London midday: Tesco paces gains as investors eye US inflation

(Sharecast News) - London stocks were still in the black by midday on Wednesday, with Tesco pacing the gains after well-received results, as investors eyed the latest US inflation reading. The FTSE 100 was up 0.6% at 7,981.76.

There are no UK macro points of note due, but the US consumer price index for March is scheduled for release at 1330 BST, while the latest FOMC minutes are at 1900 BST.

Russ Mould, investment director at AJ Bell, said: "Having shown signs of nervousness at the start of the week, investors have got more into the groove as we approach the publication of US inflation figures. European equities pushed ahead on Wednesday, building on a robust showing on Wall Street last night.

"The inflation figures could still knock markets off course, particularly if they come in higher than expected. Market forecasts already predict further gains in the annual rate of inflation, although the core inflation figure which excludes food and energy prices is expected to slip back slightly.

"It's important to keep an eye on energy prices nonetheless as oil continues to maintain its recent price strength.

"Brent Crude nudged up 0.4% to trade just below $90 per barrel and that provided support to the big oil companies on the UK stock market, namely Shell and BP.

"The FTSE 100 increased by 0.6% to 7,985, putting it back within a whisker of the 8,000 level. Exceeding that figure would be positive for investors, albeit mainly from a psychological perspective."

Investors were also mulling Fitch Ratings' decision to cut its outlook on China to 'negative' on the back of the country's increasingly uncertain economic prospects.

In a note published overnight, the rating agency said it had revised the outlook on China's long-term foreign currency issuer default rating (IDR) to 'negative' from 'stable'. It affirmed the IDR at 'A+'.

It explained: "The revision reflects increasing risks to China's public finance outlook as the country contends with more uncertain economic prospects amid a transition away from property-reliant growth to what the government views a more sustainable growth model."

In equity markets, Tesco shot to the top of the FTSE 100 as it struck a confident tone for the current financial year after reporting a jump in both annual profits and volumes.

On a statutory basis, pre-tax profits surged 159.5% to £2.76bn, with group sales excluding VAT and fuel up 7.2% in the 52 weeks to 24 February to £61.48bn.

Looking ahead, the grocer said it expected retail adjusted operating profit of "at least" £2.8bn for the 2024/25 year. It also forecast retail free cash flow of between £1.4bn and £1.8bn.

Affordable homes developer Vistry rose after saying it had signed two new deals with Homes England to deliver 1,000 mixed-tenure homes in the Midlands.

Capita rallied as the outsourcer said it had extended its customer experience contract with a "leading" European integrated telecoms company for two years from January 2024, with an option to extend for a further two years. The contract is worth more than £95m over the four years.

Elsewhere, Direct Line nudged up after saying it had poached the head of finance from Aviva's general insurance unit to be its new chief financial officer, replacing its CFO of three years just weeks after a failed takeover offer from Ageas.

Market Movers

FTSE 100 (UKX) 7,981.76 0.59% FTSE 250 (MCX) 19,936.42 0.88% techMARK (TASX) 4,447.85 0.36%

FTSE 100 - Risers

Tesco (TSCO) 299.70p 4.24% Croda International (CRDA) 4,841.00p 3.00% Burberry Group (BRBY) 1,224.00p 2.99% Airtel Africa (AAF) 108.20p 2.95% WPP (WPP) 772.80p 2.88% International Consolidated Airlines Group SA (CDI) (IAG) 178.70p 2.58% easyJet (EZJ) 588.20p 2.55% HSBC Holdings (HSBA) 660.50p 2.45% JD Sports Fashion (JD.) 127.55p 2.33% Whitbread (WTB) 3,284.00p 2.18%

FTSE 100 - Fallers

Rolls-Royce Holdings (RR.) 407.10p -1.24% Convatec Group (CTEC) 286.60p -1.10% CRH (CDI) (CRH) 6,532.00p -1.03% Relx plc (REL) 3,294.00p -0.78% Antofagasta (ANTO) 2,254.00p -0.66% Auto Trader Group (AUTO) 686.00p -0.52% BAE Systems (BA.) 1,270.50p -0.51% Experian (EXPN) 3,353.00p -0.50% Smurfit Kappa Group (CDI) (SKG) 3,620.00p -0.49% Mondi (MNDI) 1,418.00p -0.42%

FTSE 250 - Risers

OSB Group (OSB) 384.60p 3.61% Baltic Classifieds Group (BCG) 235.00p 3.52% AO World (AO.) 108.80p 3.23% Ninety One (N91) 177.10p 3.03% Watches of Switzerland Group (WOSG) 362.20p 2.96% Rathbones Group (RAT) 1,626.00p 2.91% North Atlantic Smaller Companies Inv Trust (NAS) 3,690.00p 2.79% Hargreaves Lansdown (HL.) 754.20p 2.78% Aston Martin Lagonda Global Holdings (AML) 171.90p 2.75% Foresight Group Holdings Limited NPV (FSG) 461.00p 2.67%

FTSE 250 - Fallers

Elementis (ELM) 142.00p -1.39% SDCL Energy Efficiency Income Trust (SEIT) 57.30p -1.21% Renishaw (RSW) 4,160.00p -1.07% Hipgnosis Songs Fund Limited NPV (SONG) 72.00p -0.96% Spirent Communications (SPT) 195.50p -0.61% Ruffer Investment Company Ltd Red PTG Pref Shares (RICA) 266.00p -0.56% VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 472.00p -0.53% The Global Smaller Companies Trust (GSCT) 158.20p -0.50% NCC Group (NCC) 121.60p -0.49% Computacenter (CCC) 2,678.00p -0.45%