The FTSE 100 closed lower on Tuesday, after briefly topping 9,000, as US inflation figures began to show the impact of tariffs – putting rate cut hopes in doubt.
The FTSE 100 index closed down 59.74 points, 0.7%, at 8,938.32. It earlier hit a new all-time peak of 9,016.98 – crossing the 9,000 threshold for the first time.
The FTSE 250 ended down 34.31 points, 0.2%, at 21,690.46, and the AIM All-Share fell 3.02 points, 0.4%, at 771.03.
Stocks in New York were mixed at the time of the London close on Tuesday as investors weighed inflation figures, earnings and some good news for chip maker, Nvidia.
The Dow Jones Industrial Average was down 0.6%, the S&P 500 index was up 0.1%, while the Nasdaq Composite climbed 0.7%.
US consumer price inflation accelerated in line with expectations in June, data published by the Bureau of Labor Statistics showed.
The consumer price index rose by 2.7% in June from a year before, as expected by the FXStreet-cited market consensus and picking up pace from 2.4% in May.
On a monthly basis, CPI inflation accelerated to a seasonally adjusted 0.3% in June from 0.1% in May.
Annual core CPI inflation, which strips out food and energy, accelerated to 2.9% in June, as expected by Bloomberg, from 2.8% in May.
Bank of America said the report “finally provided ample evidence that tariffs are being passed onto consumers”.
ING said the slightly softer-than-expected June core inflation reading keeps alive the chances of a September Federal Reserve interest rate cut, but “the risk is that we get less benign prints for July and August”.
“That means we will need to see clear evidence of softer jobs figures to trigger Fed action before December,” it added.
ING thinks the Fed could then cut rates by 50 basis points.
Nvidia jumped 4.4% after it said the Trump administration has relaxed restrictions on exporting a key artificial intelligence product designed specifically for the Chinese market, saying it hoped to resume deliveries of its H20 chip “soon”.
The company said “the US government has assured Nvidia that licences will be granted, and Nvidia hopes to start deliveries soon”.
Dan Ives, at Wedbush Securities, said it was a “watershed moment for Nvidia, the AI revolution thesis, and the overall US tech industry”.
He called it a “monster win” for Nvidia and also a “major bullish tailwind for the tech sector as the green light for Nvidia will propel Street estimates to go up meaningfully over the coming years with China back in the fold”.
