London close: Stocks mixed on renewed inflation concern

London's stock markets were mixed at the close on Tuesday, as banking sector concerns eased, to be replaced by fresh inflation consternation after two surveys showed a surge in food prices.

The FTSE 100 gained 0.17% to close at 7,484.25, while the FTSE 250 fell 0.72% to end the session at 18,396.69.

Sterling was a show of strength, meanwhile, last rising 0.46% on the dollar to trade at $1.2343, as it gained 0.07% against the euro to change hands at €1.1387.

“While the banking crisis seems to have subsided, stocks have been unable to find a reason to push higher this afternoon,” said IG chief market analyst Chris Beauchamp.

“The return of recession fears further dims the appeal of equities, and with tech stocks down sharply this afternoon it looks like there isn’t much chance of further upside for now.”

Beauchamp quipped that those same recession fears, as well as a weaker dollar, had provided a space for gold to rally, reversing some of its losses.

“The market continues to think the Fed is closer to capitulating on rate hikes than it was a month ago, providing a reason for gold to make another push at breaking $2000.”

Food prices keep on climbing for British shoppers

In economic news, UK shoppers looked to be facing record-high food prices according to two industry surveys.

The BRC-NielsenIQ shop price index showed that annual shop price inflation rose to 8.9% in March from 8.4% in February, with food prices jumping to a record 15% from 14.5% the previous month.

Fresh food inflation hit a new high, rising to 17% from 16.3%, while ambient food inflation rose to 12.4% from 12%.

Meanwhile, research by retail consultancy Kantar showed that grocery inflation rose to a fresh high of 17.5% in the four weeks to 19 March, adding more than £800 to average annual household food bills.

The rate was the highest ever recorded by Kantar.

“Shop price inflation has yet to peak,” warned Helen Dickinson, chief executive of the British Retail Consortium.

“As Easter approaches, the rising cost of sugar coupled with high manufacturing costs left some customers with a sour taste, as price rises for chocolate, sweets and fizzy drinks increased in March.

“Fruit and vegetables also rose as poor harvests in Europe and North Africa worsened availability, and imports became more expensive due to the weakening pound.”

Dickinson said food price rises would likely ease in the coming months, particularly as the UK growing season started, although wider inflation was expected to remain high.

Fraser McKevitt, head of retail and consumer at Kantar, noted that the data was more bad news for the British public, who were experiencing the ninth month of double-digit grocery price inflation.

“However, shoppers are taking action and clearly hunting around for the best value.

“Footfall was up in every single grocer this month, with households going to the shops just over four times per week in March.

“Apart from Christmas, that’s the highest frequency we’ve seen since the start of the pandemic.”

Elsewhere, Bank of England Governor Andrew Bailey said the UK banking sector was in good health, despite being in a "period of heightened tension".

Bailey made the comments while giving evidence to the Treasury Committee on Tuesday, after the global banking sector was hit by the collapse of Silicon Valley Bank in the US and issues at Credit Suisse, resulting in the latter being acquired by UBS Group in a state-brokered deal.

Bailey acknowledged that the UK's financial institutions were being tested by markets in response to the turmoil.

Across the pond, US consumer confidence improved slightly in March, according to data released from the Conference Board.

The consumer confidence index rose to 104.2 from 103.4 in February, ahead of expectations for a decline to 101.0.

However, the present situation index fell to 151.1 in March from 153.0 the previous month.

Remaining stateside, the latest S&P/Case-Shiller national home price index showed that US house price growth eased in January, with the 20-city index posting a 2.5% year-over-year gain, down from 4.6% in December.

Miami, Tampa, and Atlanta saw the highest year-over-year gains among the 20 cities in January.

Airlines and miners rise, TUI slumps on rights issue

On London’s equity markets, International Consolidated Airlines Group (IAG), the parent of British Airways and Iberia, rose 2.19% after receiving an upgrade to 'buy' from 'neutral' from Redburn.

Oil major BP gained 2.3% after making a $4bn offer, in partnership with Abu Dhabi National Oil Co (ADNOC), to purchase 50% of Israel offshore natural gas producer NewMed Energy and take it private.

