London open: Stocks edge lower; Persimmon said to weigh bid for Cala

(Sharecast News) - London stocks edged lower in early trade on Tuesday as traders returned to their desks after the long weekend. At 0910 BST, the FTSE 100 was down 0.2% at 8,305.03.

Guy Lawson-Johns, equity analyst at Hargreaves Lansdown, said: "Last week's election announcement is causing some short-term volatility in the markets, but longer-term investors can usually take this as background noise. Rishi Sunak is betting on a £2.4bn tax break to win the support of pensioners as he fights to stay in office. Meanwhile, the National Service pitch appears to be a defensive strategy to shore up core Tory voters as the Conservatives look set to gain an unprecedentedly low number of seats.

"Overnight, the European Central Bank sent a clear signal that interest rates will be cut from their record highs next week. This comes amid warnings that cutting rates aggressively ahead of the Fed could cause the euro to depreciate and inflation to flare up as imports become more expensive.

"In the US, despite bright spots and a booming Memorial Day weekend for travel, the usual summer slowdown in stock markets may be more pronounced this year. Inflation concerns and an early presidential debate could weigh on a rally that has pushed the S&P 500 near record highs. With the S&P 500 trading at a premium compared to historical norms and few catalysts for further gains, the traditionally slow summer season could be more turbulent than usual."

Investors were mulling the latest shop price index from the British Retail Consortium and NeilsenIQ, which showed that shop price inflation slowed to 0.6% in May from 0.8% in April.

This marked the lowest rate of shop price inflation since November 2021, and brought inflation below the three-month average of 0.9%.

Non-food prices continued to deflate, with an annual rate of -0.8% in May, compared to -0.6% in April.

That was the lowest deflation rate since October 2021, and was also below the three-month average, which was -0.4%.

Helen Dickinson, chief executive of the BRC, noted that shop price inflation had returned to normal levels, aided by a reduction in food inflation, particularly in fresh food.

"Meanwhile, ambient food inflation remained stickier, especially for sugary products which continued to feel the effects of high global sugar prices," she said.

"In non-food, retailers cut furniture prices in an attempt to revive subdued consumer demand for big-ticket items, and football fans have been able to grab some bargains on TVs and other audio-visual equipment ahead of this summer's Euros."

In equity markets, investment firm Intermediate Capital Group (ICG) rallied as it said profits more than doubled in the year ended 31 March and reported a huge increase in performance fee income while assets under management rose by nearly a quarter.

Persimmon fell following a report the housebuilder is exploring a £1bn takeover bid for Cala Group, a rival player in the sector which has been put up for sale. According to Sky News, Persimmon is leaning towards submitting an offer for Cala ahead of a bid deadline next week.

Insiders expect Cala, which is being auctioned by Legal & General (L&G), to command a price tag of about £1bn. L&G shares were trading higher.

Softcat nudged lower despite saying that full-year gross profit and operating profit were set to be in line with expectations.

Great Portland Estates tumbled as the shares went ex-rights.

Market Movers

FTSE 100 (UKX) 8,305.03 -0.15% FTSE 250 (MCX) 20,805.85 0.17% techMARK (TASX) 4,841.22 -0.26%

FTSE 100 - Risers

Ocado Group (OCDO) 389.70p 4.25% Intermediate Capital Group (ICG) 2,372.00p 2.24% easyJet (EZJ) 467.10p 2.10% RS Group (RS1) 756.00p 2.09% Rolls-Royce Holdings (RR.) 453.80p 2.02% International Consolidated Airlines Group SA (CDI) (IAG) 176.20p 2.00% St James's Place (STJ) 499.40p 1.75% JD Sports Fashion (JD.) 123.05p 1.32% Fresnillo (FRES) 603.50p 1.26% Barclays (BARC) 218.75p 1.20%

FTSE 100 - Fallers

United Utilities Group (UU.) 977.00p -3.03% Flutter Entertainment (DI) (FLTR) 15,535.00p -2.85% Persimmon (PSN) 1,441.00p -2.70% Severn Trent (SVT) 2,402.00p -1.92% AstraZeneca (AZN) 12,094.00p -1.64% Diageo (DGE) 2,667.50p -0.95% Relx plc (REL) 3,490.00p -0.85% Associated British Foods (ABF) 2,700.00p -0.81% Pearson (PSON) 940.40p -0.63% Anglo American (AAL) 2,598.50p -0.63%

FTSE 250 - Risers

TUI AG Reg Shs (DI) (TUI) 573.00p 4.37% Close Brothers Group (CBG) 479.60p 3.54% FirstGroup (FGP) 174.60p 3.07% QinetiQ Group (QQ.) 425.60p 2.90% Keller Group (KLR) 1,396.00p 2.50% Rathbones Group (RAT) 1,826.00p 2.47% Patria Private Equity Trust (PPET) 579.00p 2.30% Mobico Group (MCG) 58.55p 2.27% Endeavour Mining (EDV) 1,717.00p 2.14% PZ Cussons (PZC) 113.20p 1.98%

FTSE 250 - Fallers

Great Portland Estates (GPE) 347.50p -17.26% Ferrexpo (FXPO) 46.55p -2.00% Investec (INVP) 529.50p -1.85% Workspace Group (WKP) 536.00p -1.83% Baltic Classifieds Group (BCG) 248.00p -1.78% TBC Bank Group (TBCG) 2,615.00p -1.69% Direct Line Insurance Group (DLG) 207.20p -1.52% Quilter (QLT) 117.30p -1.51% Tritax Eurobox (GBP) (EBOX) 55.00p -1.43% Paragon Banking Group (PAG) 759.00p -1.24%