London open: Stocks edge up after US gains; BAT, Unilever rally

(Sharecast News) - London stocks edged up in early trade on Thursday after US markets hit record highs, with well-received updates from the likes of Unilever and British American Tobacco lending a hand. At 0825 GMT, the FTSE 100 was up 0.3% at 7,648.48.

Investors were mulling the latest data out of China, which showed that deflation accelerated at its fastest pace in 15 years in January, as weak demand continued to hamper efforts to bolster the struggling economy.

The consumer price index fell 0.8% year-on-year in January, faster than the 0.5% expected. It marked the fourth straight month of declines and the biggest contraction since the 2008 financial crisis.

Food prices fell 5.9% year-on-year, with a 17% slump in pork prices a major contributor to the decline.

Capital Economics said: "Looking forward, we expect easing food price deflation to lift consumer price inflation into positive territory in the coming months. But core inflation will probably stay low. While declines in car prices are likely to slow as the market finds a new equilibrium, close-to-zero rental inflation is here to stay given the sizeable oversupply of housing and declining population.

"All told, we think inflation will stay low, with CPI inflation to average only 0.5% in 2024, up from 0.2% in 2023."

In UK equity markets, British American Tobacco was the standout gainer on the FTSE 100 despite saying it swung to a full-year loss mainly due to an impairment charge related to its US business.

Unilever rallied after the consumer goods giant announced a €1.5bn share buyback as it reported a return to volume growth in the final quarter of 2023 and said it expected a "modest improvement" in operating margin this year as prices eased.

Catering giant Compass gained after saying it delivered a strong start to its financial year with organic revenue growth currently running ahead of full-year guidance.

Babcock shot higher as JPMorgan lifted its price target on the shares to 630p from 610p as it upped its earnings per share estimates following the company's capital markets day.

It said: "Our higher forecasts are driven by three takeaways from the CMD: (1) the scope of infrastructure work in BAB's Devonport dockyard is greater than we expected; (2) BAB has circa £100m of incremental revenue from building military land vehicles; (3) the overall positive tone of the presentations."

JPM rates Babcock at 'overweight'.

Watches of Switzerland gained as it backed its full-year guidance but reported a dip in third-quarter revenues as it said consumers in the UK and Europe were choosing to spend their disposable income on other categories such as fashion and beauty.

AstraZeneca lost ground after it delivered a 6% increase in sales in 2023 despite a $3.7bn decline in Covid-19 medicines revenues, as it guided to a strong pick-up in growth this year, but profits came in slightly under analysts' forecasts.

Market Movers

FTSE 100 (UKX) 7,648.48 0.26% FTSE 250 (MCX) 19,172.07 0.35% techMARK (TASX) 4,413.69 -0.02%

FTSE 100 - Risers

British American Tobacco (BATS) 2,425.50p 4.59% Unilever (ULVR) 4,020.00p 3.04% Compass Group (CPG) 2,202.00p 2.42% Smurfit Kappa Group (CDI) (SKG) 3,030.00p 1.95% Mondi (MNDI) 1,400.50p 1.41% Smith (DS) (SMDS) 285.00p 1.39% 3i Group (III) 2,363.00p 1.24% Beazley (BEZ) 562.50p 1.17% Rio Tinto (RIO) 5,440.00p 1.15% Intermediate Capital Group (ICP) 1,795.00p 1.10%

FTSE 100 - Fallers

AstraZeneca (AZN) 10,300.00p -1.81% SSE (SSE) 1,625.50p -1.66% London Stock Exchange Group (LSEG) 8,802.00p -0.68% Centrica (CNA) 134.35p -0.63% Experian (EXPN) 3,270.00p -0.61% Burberry Group (BRBY) 1,285.00p -0.58% Standard Chartered (STAN) 590.40p -0.57% Hikma Pharmaceuticals (HIK) 1,916.00p -0.55% Barratt Developments (BDEV) 498.30p -0.54% Fresnillo (FRES) 502.40p -0.40%

FTSE 250 - Risers

Babcock International Group (BAB) 452.60p 6.69% Dr. Martens (DOCS) 87.25p 3.56% AJ Bell (AJB) 326.00p 2.71% Computacenter (CCC) 2,980.00p 2.48% Wood Group (John) (WG.) 157.10p 2.21% Genuit Group (GEN) 424.00p 2.05% Clarkson (CKN) 3,535.00p 2.02% Ashmore Group (ASHM) 215.60p 1.99% Moneysupermarket.com Group (MONY) 252.40p 1.94% Me Group International (MEGP) 131.40p 1.86%

FTSE 250 - Fallers

PZ Cussons (PZC) 103.40p -3.36% Hill and Smith (HILS) 1,846.00p -2.43% Aberforth Smaller Companies Trust (ASL) 1,310.00p -2.38% Dunelm Group (DNLM) 1,078.00p -2.09% Workspace Group (WKP) 494.00p -1.98% Big Yellow Group (BYG) 1,092.00p -1.44% Octopus Renewables Infrastructure Trust (ORIT) 79.10p -1.37% Oxford Instruments (OXIG) 2,100.00p -0.94% Mercantile Investment Trust (The) (MRC) 213.00p -0.93% JPMorgan European Discovery Trust (JEDT) 413.50p -0.84%