Miners were also on the rise, with Glencore, Anglo American, and Rio Tinto all up as copper prices advanced.

IT service provider Softcat surged 5.55% after announcing that it expected its full-year outturn to be "slightly ahead" of previous estimates following outperformance in the first half.

Meanwhile, safety technology provider Halma gained 0.52% after acquiring FirePro, a manufacturer of aerosol-based fire suppression systems, for €150m on a cash- and debt-free basis.

On the downside, online grocery delivery service Ocado Group reversed earlier gains to trade 1.79% lower, despite reporting a 3.4% jump in first-quarter revenues for its joint venture with Marks and Spencer.

Soft drinks maker AG Barr fell 6.09% despite posting a rise in full-year profit and revenue, as it warned of a short-term hit to operating margins due to inflationary pressures and ongoing investment.

John Wood Group dropped 5.62%, while United Utilities Group fell 0.39% after trimming its full-year revenue outlook.

Trading platform CMC Markets was down 3.58% following a warning that its net operating income for the 2023 financial year would likely remain flat on the year, due to a "more challenging" environment in February and March.

Meanwhile, 888 Holdings fell 0.09%, and TUI shares plummeted 49.24% in response to an eight-for-three rights issue to raise €1.8bn at a deeply discounted price, simply to repay state aid received during the Covid pandemic.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,484.25 0.17%
FTSE 250 (MCX) 18,396.69 -0.72%
techMARK (TASX) 4,503.81 -0.64%

FTSE 100 - Risers

BP (BP.) 507.80p 2.30%
International Consolidated Airlines Group SA (CDI) (IAG) 140.40p 2.19%
Glencore (GLEN) 458.90p 2.07%
Rio Tinto (RIO) 5,338.00p 2.03%
Prudential (PRU) 1,044.50p 1.75%
Tesco (TSCO) 254.90p 1.39%
Shell (SHEL) 2,263.00p 1.37%
Sainsbury (J) (SBRY) 264.80p 1.34%
Endeavour Mining (EDV) 1,883.00p 1.29%
DCC (CDI) (DCC) 4,392.00p 1.13%

FTSE 100 - Fallers

Hargreaves Lansdown (HL.) 767.80p -2.61%
Ocado Group (OCDO) 444.00p -1.79%
Rightmove (RMV) 541.40p -1.78%
Haleon (HLN) 321.00p -1.61%
Beazley (BEZ) 560.00p -1.58%
Kingfisher (KGF) 251.20p -1.57%
Admiral Group (ADM) 1,994.50p -1.46%
Croda International (CRDA) 6,380.00p -1.45%
Centrica (CNA) 101.95p -1.35%
Rentokil Initial (RTO) 566.40p -1.32%

FTSE 250 - Risers

Energean (ENOG) 1,283.00p 9.10%
Aston Martin Lagonda Global Holdings (AML) 232.00p 7.21%
Softcat (SCT) 1,218.00p 5.55%
Harbour Energy (HBR) 267.30p 4.33%
Ithaca Energy (ITH) 153.70p 4.06%
Senior (SNR) 157.00p 3.43%
Tullow Oil (TLW) 29.36p 2.73%
Diversified Energy Company (DEC) 94.65p 2.55%
Marks & Spencer Group (MKS) 158.80p 2.39%
Carnival (CCL) 664.60p 1.84%

FTSE 250 - Fallers

TUI AG Reg Shs (DI) (TUI) 702.00p -49.24%
Synthomer (SYNT) 109.50p -11.62%
Molten Ventures (GROW) 263.60p -6.19%
Barr (A.G.) (BAG) 509.00p -6.09%
Wood Group (John) (WG.) 191.60p -5.62%
Direct Line Insurance Group (DLG) 135.00p -4.26%
Genus (GNS) 2,854.00p -3.67%
TR Property Inv Trust (TRY) 263.50p -3.66%
CMC Markets (CMCX) 177.60p -3.58%
Octopus Renewables Infrastructure Trust (ORIT) 89.50p -3.45%