The FTSE 100 index started Wednesday on the back foot but managed to limit losses, trading at 9,177.07, down just 12.15 points, a comparatively resilient performance against deeper declines in Paris and Frankfurt. Investor caution ahead of the Jackson Hole economic symposium and a sell-off in global tech shares shaped early market sentiment.

Defensive Stocks Lend Support

Concerns about the US interest rate outlook pushed investors into defensive sectors, with consumer staples and utilities among the day’s stronger performers. Unilever rose £37 to £4581, British American Tobacco gained £38 to £4274, and United Utilities climbed £13 to £1133.5.

One of the biggest winners in the FTSE 100 was Convatec, which jumped 5% (£11.4) to £242.6 after the medical devices group announced a $300 million share buyback programme. The news lifted investor confidence despite broader market uncertainty.

Tech and Aerospace Weigh on Index

London-listed tech and aerospace names mirrored Wall Street’s overnight weakness. Polar Capital Technology Trust topped the fallers' list, slipping £6.5 to £395 after US tech stocks sold off sharply. BAE Systems lost £18 to £1703, while Rolls-Royce declined £16.4 to £1043.1, reflecting wider concerns around slowing demand in the sector.

Costain Hit by HS2 Delays

In the FTSE 250, Costain suffered a steep sell-off, dropping 13% to £142.2. The infrastructure group reported a 17.8% fall in revenues to £525.4 million for the half year, citing completed road projects and delays to the government’s HS2 rail project.

Despite the revenue dip, Costain noted solid growth in its transport, water, energy, and defence businesses, with adjusted operating profit up 3.1% to £16.8 million. However, the revenue slump outweighed the positives, triggering heavy profit-taking.

Inflation Concerns Mount

Investor nerves were further tested by fresh UK inflation data, which showed annual consumer price inflation rising to 3.8% in July, the highest since early 2024 and above expectations of 3.7%. The jump, driven largely by a sharp increase in airfares and higher food costs, raised doubts over the prospect of further Bank of England interest rate cuts this year.

Analysts at Capital Economics said while a November rate cut remains possible, the recent inflation surge complicates the central bank’s decision-making. A peak of 4% inflation is now expected in September.

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Outlook

Despite the weaker start, the FTSE 100’s defensive tilt helped limit losses relative to European peers. With investors awaiting Fed Chair Jerome Powell’s speech on Friday at Jackson Hole, volatility is likely to persist. The index’s near-record levels suggest resilience, but inflation risks and global rate jitters may keep gains capped in the short term.