UK's FTSE 100 inches lower as market assesses inflation data, mixed earnings

May 21 (Reuters) - Britain's FTSE 100 index edged lower on Wednesday, weighed by a mixed bag of corporate earnings, and as the country's hotter-than-expected inflation data led investors to temper expectations for the Bank of England's interest rate cuts.
As of 0949 GMT, the blue-chip index (.FTSE), opens new tab was down 0.1%.
Britain suffered a bigger-than-expected inflation surge in April, including in areas watched closely by the Bank of England.
"Today's data should put pay to the possibility of another UK rate cut for a few months, and will likely encourage the Bank of England to maintain its hawkish policy guidance for some time yet," said Matthew Ryan, Head of Market Strategy at Ebury.
The chance of a rate cut in August was cut to 40% by investors, down from 60% before the inflation data.
Sterling hit its highest in three years, opens new tab against the U.S. dollar after the figures were published.
The inflation data triggered a slight wobble on the more domestically-focused midcap index (.FTMC), opens new tab, which was down 0.7%.
Separately, British house prices also rose at their fastest pace since the end of 2022 in the 12 months to March, according to official data published on Wednesday.
Among the blue-chips, sportswear retailer JD Sports' shares (JD.L), opens new tab were the worst hit, dropping 6.5% after it warned that President Donald Trump's tariffs may force the company to hike prices in the key market.
Marks & Spencer (MKS.L), opens new tab slid 2% after the retailer said "a highly sophisticated and targeted cyberattack" would cost it about 300 million pounds ($403 million) in operating profit.
On the other hand, aerospace and defence sub-index (.FTNMX502010), opens new tab gained 1.3%.
Utilities (.FTUB6510), opens new tab were up 1% with SSE (SSE.L), opens new tab rising 1.2% even after the renewable energy generator cut its five-year investment plans by 3 billion pounds ($4.04 billion), citing a changing macroeconomic environment across the energy sector.
Currys (CURY.L), opens new tab rose 1.9% after the electricals retailer raised its annual profit forecast for the third time this year.

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Tech tycoon Lynch's doomed Bayesian yacht lifted to surface

Salvage experts lifted Mike Lynch's sunken superyacht to the surface and began pumping seawater out of it on Saturday, 10 months after it sank off the coast of Sicily, killing the British tech tycoon, his teenage daughter and five others. Work resumed at first light, with one of the most powerful maritime cranes in Europe having been used to haul the 184-foot Bayesian from beneath the waves. The upper decks appeared badly damaged while the blue hull was encrusted with mud. The Bayesian was moored off the small port of Porticello, near Palermo, in August last year when it sank during a sudden storm. The yacht was vulnerable to violent winds and was probably knocked over by gusts of more than 117 km (73 miles) per hour, an interim British report said last month. The vessel will be held in an elevated position over the weekend while checks and preparations are made, said TMC Marine, which has been leading the salvage operation, working with Dutch specialists Hebo Maritiemservice to lift the yacht 50 meters from the seabed over the past few days. It is then expected to be transported to the nearby port of Termini Imerese on Monday and handed over to the authorities who are investigating the sinking. The recovery process has been made easier after the vessel's 72-metre mast was detached using a remote-controlled cutting tool and placed on the seabed on Tuesday. In addition to Lynch, founder of the software company Autonomy, his daughter Hannah, lawyer Chris Morvillo and his wife Neda, banker Jonathan Bloomer and his wife Judy, and chef Recaldo Thomas were killed when the yacht sank. Nine other crew members and six guests were rescued.

Telegraph

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EU fantasies of toppling the dollar are totally delusional

