing geopolitical instability has bolstered demand for Babcock’s defence equipment and services, contributing to investor optimism.