London midday: FTSE up as Barclays rallies; inflation data raises rate cut expectations

(Sharecast News) - London stocks were still firmly in the black by midday on Wednesday as the latest UK inflation reading raised rate cut expectations, and underpinned by a solid performance from Barclays. The FTSE 100 was up 0.8% at 9,504.00.

Figures released earlier by the Office for National Statistics showed the rate of inflation was unchanged in September, after a jump in airfares was offset by lower prices elsewhere.

The cost of food and drink also fell for the first time since May 2024.

The consumer prices index rose by 3.8% in the 12 months to September 2025, unchanged on August.

The rate remains above the Bank of England's long-term target of 2%. However, it was also better than expected, with most analysts forecasting an increase to 4%.

Core inflation, which strips out the most volatile elements of energy, food, alcohol and tobacco, rose 3.5%, down from August's 3.6%.

Grant Fitzner, chief economist at the ONS, said: "The largest upward drivers came from petrol prices and airfares, where the fall in prices eased in comparison to last year.

"These were offset by lower prices for a range of recreational and cultural purchase, including live events. The cost of food and non-alcoholic drinks also fell."

Food and non-alcoholic drink prices, which have soared in recent months, rose by 4.5%, down on August's 5.1% spike.

The print will provide some relief for chancellor Rachel Reeves, who is due to present her Budget next month.

Kathleen Brooks, research director at XTB, said the softer inflation print is welcome news as it has boosted the chances of an early Christmas present from the Bank of England.

"There are 17 basis points of cuts priced in by the UK OIS market for December, compared to 10 bps of cuts expected on Tuesday," she said. "Traders are betting that the softer inflation print could drive the BoE to cut rates by year end, as this inflation print gives the BoE more leeway to loosen monetary policy earlier than anticipated. The next BoE meeting takes place in November, and it will be watched closely to see if there is a dovish shift at the bank indicati8ng whether or not a December rate cut is possible."

In equity markets, Barclays Bank jumped as it launched an unexpected £500m share buyback, lifted its return on equity target and unveiled a plan to move to quarterly share buyback announcements.

The bank posted a 7% fall in third quarter profit to £2bn, partly due to a higher £235m provision relating to the UK motor finance scandal, taking the total impairment to £325m.

Russ Mould, investment director at AJ Bell, said: "If investors were looking for some reassurance after a tricky little spell for the banking sector then Barclays has provided it.

"Barclays was caught up in market concerns about the US private credit situation last week, with the company having some direct exposure to the collapse of sub-prime auto lender and car retailer Tricolor. It also has the broadest US exposure among its London-listed peers.

"However, the scale of the share buyback announcement unveiled today does not smack of a business in panic mode, nor does an increase in the guidance for the full year. A decision to move to quarterly buyback announcements is an interesting one and could mean shareholders come to expect a return of capital in this way on a regular basis.

"Barclays is undergoing a review of its loan portfolio, and the market may remain wary for some time until it has confidence that there are no more skeletons in the closet.

"Ultimately, this was a decent start to the banking sector earnings season in the UK as the industry tries to rebuild investor confidence."

Housebuilders Persimmon, Berkeley and Barratt Redrow rose, likely boosted by raised rate cut expectations.

Precious metals miner Fresnillo and gold miners Endeavour and Hochschild were among the risers as the price of the yellow metal stabilised following heavy losses in the previous session.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, noted that gold prices fell 5% on Tuesday.

"The downward pressure came from traders locking in gains from the recent record-breaking rallies and hopes of easing US-China tensions dented gold's safe-haven appeal. Still, gold remains up around 60% year-to-date," he said.

Fresnillo and Hochschild were also in focus after third-quarter results and a production report, respectively.

Softcat advanced as it reported a jump in full-year profit and revenue, pointing to a strong performance in the base business.

On the downside, consumer goods giant Reckitt nudged lower it reiterated its full-year guidance as it reported a "strong" third-quarter performance, with like-for-like net revenue up 7% in the three months ended 30 September at £3.61bn.

ITV tanked after its largest shareholder, Liberty Global, sold half its stake in the broadcaster in a placing, raising about £135m.

Market Movers

FTSE 100 (UKX) 9,504.00 0.82% FTSE 250 (MCX) 22,097.55 0.86% techMARK (TASX) 5,564.94 0.63%

FTSE 100 - Risers

Barclays (BARC) 380.00p 4.32% Entain (ENT) 813.40p 3.46% Persimmon (PSN) 1,211.50p 2.76% Phoenix Group Holdings (PHNX) 669.50p 2.45% SEGRO (SGRO) 708.20p 2.37% NATWEST GROUP (NWG) 550.00p 2.31% Berkeley Group Holdings (The) (BKG) 4,118.00p 2.29% Kingfisher (KGF) 305.60p 2.28% Barratt Redrow (BTRW) 395.00p 2.23% Pershing Square Holdings Ltd NPV (PSH) 4,722.00p 2.21%

FTSE 100 - Fallers

Coca-Cola HBC AG (CDI) (CCH) 3,452.00p -1.54% Burberry Group (BRBY) 1,238.00p -1.47% Airtel Africa (AAF) 225.20p -0.97% Pearson (PSON) 1,101.00p -0.90% BT Group (BT.A) 184.60p -0.89% Diageo (DGE) 1,819.50p -0.87% Hikma Pharmaceuticals (HIK) 1,772.00p -0.62% Bunzl (BNZL) 2,448.00p -0.57% Unilever (ULVR) 4,614.00p -0.47% Beazley (BEZ) 887.50p -0.39%

FTSE 250 - Risers

Playtech (PTEC) 279.50p 4.88% NCC Group (NCC) 152.60p 4.81% Softcat (SCT) 1,638.00p 4.46% Ibstock (IBST) 132.60p 3.92% Grafton Group Ut (CDI) (GFTU) 941.60p 3.85% Genuit Group (GEN) 371.00p 3.63% THG (THG) 47.42p 3.63% Travis Perkins (TPK) 627.00p 3.21% Wickes Group (WIX) 221.50p 3.02% Patria Private Equity Trust (PPET) 588.00p 2.98%

FTSE 250 - Fallers

ITV (ITV) 68.35p -8.32% International Personal Finance (IPF) 205.50p -3.75% Raspberry PI Holdings (RPI) 356.80p -3.67% W.A.G Payment Solutions (EWG) 92.60p -2.53% Dr. Martens (DOCS) 92.05p -2.07% Ocado Group (OCDO) 245.80p -1.88% Tate & Lyle (TATE) 375.60p -1.26% Aston Martin Lagonda Global Holdings (AML) 62.00p -1.20% 4Imprint Group (FOUR) 3,085.00p -1.12% Pinewood Technologies Group (PINE) 374.00p -0.93%