FTSE 100 Declines on Rentokil Warning; U.S. Inflation Data Affects Markets – Reuters

By Purvi Agarwal and Khushi Singh

The UK’s main stock index experienced a decline on Wednesday, primarily due to a drop in Rentokil shares following the company’s warning about weakness in its North American operations. Investors were also digesting the latest inflation figures from the United States.

The blue-chip FTSE 100 fell by 0.2%, while the mid-cap index lost 0.6%. Rentokil Initial issued its third forecast for lower annual profits, citing weaker-than-expected sales in North America, which led to a steep decline in its shares, dropping as much as 20%.

Additionally, Rentokil announced plans to reduce its U.S. workforce by an undisclosed number of positions to manage cost overruns. Industrial support services stocks suffered the most, with a 3.4% decrease across the sector.

Global stock indexes faced pressure after consumer prices in the U.S. showed a slight increase in August, yet underlying inflation appeared persistent. This situation may deter the Federal Reserve from implementing a half-point interest rate cut next week. Currently, over 80% of traders anticipate a 25 basis point cut in interest rates.

In the UK, rate-sensitive homebuilders declined by 0.9%. Conversely, precious metal miners emerged as the best-performing sector, rising 1.4%. Centamin, a gold mining company, increased by 1.8%, continuing its upward trend for the second consecutive session following its agreement for a $2.5 billion acquisition by AngloGold Ashanti.

Meanwhile, recent data indicated that Britain’s economic output grew less than expected month-on-month in July, showing no change after a period of stagnation in June.

According to Nick Saunders, CEO of a trading platform, "The figures are not bad enough to change the course the Bank of England is sailing on. An unexpected cut or a cut that’s too large might signal to investors that the economic outlook is significantly worse."

In other news, shares of WH Smith surged by 10.8% after the company reported increased annual revenue and unveiled a buyback plan worth £50 million.