The FTSE 100 suffered its worst day since August after a surprise jump in inflation on Wednesday.
The index closed at almost 1.5% lower than it opened at 7,446 as around £30billion was wiped of its value.
The rate of inflation was expected to fall from 3.9% to 3.8%, but it instead creeped up to 4% as the government upped smoking duties in the autumn statement.
Rishi Sunak had made halving inflation one of his key pledges for 2023, something he achieved, however the inflation rate remains double the Bank of England's 2% target.
Melissa Davies, chief economist at Redburn Atlantic, said: “It is far from clear that the Bank of England’s job is sufficiently done to allow a swift series of rate cuts, as expected by the market.
“In fact, there are a number of reasons the Bank should hold the line on rates into the second half of the year and then proceed slowly with cuts. Wage inflation remains elevated, services inflation is high and sticky, while goods inflation is poised to bounce in the face of renewed supply chain pressures.”
FTSE 100
The UK's flagship share index, the FTSE 100, was down six-points at 7,439 shortly after opening this morning.
Brent crude oil futures were up 0.32% today, trading at $78.13 a barrel.
Companies reporting today
AJ Bell - Q1 trading statement
Bakkavor Group - Full year trading statement
Currys - Q3 trading statement
Dunelm - Q2 trading statement
Flutter Entertainment - Full year trading statement
Sage - Q1 trading statement
WAG Payment Solutions - Q4 trading statement