It's a nice problem to have amid the Trump-inspired madness that grips today's foreign exchange markets. But it's a problem none the less. The Swiss franc keeps on appreciating, and there seems to be almost nothing the authorities can do to stop it. Increasingly alarmed by its trajectory, the Swiss National Bank last week cut its official policy rate back down to zero, and there is now talk of rates going negative again by summer's end. But to little effect. Switzerland's safe haven attributes have rarely been in such high demand. Rising geopolitical tensions have combined with growing loss of trust in the dollar as the bedrock of the global economy to send the franc soaring, almost regardless of whatever rate of interest it carries. Lest it be gold, there are few repositories of wealth thought more secure than Switzerland. Contrast that with the UK, where Bank Rate is still firmly stuck at 4.25pc with stubbornly persistent inflation to match. Thanks substantially to the lower import prices that the surging franc brings about, prices as a whole are going down not up; there is little or no cost of living crisis. This is great for consumers, not so much for Swiss industry, which has to match these deflating prices at home and abroad. But thus far at least, it's coped remarkably well. I've never bought the idea that a competitive economy needs a weak currency. Persistent devaluation has been the British way for decades now, and little good has it done either. At best, it's only smoothed the decline – a tranquiliser to avoid having to face up to the hard yards of painful structural adjustment. While the UK has grown poorer, the Swiss grow ever richer – living proof that a strong currency goes hand in hand with a competitive economy. The one is a reflection of the other. Bad, uncompetitive companies are quickly weeded out and dispensed with, while the disciplines of having to compete with cheaper foreign goods and services forces the survivors into imaginative innovation and productivity gain. You can, however, have too much of a good thing, and this is the unfortunate position that Switzerland now finds itself in. Broadly speaking, Switzerland produces in appreciating francs, but sells in equally fast depreciating dollars. There is only so far countervailing productivity improvement can take you. Theoretically, Donald Trump's tariff policies should make the dollar stronger, in that all other things being equal, they ought to reduce the size of the deficit. But it hasn't worked out that way. In practice, they've only further undermined international confidence in US economic management more widely. To most observers, it looks as if the White House is deliberately trying to tank the dollar. And on one level, it is; a depreciating dollar temporarily helps domestic producers by making imports more expensive. When combined with tariffs – effectively a sales tax on foreign producers – US industry gets a double boost. Trump wants the best of both worlds; he wants a weak dollar, but he also very much likes the dollar's commanding position in the global economy for the geopolitical power it bestows. Sadly for him, it's not clear he can have both. To support a weak dollar, he needs to make dollar assets less attractive to foreign investors. As Stephen Miran, the head of Trump's council of economic advisers, has suggested, this might be achieved by imposing a withholding tax on income generated by US assets, or by converting foreign holdings of US Treasuries into 100-year bonds. Trump's problem is that the less attractive the US makes itself to foreign investors, the less likely it is that the dollar can sustain its dominant reserve currency position. Use of the dollar for sanctions against countries the US has got a problem with has further undermined trust in the currency as both a store of value and reliable means of exchange. International trust relies crucially on the idea of a global order based on agreed rules, the very thing Trump wants to dispense with. So the dollar turns weaker, and together with the Trump tariff shock, it drives up domestic US inflation. Despite almost daily berating from Trump, Jerome Powell, the chairman of the Federal Reserve, is sitting on his hands and refusing to reduce interest rates in the precipitous way the president demands. The more Trump complains, the more Powell digs in. Determination not to give way has become a matter of principle, almost regardless of its economic merits. Powell's stance is totemic in the wider struggle to protect institutional integrity from presidential diktat. Once Federal Reserve independence goes, the whole fragile structure of dollar hegemony begins to crumble. Even Trump must know that. Meanwhile, Europe is cutting fast – with the notable exception of the UK, where inflation remains a problem. Normally, America's higher interest rates relative to Europe would cause the dollar to strengthen, but the trust issue has provoked a very different response – a weaker dollar despite a widening interest rate gap. Christine Lagarde, the president of the European Central Bank, sees Trump's antics as an opportunity for a 'global euro moment'. It has long been the ambition of European policymakers to look the mighty dollar in the face, and eventually usurp its position in the international monetary system. This has always seemed fanciful. For all its grandstanding, the EU remains a disjointed confederation of fiscally sovereign and often deeply divided nations, with no centralised Treasury function to speak of, no banking union and no unified sovereign debt market. This makes its monetary union acutely vulnerable to existential crisis. Lagarde might think of herself as queen bee, but her powers and reach are remarkably limited. As long as this remains the case – and there is little sign of it changing – Lagarde's musings are just delusional nonsense. Where reserve managers have been diversifying away from the dollar, it has, moreover, tended to be into gold, not the euro. Indeed, gold recently overtook the euro as the biggest central bank reserve asset after the dollar. A rather more potent long term threat comes from China, whose central bank digital currency and the infrastructure being built around it are deliberately designed to provide an alternative to the dollar for trade and investment. Those who take umbrage at Trump's America can try China instead. Who's to say it's less reliable than a country that slaps record tariffs on some of its closest allies? Regrettably, Switzerland is just too small to act as a global reserve currency. As it is, it struggles to manage the inflows of international capital looking for safety amid the bedlam of today's world. Already, the Swiss National Bank balance sheet is swollen by its various currency interventions to a size considerably bigger than that of Switzerland's entire economy. It can surely go no further in printing Swiss francs to buy foreign assets. But as I say, it's a nice problem to have.

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Europeans seek 'digital sovereignty' as US tech firms embrace Trump

