London midday: Stocks extend gains after inflation print; housebuilders rally

London stocks had extended gains by midday on Wednesday, with housebuilders on the front foot as data showed that UK inflation was steady in January, taking pressure off the Bank of England to keep rates higher for longer.

The FTSE 100 was up 0.8% at 7,570.71.

Figures released earlier by the Office for National Statistics showed that the consumer price index rose 4% in the 12 months to January, unchanged on December. Analysts had been expecting a rise to 4.2%.

The ONS said food prices fell on the month for the first time in over two years. Furniture and household goods prices also decreased, though that was partly offset by higher gas and electricity charges and second-hand car prices, which went up for the first time since May.

On a monthly basis, CPI eased 0.6%.

Including owner occupiers’ housing costs, inflation was 4.2%, also unchanged on December.

Core inflation, which strips out the more volatile elements of food, alcohol and energy, was steady at 5.1%.

"It’s not unusual when inflation is falling to see these kind of pauses," Grant Fitzner, chief economist at the ONS, told the BBC.

The Bank of England hiked the cost of borrowing throughout 2022 and into 2023, as it looked to tackle surging inflation.

While inflation is now well below a peak of 11.1%, reached in October 2022, it remains above the BoE’s long-term target of 2%.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Bank of England policymakers are a very wary lot and will want more evidence that inflation will hug the target of 2% rather than drift upwards again before they are confident about cutting rates. However, given this slightly better than expected reading, the prospect for rate cuts this year is more encouraging.

"The pound has dipped back by around 0.25%, reflecting this, and was trading around 1.255 against the dollar. The better-than-expected inflation reading has helped push the FTSE 100 into the green in early trade, with a sigh of relief palpable that cuts are on the horizon."

In equity markets, housebuilders rallied, with Persimmon, Taylor Wimpey and Barratt Developments among the best performers on the FTSE 100.

Coca-Cola HBC was the standout gainer on the top-flight index, however, after it posted record profits for last year driven by surging sales and volumes for sparkling drinks and coffee combined with costs easing in the second half.

On the downside, furniture and homewares retailer Dunelm fell even as it lifted its dividend and declared a special payout after a rise in interim profits and sales.

Market Movers

FTSE 100 (UKX) 7,570.71 0.78%
FTSE 250 (MCX) 19,057.85 0.71%
techMARK (TASX) 4,382.09 0.96%

FTSE 100 - Risers

Coca-Cola HBC AG (CDI) (CCH) 2,368.00p 7.34%
Persimmon (PSN) 1,415.50p 3.97%
Ocado Group (OCDO) 537.20p 3.39%
Vodafone Group (VOD) 66.04p 2.95%
Melrose Industries (MRO) 603.80p 2.51%
Taylor Wimpey (TW.) 144.85p 2.40%
Barratt Developments (BDEV) 477.30p 2.40%
Airtel Africa (AAF) 100.90p 2.23%
Legal & General Group (LGEN) 235.90p 2.21%
NATWEST GROUP (NWG) 208.90p 2.20%

FTSE 100 - Fallers

Entain (ENT) 935.80p -3.90%
Anglo American (AAL) 1,722.80p -1.89%
Glencore (GLEN) 388.85p -0.98%
United Utilities Group (UU.) 1,017.00p -0.93%
Endeavour Mining (EDV) 1,273.00p -0.70%
Fresnillo (FRES) 469.70p -0.45%
Reckitt Benckiser Group (RKT) 5,692.00p -0.35%
Prudential (PRU) 788.20p -0.33%
Severn Trent (SVT) 2,489.00p -0.24%
Haleon (HLN) 317.60p -0.09%

FTSE 250 - Risers

Dr. Martens (DOCS) 91.25p 4.17%
UK Commercial Property Reit Limited (UKCM) 66.20p 4.09%
Trustpilot Group (TRST) 192.80p 3.10%
Softcat (SCT) 1,525.00p 2.83%
Man Group (EMG) 235.10p 2.75%
Grafton Group Ut (CDI) (GFTU) 977.90p 2.75%
Redrow (RDW) 667.50p 2.69%
Marshalls (MSLH) 283.60p 2.68%
Babcock International Group (BAB) 466.20p 2.42%
Crest Nicholson Holdings (CRST) 216.60p 2.36%

FTSE 250 - Fallers

TUI AG Reg Shs (DI) (TUI) 558.00p -3.54%
Aston Martin Lagonda Global Holdings (AML) 171.60p -1.49%
Lancashire Holdings Limited (LRE) 630.50p -1.10%
Renishaw (RSW) 4,074.00p -0.92%
Pennon Group (PNN) 656.00p -0.91%
FDM Group (Holdings) (FDM) 419.00p -0.83%
Bellevue Healthcare Trust (Red) (BBH) 149.40p -0.80%
Spirent Communications (SPT) 117.00p -0.76%
Greencoat UK Wind (UKW) 132.00p -0.75%
Foresight Group Holdings Limited NPV (FSG) 428.00p -0.70%