Stocks drop as UK inflation data dampens rate cut hopes

London stocks closed lower and the pound climbed on news that Britain's CPI gained 2.3% in April

Global stocks mostly dropped Wednesday after UK inflation numbers doused hopes of a quick BoE rate cut, while Fed minutes highlighted concerns about lingering pricing pressure.

London stocks closed lower and the pound climbed on news that Britain's CPI gained 2.3% in April, slower than the previous month but outpacing analyst expectations of 2.1%.

This was disappointing news, and the markets moved quickly to price out hopes of a June rate cut. It now looks as if September is most likely, according to David Morrison, senior analyst at Trade Nation.

US stocks traded sideways much of the day after a down session on major Asian and European indices.

But US indices slipped into the red after the Fed minutes showed that policy makers were frustrated with the lack of progress in bringing inflation towards the central bank's 2% target.

The disappointing inflation data, and the strong economic figures in the first quarter, led them to conclude that "it would take longer than previously anticipated" for them to be confident that inflation was trailing off, the Fed said.

Briefing.com analyst Patrick O'Hare said the concerns were unsurprising given the mindset of the Federal Reserve at the May 1 meeting, but that the release served as an excuse for investors to sell after a big rally since the meeting.

All three major US indices closed lower, including the Nasdaq, which shed 0.2%, retreating after two records.

Anticipation was high heading into the day owing to results from AI highflier Nvidia.

The chip-maker's stock price is 90% higher this year with its high-end processors prized by companies looking to get ahead in the booming AI sector.

Nvidia reported a profit of $14.9 billion on revenue of $26 billion in the recently ended quarter, both multiples of what it made in the same period a year earlier.

Shares jumped 3.5% in after-hours trading.