BERLIN, June 21 (Reuters) - At a market stall in Berlin run by charity Topio, volunteers help people who want to purge their phones of the influence of U.S. tech firms. Since Donald Trump's inauguration, the queue for their services has grown. Interest in European-based digital services has jumped in recent months, data from digital market intelligence company Similarweb shows. More people are looking for e-mail, messaging and even search providers outside the United States. The first months of Trump's second presidency have shaken some Europeans' confidence in their long-time ally, after he signalled his country would step back from its role in Europe's security and then launched a trade war. "It's about the concentration of power in U.S. firms," said Topio's founder Michael Wirths, as his colleague installed on a customer's phone a version of the Android operating system without hooks into the Google ecosystem. Wirths said the type of people coming to the stall had changed: "Before, it was people who knew a lot about data privacy. Now it's people who are politically aware and feel exposed." Tesla (TSLA.O), opens new tab chief Elon Musk, who also owns social media company X, was a leading adviser to the U.S. president before the two fell out, while the bosses of Amazon (AMZN.O), opens new tab, Meta (META.O), opens new tab and Google-owner Alphabet (GOOGL.O), opens new tab took prominent spots at Trump's inauguration in January. Days before Trump took office, outgoing president Joe Biden had warned of an oligarchic "tech industrial complex" threatening democracy. Berlin-based search engine Ecosia says it has benefited from some customers' desire to avoid U.S. counterparts like Microsoft's (MSFT.O), opens new tab Bing or Google, which dominates web searches and is also the world's biggest email provider. "The worse it gets, the better it is for us," founder Christian Kroll said of Ecosia, whose sales pitch is that it spends its profits on environmental projects. Similarweb data shows the number of queries directed to Ecosia, opens new tab from the European Union has risen 27% year-on-year and the company says it has 1% of the German search engine market. But its 122 million visits from the 27 EU countries in February were dwarfed by 10.3 billion visits to Google, whose parent Alphabet made revenues of about $100 billion from Europe, the Middle East and Africa in 2024 - nearly a third of its $350 billion global turnover. Non-profit Ecosia earned 3.2 million euros ($3.65 million) in April, of which 770,000 euros was spent on planting 1.1 million trees. Google declined to comment for this story. Reuters could not determine whether major U.S. tech companies have lost any market share to local rivals in Europe. The search for alternative providers accompanies a debate in Europe about "digital sovereignty" - the idea that reliance on companies from an increasingly isolationist United States is a threat to Europe's economy and security. "Ordinary people, the kind of people who would never have thought it was important they were using an American service are saying, 'hang on!'," said UK-based internet regulation expert Maria Farrell. "My hairdresser was asking me what she should switch to." Use in Europe of Swiss-based ProtonMail rose 11.7% year-on-year to March compared to a year ago, according to Similarweb, while use of Alphabet's Gmail, which has some 70% of the global email market, slipped 1.9%. ProtonMail, which offers both free and paid-for services, said it had seen an increase in users from Europe since Trump's re-election, though it declined to give a number. "My household is definitely disengaging," said British software engineer Ken Tindell, citing weak U.S. data privacy protections as one factor. Trump's vice president JD Vance shocked European leaders in February by accusing them - at a conference usually known for displays of transatlantic unity - of censoring free speech and failing to control immigration. In May, Secretary of State Marco Rubio threatened visa bans for people who "censor" speech by Americans, including on social media, and suggested the policy could target foreign officials regulating U.S. tech companies. U.S. social media companies like Facebook and Instagram parent Meta have said the European Union's Digital Services Act amounts to censorship of their platforms. EU officials say the Act will make the online environment safer by compelling tech giants to tackle illegal content, including hate speech and child sexual abuse material. Greg Nojeim, director of the Security and Surveillance Project at the Center for Democracy & Technology, said Europeans' concerns about the U.S. government accessing their data, whether stored on devices or in the cloud, were justified. Not only does U.S. law permit the government to search devices of anyone entering the country, it can compel disclosure of data that Europeans outside the U.S. store or transmit through U.S. communications service providers, Nojeim said. Germany's new government is itself making efforts to reduce exposure to U.S. tech, committing in its coalition agreement to make more use of open-source data formats and locally-based cloud infrastructure. Regional governments have gone further - in conservative-run Schleswig-Holstein, on the Danish border, all IT used by the public administration must run on open-source software. Berlin has also paid for Ukraine to access a satellite-internet network operated by France's Eutelsat ( opens new tab instead of Musk's Starlink. But with modern life driven by technology, "completely divorcing U.S. tech in a very fundamental way is, I would say, possibly not possible," said Bill Budington of U.S. digital rights nonprofit the Electronic Frontier Foundation. Everything from push notifications to the content delivery networks powering many websites and how internet traffic is routed relies largely on U.S. companies and infrastructure, Budington noted. Both Ecosia and French-based search engine Qwant depend in part on search results provided by Google and Microsoft's Bing, while Ecosia runs on cloud platforms, some hosted by the very same tech giants it promises an escape from. Nevertheless, a group on messaging board Reddit called BuyFromEU has 211,000 members. "Just cancelled my Dropbox and will switch to Proton Drive," read one post. Mastodon, a decentralised social media service developed by German programmer Eugen Rochko, enjoyed a rush of new users two years ago when Musk bought Twitter, later renamed X. But it remains a niche service. Signal, a messaging app run by a U.S. nonprofit foundation, has also seen a surge in installations from Europe. Similarweb's data showed a 7% month-on-month increase in Signal usage in March, while use of Meta's WhatsApp was static. Meta declined to comment for this story. Signal did not respond to an e-mailed request for comment. But this kind of conscious self-organising is unlikely on its own to make a dent in Silicon Valley's European dominance, digital rights activist Robin Berjon told Reuters. "The market is too captured," he said. "Regulation is needed as well."