London open: Stocks edge up as inflation jumps past BoE target

London stocks edged higher in early trade on Wednesday as higher-than-expected UK inflation fuelled expectations the Bank of England will refrain from cutting rates next month.

At 0840 GMT, the FTSE 100 was up 0.2% at 8,114.03.

Data from the Office for National Statistics showed that inflation jumped past the BoE’s 2% target in October after energy bills rose.

The consumer price index rose at an annual rate of 2.3% in October, up from 1.7% in September and above the 2.2% expected by economists. The increase was put down to higher electricity and gas prices.

Electricity prices rose by 7.7% in October, having fallen by 7.5% between the same two months last year. Meanwhile, gas prices were up 11.7%, having fallen by 7% last year.

The figures showed that services inflation ticked up to 5% in October from 4.9% the month before. However, it was down from 7.4% in July 2023, which was the joint highest rate - with May 2023 - since March 1992.

Core inflation - which strips out volatile elements such as food and energy - rose to 3.3% from 3.2%.

ONS chief economist Grant Fitzner said: "Inflation rose this month as the increase in the energy price cap meant higher costs for gas and electricity compared with a fall at the same time last year."

Ruth Gregory, deputy chief UK economist at Capital Economics, said October’s "surprisingly large rebound" in CPI won’t stop the Bank of England from cutting interest rates further.

"But it lends some support our view that the Bank will skip the December meeting and cut rates only gradually, by 25 basis points in February and at every other policy meeting until rates reach 3.50% in early 2026."

Looking ahead to the rest of the day, attention will turn to third-quarter results from US tech giant Nvidia, due after the closing bell.

Richard Hunter, head of markets at Interactive Investor, said: "Nvidia has become the poster child of the new AI revolution and a market darling in turn, with investors still scrambling to price a stock whose earnings have continued to confound.

"Expectations are ratcheting higher with each release, which is unsurprising given a lofty valuation which has seen the share price rise by 850% over the last two years and by 205% this year alone."

In equity markets, Sage Group surged to the top of the FTSE 100 as it posted a 21% rise in full-year underlying operating profit and announced a share buyback of up to £400m.

Severn Trent advanced as it reported a double-digit increase in first-half profits and said it expects capital investment to hit the top end of guidance this year, putting it in a strong position for the next five-year regulatory cycle, AMP8.

Genus gained as the animal genetics firm said trading has been encouraging and that full-year adjusted pre-tax profit was set to be in line with market expectations.

Rotork was also in the black after a trading update.

On the downside, Crest Nicholson fell after the housebuilder said it expected full-year earnings to be at the lower end of guidance due to a higher proportion of affordable homes being delivered.

British Land also lost ground as it said half-year underlying profit rose just 1% and that its portfolio valuation ticked up just 0.2%.

Market Movers

FTSE 100 (UKX) 8,114.03 0.19%
FTSE 250 (MCX) 20,472.89 0.22%
techMARK (TASX) 4,660.39 1.00%

FTSE 100 - Risers

Sage Group (SGE) 1,269.50p 17.66%
Severn Trent (SVT) 2,748.00p 2.19%
Beazley (BEZ) 760.50p 2.01%
Anglo American (AAL) 2,349.50p 1.95%
United Utilities Group (UU.) 1,112.00p 1.41%
Hikma Pharmaceuticals (HIK) 1,840.00p 1.15%
CRH (CDI) (CRH) 7,924.00p 0.94%
Standard Chartered (STAN) 955.40p 0.89%
Prudential (PRU) 630.00p 0.83%
Rio Tinto (RIO) 4,906.00p 0.82%

FTSE 100 - Fallers

Vistry Group (VTY) 653.00p -2.61%
British Land Company (BLND) 376.20p -2.18%
easyJet (EZJ) 515.60p -2.01%
Rolls-Royce Holdings (RR.) 528.60p -1.97%
Admiral Group (ADM) 2,467.00p -1.48%
Land Securities Group (LAND) 590.00p -1.09%
BAE Systems (BA.) 1,299.00p -1.03%
Fresnillo (FRES) 658.50p -0.98%
Taylor Wimpey (TW.) 128.80p -0.92%
Reckitt Benckiser Group (RKT) 4,742.00p -0.86%

FTSE 250 - Risers

Vesuvius (VSVS) 404.00p 9.34%
IP Group (IPO) 45.10p 5.99%
Genus (GNS) 1,770.00p 4.98%
Moonpig Group (MOON) 258.50p 4.66%
Senior (SNR) 149.00p 4.05%
Hochschild Mining (HOC) 225.00p 3.93%
Rotork (ROR) 327.40p 3.02%
Harbour Energy (HBR) 256.80p 2.76%
Foresight Group Holdings Limited NPV (FSG) 457.00p 2.47%
Victrex plc (VCT) 886.00p 2.19%

FTSE 250 - Fallers

Dr. Martens (DOCS) 55.00p -4.68%
Hilton Food Group (HFG) 890.00p -3.68%
Helios Towers (HTWS) 98.20p -3.16%
Target Healthcare Reit Ltd (THRL) 82.20p -2.95%
Fidelity Emerging Markets Limited Ptg NPV (FEML) 665.20p -2.18%
Ashmore Group (ASHM) 164.00p -2.03%
Sequoia Economic Infrastructure Income Fund Limited (SEQI) 74.20p -1.85%
Genuit Group (GEN) 412.00p -1.67%
North Atlantic Smaller Companies Inv Trust (NAS) 3,800.00p -1.55%
Rathbones Group (RAT) 1,660.00p -1.43%