London open: Stocks nudge up as investors eye inflation data; Smith & Nephew rallies

(Sharecast News) - London stocks nudged higher in early trade on Tuesday as investors erred on the side of caution ahead of key inflation data later this week. At 0835 GMT, the FTSE 100 was up 0.1% at 7,688.78.

Richard Hunter, head of markets at Interactive Investor, said UK markets "made a positive but unconvincing move at the open, with one of the highlights coming from pleasing Smith & Nephew numbers".

"Elsewhere within the premier index, mining stocks caught the attention of potential bargain hunters, with Endeavour Mining also edging ahead and casting some doubts on whether it will be relegated from the FTSE100 after all. The reshuffle will be announced after the close of business, but based on closing prices from today, which means that easyJet will need to wait in the wings to discover whether it has regained its position at the top table."

He pointed out that US markets paused for breath on Monday after a strong run powered by a largely successful earnings season and renewed excitement over the potential of AI, which has driven the main indices to hover around record highs.

"At such elevated levels, expectations will tick up given more stretched valuations, while investors will continue to scrutinise the economic data which has so far defied estimates and lessened any pressure on the Federal Reserve to cut interest rates for the moment," he said.

"The current consensus points to three cuts this year beginning in June, something of a far cry from the beginning of the year when six cuts were expected to commence in March.

"As such, and in the absence of any high level data, Thursday's personal consumption expenditures report will take on additional significance, with a hotter than expected print likely to test the enthusiasm which investors have had so far this year. The reading will follow data from yesterday which saw new home sales for January coming in below estimates, in light of higher mortgage rates. Nonetheless, a rise of 1.5% was accompanied by an ongoing shortage of previously owned homes, while a positive manufacturing reading pointed to underlying economic resilience."

On home shores, data released earlier showed that shop price inflation in the UK fell to its lowest level in 23 months in February.

According to the British Retail Consortium-NielsenIQ Shop Price Index, the annual rate of price growth slowed to 2.5% this month, down from 2.9% in January, as easing supply-chain pressures fed through to food prices.

This was below the three-month average rate of 3.3% and the lowest level since March 2022.

Non-food inflation was unchanged at 1.3% compared with last year, while food inflation eased to 5.0% from 6.1% - marking the tenth straight monthly deceleration.

However, according to BRC chief executive Helen Dickinson, "significant uncertainties remain" as geopolitical tensions increase.

"Prices of non-food goods will be more susceptible to shipping costs, which have risen due to the re-routing of imports around the Cape of Good Hope," said Dickinson.

Meanwhile, Dickinson highlighted that UK retailers are facing a big rise in business rates bills in April, which was "determined by last September's sky-high inflation rate".

"April's rates rise should be based on April's inflation, and the Chancellor should use the Spring Budget to make this correction, supporting business investment and helping to drive down prices for consumers," Dickinson said.

In equity markets, Smith & Nephew rallied after it posted better-than-expected full-year trading profit of $970m and lifted its outlook for 2024. It now expects underlying revenue growth expected of between 5% and 6%, up from 4.6% to 5.6%.

Flutter Entertainment was in the black as Barclays upgraded its stance on the shares to 'overweight' from 'equalweight' and hiked the price target.

Endeavour Mining was up as it said that wet commissioning activities are now underway at the Sabodala-Massawa Expansion project in Senegal, with first gold expected in early May.

Fund manager Abrdn was the standout gainer on the FTSE 250 as it posted a narrowing of its full-year losses but warned of a hit to margins as clients shift to passive investing.

On the downside, speciality chemicals company Croda International slumped as it warned of lower operating margins after posting a drop in 2023 profits due to customers destocking and a weak macroeconomic environment.

Outside the FTSE 305, On The Beach surged after saying it had signed a long-term distribution agreement with Ryanair, despite the latter having recently branded the online travel agent a "pirate" and accused it of marking up prices.

Market Movers

FTSE 100 (UKX) 7,688.78 0.06% FTSE 250 (MCX) 19,145.62 0.10% techMARK (TASX) 4,400.07 0.24%

FTSE 100 - Risers

Smith & Nephew (SN.) 1,159.50p 3.02% Anglo American (AAL) 1,767.60p 2.37% Rio Tinto (RIO) 5,154.00p 1.72% Fresnillo (FRES) 474.20p 1.37% Flutter Entertainment (DI) (FLTR) 16,915.00p 1.32% Antofagasta (ANTO) 1,793.50p 1.13% Endeavour Mining (EDV) 1,277.00p 1.11% Standard Chartered (STAN) 643.40p 1.10% Glencore (GLEN) 372.95p 1.08% Rentokil Initial (RTO) 439.10p 0.94%

FTSE 100 - Fallers

Croda International (CRDA) 4,819.00p -1.71% Unilever (ULVR) 3,939.50p -1.41% Rolls-Royce Holdings (RR.) 356.40p -1.33% JD Sports Fashion (JD.) 113.55p -0.83% Airtel Africa (AAF) 94.10p -0.74% Reckitt Benckiser Group (RKT) 5,836.00p -0.61% Rightmove (RMV) 560.80p -0.60% Ocado Group (OCDO) 488.60p -0.59% Lloyds Banking Group (LLOY) 45.66p -0.54% Compass Group (CPG) 2,161.00p -0.46%

FTSE 250 - Risers

Abrdn (ABDN) 172.50p 6.81% Baltic Classifieds Group (BCG) 248.00p 3.12% Dunelm Group (DNLM) 1,189.00p 2.59% Assura (AGR) 43.10p 2.13% Mobico Group (MCG) 79.00p 2.00% Centamin (DI) (CEY) 93.10p 1.97% Trustpilot Group (TRST) 189.90p 1.93% Bytes Technology Group (BYIT) 549.50p 1.85% Genus (GNS) 1,960.00p 1.66% Tullow Oil (TLW) 30.14p 1.48%

FTSE 250 - Fallers

Dr. Martens (DOCS) 94.20p -3.68% Cranswick (CWK) 3,856.00p -2.03% Close Brothers Group (CBG) 326.40p -1.63% Drax Group (DRX) 410.50p -1.61% SThree (STEM) 404.00p -1.58% Bodycote (BOY) 607.00p -1.30% Victrex plc (VCT) 1,260.00p -1.25% Hargreaves Lansdown (HL.) 739.60p -1.20% Petershill Partners (PHLL) 168.60p -1.17% Ibstock (IBST) 163.50p -1.15%