FTSE 100 drifts lower; WPP shines on AI deal with Nvidia

U.K. stock markets traded in a mixed fashion Tuesday, as investors returned from a long weekend to digest an agreement to raise the U.S. debt ceiling as well as fresh inflation concerns.

At 04:15 ET (08:15 GMT), the benchmark FTSE 100 index traded 0.2% lower, the mid-cap FTSE 250 climbed 0.4% and the combined FTSE 350 traded largely flat.

U.S. President Joe Biden and top congressional Republican Kevin McCarthy announced an agreement over the weekend to suspend the country’s $31.4 trillion debt ceiling until 2025, in exchange for capping some government spending over the next two years.

Concerns had been growing that the lack of a deal would mean the United States defaulted on its debt obligations, which would have had severe global economic ramifications.

However, the deal still has to get through both houses in a deeply divided Congress, and is likely to face opposition from the extreme wings of both parties.

Back in the U.K., data from the British Retail Consortium indicated that shop price inflation picked up this month to reach its highest rate since industry records began in 2005, with prices in supermarkets and retail chains rising 9.0% in the year to May, after an 8.8% increase in April.

This is likely to keep the pressure on the Bank of England to keep on lifting interest rates, with U.K. inflation the joint highest at 8.7%, along with Italy, of the G-7 industrialised countries.

The BoE will not get inflation back to its 2% target until the end of 2025, Goldman Sachs said, citing soaring food prices as well as wage increases.

In the corporate news, WPP (LON:WPP) stock rose 2% after the ad giant announced plans to work with chipmaker Nvidia (NASDAQ:NVDA) in order to use generative artificial intelligence in advertising.

Bunzl (LON:BNZL) stock fell 0.7% after the packaging and distribution firm announced the purchases of safety businesses in Brazil and Spain, taking the total of acquisitions made since 2004 to 200.

Hollywood Bowl (LON:BOWL) stock rose 0.2% after the 10-pin bowling operator announced an increase in half-yearly sales, despite a drop in profits, as cash-strapped U.K. consumers looked for inexpensive entertainment.