Wednesday Morning Markets: FTSE 100 Holds Flat as Miners Weigh and US Inflation Data Looms

FTSE 100 Treads Water

The FTSE 100 is broadly flat in Wednesday morning trade, despite a sell-off in some mining shares. 

After a brief positive open, as investors clung to hopes of de-escalation in the Middle East despite overnight strikes, the index quickly surrendered those early gains and is now flat. 

Yesterday’s decline, driven by GSK’s drop on its $10.6 billion Nuvalent acquisition, is still fresh in traders’ minds, and today’s mood is one of cautious consolidation ahead of a pivotal US data release this afternoon.

Mining Stocks Under Pressure

Some mining names are causing a drag on the index this morning, with Endeavour Mining, Gelncore and Fresnillo among the prominent fallers. 

A continued retreat in precious metals has weighed on the names, with gold and silver both down once again on Wednesday, each falling over 2%. 

The US dollar has strengthened, while bond yields are rising as investors position defensively amid the continued fragility in the Middle East and ahead of this afternoon’s US inflation data. 

With American inflation expected to have risen in May, partly driven by elevated energy costs tied to the ongoing US-Iran conflict, expectations for a more hawkish Federal Reserve are building. 

That’s a headwind for non-yielding assets like gold and silver, and the mining stocks that depend on them.

Metlen Energy & Metals Leads the Risers; RELX Slips

Not all blue-chip stocks are suffering. Despite other miners declining so far this session, MTLN is leading the FTSE 100 risers this morning, up 3.7%.

Associated British Foods and Tesco make up the top three at +2.7% and +1.8%, respectively.

Meanwhile, RELX is the biggest faller, down 2.3% and continuing its sideways pattern in recent months.

St James’s Place is the next big faller, off by 2.1%.

European Peers Mixed; Inflation in Focus

Across the Channel, European markets are similarly subdued. The DAX is off 0.2% and the CAC 40 is edging up 0.1%, 

Overnight reports of a fresh escalation in US-Iran hostilities have kept investors cautious, but markets appear to be pricing in some hope of a diplomatic resolution rather than a full-blown spike in risk aversion.

All eyes now turn to the US inflation print, due later today. A hotter-than-expected reading could accelerate the dollar rally, add further pressure to commodities, and keep equity markets on the back foot into the close.