London open: Stocks in the red on inflation fears; Barratt slumps

(Sharecast News) - London stocks fell in early trade on Wednesday as a jump in oil prices sparked worries about inflation. At 0820 BST, the FTSE 100 was down 0.5% at 7,400.91.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "The downbeat mood on the markets is continuing, with little to lift sentiment in sight, as oil prices stay elevated and inflationary fears are pushed back up. Brent Crude is still hovering around $90 a barrel, after jumping sharply on news that Saudia Arabia and Russia appear intent on extending voluntary cuts through to the end of the year.

"Riyadh's decided to take 1 million barrels a day out of the market until the end of December, and Moscow following suit with a similar, but smaller, reduction has led to concerns about supply on world markets.

"While higher prices are certainly good news for Saudi Arabia's coffers, it's set to cause fresh pain at the fuel pumps as elevated crude costs filter through. It'll also cause another headache for central bankers. Energy prices are big inflationary drivers, and just at the time when the price spiral appears to be moving more obediently downwards, high crude prices could cause upset.

"The expectation that the Fed might have to push up interest rates again, after a pause this month, has sent US Treasury yields higher, and the uneasy sentiment is expected to hang around."

On the macroeconomic front, the S&P Global UK construction PMI for August is due at 0930 BST. It's expected to have fallen to 49.8 - contraction territory - from 51.7 in July.

In equity markets, housebuilder Barratt was in the red as it reported a fall in annual profits, cut its dividend and said there would be no share buyback this year as higher borrowing costs hit mortgage affordability.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: "Rate rises throughout the year have pushed up borrowing costs for buyers, making mortgage affordability much more difficult. Add to the mix the closure of the Help to Buy scheme and the fallout from the fiscal event back in September 2022 and you've got a potent cocktail, which saw Barratt's net private reservation rates fall by around a third last year. All of this translated to a steep decline in underlying operating profit.

"But it's not all doom and gloom. Build cost inflation looks set to ease to mid single-digits this year. And a sharp reduction in land spend last year more than offset the share buyback programme, helping to keep Barratt's net cash position broadly flat at a mighty £1.1bn. That provides plenty of flexibility to smooth out any future bumps in the road."

Elsewhere, Darktrace slid as its full-year results met analysts' estimates but the cybersecurity firm cut guidance for full-year 2024 adjusted EBITDA margins to between 17% and 19%.

Stationery and books retailer WH Smith was weaker despite saying that full-year figures will be in line with expectations as strong trading at its airport and train station locations offset a weak performance on the high street.

Ashmore lost ground after it posted a fall in annual profits as assets under management declined 13% as customers withdrew their cash amid volatile markets.

On the upside, B&M European Value Retail was a high riser, having tumbled on Tuesday on the back of a downgrade by JPMorgan. Shore Capital raised the shares to 'buy' from 'hold' as it said the acquisition of up to 51 Wilko stores is expected to enhance the company's presence and growth potential.

Market Movers

FTSE 100 (UKX) 7,400.91 -0.50% FTSE 250 (MCX) 18,423.15 -0.37% techMARK (TASX) 4,254.46 -0.24%

FTSE 100 - Risers

B&M European Value Retail S.A. (DI) (BME) 556.00p 1.50% Melrose Industries (MRO) 509.80p 0.87% Vodafone Group (VOD) 73.83p 0.52% Centrica (CNA) 156.45p 0.29% Sage Group (SGE) 974.60p 0.16% Tesco (TSCO) 256.70p 0.16% Antofagasta (ANTO) 1,480.00p 0.14% Johnson Matthey (JMAT) 1,720.50p 0.12% Relx plc (REL) 2,606.00p 0.04% Unite Group (UTG) 914.00p 0.00%

FTSE 100 - Fallers

Ashtead Group (AHT) 5,214.00p -1.81% Rolls-Royce Holdings (RR.) 215.70p -1.60% Burberry Group (BRBY) 2,155.00p -1.51% IMI (IMI) 1,477.00p -1.40% Abrdn (ABDN) 158.85p -1.37% DCC (CDI) (DCC) 4,210.00p -1.29% Flutter Entertainment (CDI) (FLTR) 13,880.00p -1.25% Hiscox Limited (DI) (HSX) 984.00p -1.20% JD Sports Fashion (JD.) 139.30p -1.17% CRH (CDI) (CRH) 4,380.00p -1.13%

FTSE 250 - Risers

Assura (AGR) 46.52p 2.78% Savills (SVS) 930.50p 2.25% Mobico Group (MCG) 88.95p 2.12% Grainger (GRI) 235.40p 1.47% International Distributions Services (IDS) 244.80p 1.37% Harbour Energy (HBR) 256.20p 0.87% Spirent Communications (SPT) 150.00p 0.81% Spectris (SXS) 3,285.00p 0.74% Diploma (DPLM) 3,132.00p 0.71% IWG (IWG) 175.00p 0.69%

FTSE 250 - Fallers

Darktrace (DARK) 345.00p -6.55% WH Smith (SMWH) 1,439.00p -3.03% Wood Group (John) (WG.) 159.60p -2.74% Edinburgh Worldwide Inv Trust (EWI) 147.80p -2.64% RHI Magnesita N.V. (DI) (RHIM) 2,812.00p -2.63% Grafton Group Ut (CDI) (GFTU) 861.50p -1.95% Bytes Technology Group (BYIT) 475.60p -1.82% Foresight Solar Fund Limited (FSFL) 91.50p -1.72% Morgan Sindall Group (MGNS) 1,928.00p -1.63% Jupiter Fund Management (JUP) 96.55p -1.63%