FTSE 100 plunges after shock rise in inflation Business

Thanks for joining me. Inflation rose to 4pc in December, according to the latest figures from the Office for National Statistics.

Mortgage borrowers have been watching the figure closely, as the Bank of England has raised interest rates to 16-year highs in an effort to bring the rate of inflation in Britain back to its 2pc target.

5 things to start your day 

1) Two of Britain’s biggest investments banks combine amid London stock market slowdown | Racehorse tycoon and former Barclays boss Rich Ricci leads City deal

2) Why the Red Sea crisis signals a new era for interest rates | With instability as the new normal, money managers are preparing for another long war

3) Tories should prioritise economy over migrant bill to win votes, says George Osborne | Former chancellor says Rishi Sunak must ‘double down’ on his economic message

4) Jeremy Warner: Hooked on cheap money, the Tories have wasted 14 years in power | Party only has itself to blame as it careens towards seemingly certain defeat

5) Ambrose Evans-Pritchard: The West is protecting China’s vital interests in the Red Sea | Xi Jinping is free-riding off UK and US naval forces’ defence of global trade

What happened overnight 

Asian equities fell sharply after a series of data pointed to a patchy recovery in China, while the dollar was near a one-month high as traders dialled back bets of early interest rate cuts.

China’s economy last year grew at one of its slowest rates in more than three decades, official figures showed on Wednesday, as it was battered by a crippling property crisis, sluggish consumption and global turmoil.

The figures actually beat Beijing’s target but will still pile fresh pressure on officials to unveil more stimulus measures to kickstart business activity and get the country’s army of consumers spending again.

China’s National Bureau of Statistics revealed that gross domestic product expanded 5.pc to hit 126 trillion yuan (£14 trillion) last year.

Tokyo stocks ended lower, with the benchmark Nikkei 225 index gaving up 0.4pc, or 141.43 points, to 35,477.75, while the broader Topix index lost 0.3pc, or 7.60 points, to 2,496.38.

Australia’s S&P/ASX 200 slipped 0.3pc to 7,393.10. South Korea’s Kospi dropped 2pc to 2,447.09. Hong Kong’s Hang Seng dove nearly 3.1pc to 15,381.84. The Shanghai Composite shed 0.9pc to 2,868.96.

Wall Street slipped on Tuesday in a disappointing return to trading following a three-day holiday weekend in America.

The S&P 500 fell 0.4pc, closing at 4,765.98. Meanwhile, the Dow Jones Industrial Average of 30 leading US companies dropped 0.6pc to 37,361.12. The Nasdaq Composite index, which is heavily skewed towards technology shares, dropped 0.2pc, closing at 14,944.35.

Yields rose in the bond market after US Fed official Christopher Waller said in a speech that “policy is set properly” on interest rates. Following the speech, traders pushed some bets for the Fed’s first rate cut to happen in May instead of March.

The yield on the 10-year Treasury climbed to 4.06pc from 3.95pc late on Friday.