FTSE 100 Falls as Inflation Concerns Weigh on Europe

The FTSE 100 index fell on Wednesday by 0.3% to 10,606.00 due to concerns over inflation data in Europe and the US.

European markets were impacted by strong inflation readings, with France's annual inflation rate hitting its highest level since February 2024 at 4.2%, Italy at 4.2%, and Germany expected to rise to 3.3% from 2.9% in August.

Analyst Mariana Monteiro expects euro-wide inflation figures on Friday to be stronger than anticipated, putting pressure on the European Central Bank to raise interest rates.

In contrast, US markets showed a brighter mood, with the Dow Jones Industrial Average up 0.1%, S&P 500 rising 0.6%, and Nasdaq Composite climbing 1.0% due to faster-than-expected economic growth in the second quarter and lower core personal consumption expenditures price index.

Kathleen Brooks of XTB noted that expectations for a Federal Reserve rate hike in October have dropped sharply, from 70% last week to 37% now.