London open: FTSE edges up despite grim inflation data

London stocks edged up in early trade on Wednesday despite rising geopolitical tensions and a grim UK inflation report.

At 0835 GMT, the FTSE 100 was 0.3% firmer at 7,388.76, while sterling was up 0.1% against the dollar at 1.1877.

Geopolitical tensions were in focus following reports that a Russian-made missile had killed two people in NATO member Poland. Russia has denied responsibility for the missile strikes, while US president Joe Biden said it was "unlikely" the missile was fired from Russia.

On home shores, data released earlier by the Office for National Statistics showed that consumer price inflation hit a 41-year high of 11.1% in the year to October as energy bills and food prices surged. This was up from 10.1% in September and versus expectations of 10.7%.

Grant Fitzner, chief economist at the ONS, noted that over the past year, gas prices have climbed nearly 130% while electricity has risen by around 66%.

"Increases across a range of food items also pushed up inflation," he said. "These were partially offset by motor fuels, where average petrol prices fell on the month, while the price for diesel rose taking the disparity in price between the two fuels to the highest on record.

"There was further evidence that costs facing businesses are rising more slowly, driven by crude oil and petroleum prices."

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "The jumps in the cost of essentials have been showing up on grocery bills for some time and now it’s made clear with the stark 16.4% rise in food inflation, the highest since 1977.

"It seems we are in a seventies time warp with runaway food prices, public sector strikes crippling services, and worries about energy supplies. The constant march upwards in prices is increasingly painful for consumers and companies, and for now shows little sign of quickly abating.

"This is difficult reading for Bank of England policymakers, as inflation is clearly proving sticker than they forecast. They are now likely to vote for another rise in interest rates at the December meeting, although expectations of another super-size hike still remain lower. So, a rise of 0.5% is on the cards next month with more to come with rates forecast to rise to around 4.5% - 4.75% by the middle of next year."

In equity markets, software firm Sage surged to the top of the FTSE 100 after full-year revenues beat expectations.

Defence company BAE Systems was also higher, likely on the back of the blast in Poland.

Hill & Smith rallied as the infrastructure provider said annual profits were set to be at the upper end of guidance, driven by strong trading and foreign exchange tailwinds.

Future was boosted by an initiation at ‘overweight’ at JPMorgan.

On the downside, SSE was under the cosh after the UK energy provider said it swung to an interim loss in what it called "unprecedented market volatility" as gas storage earnings amid soaring prices offset weaker earnings from renewables.

British Land was also in the red despite posting a big jump in first-half profits on the back of "strong" rental growth and cost control.

CMC Markets slid even as it reported a rise in first-half net operating income amid increased activity.

Insurer Beazley fell after it raised £350m in a discounted placing to support organic growth and provide growth capital to fund "attractive" underwriting opportunities.

Market Movers

FTSE 100 (UKX) 7,388.76 0.26%
FTSE 250 (MCX) 19,347.04 -0.56%
techMARK (TASX) 4,361.59 0.58%

FTSE 100 - Risers

Sage Group (SGE) 799.40p 5.77%
BAE Systems (BA.) 770.20p 4.28%
Haleon (HLN) 285.70p 2.36%
Shell (SHEL) 2,412.50p 1.58%
BP (BP.) 484.15p 1.49%
Convatec Group (CTEC) 225.40p 1.26%
Spirax-Sarco Engineering (SPX) 11,900.00p 1.19%
Halma (HLMA) 2,396.00p 1.10%
Pershing Square Holdings Ltd NPV (PSH) 2,930.00p 1.03%
Fresnillo (FRES) 865.60p 0.91%

FTSE 100 - Fallers

JD Sports Fashion (JD.) 117.10p -2.21%
Kingfisher (KGF) 241.00p -2.03%
Intertek Group (ITRK) 4,038.00p -2.01%
Next (NXT) 5,618.00p -1.89%
Persimmon (PSN) 1,298.00p -1.85%
B&M European Value Retail S.A. (DI) (BME) 385.70p -1.73%
British Land Company (BLND) 389.60p -1.64%
Smurfit Kappa Group (CDI) (SKG) 3,132.00p -1.57%
SSE (SSE) 1,619.50p -1.46%
International Consolidated Airlines Group SA (CDI) (IAG) 137.16p -1.45%

FTSE 250 - Risers

Hill and Smith (HILS) 1,194.00p 9.34%
Kainos Group (KNOS) 1,520.00p 5.48%
Future (FUTR) 1,598.00p 2.83%
Vietnam Enterprise Investments (DI) (VEIL) 510.00p 2.00%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 399.00p 1.79%
Petrofac Ltd. (PFC) 127.60p 1.67%
QinetiQ Group (QQ.) 348.00p 1.40%
Bytes Technology Group (BYIT) 431.80p 1.12%
FirstGroup (FGP) 96.05p 1.11%
Hochschild Mining (HOC) 70.25p 1.08%

FTSE 250 - Fallers

CMC Markets (CMCX) 240.50p -10.26%
Carnival (CCL) 780.40p -7.51%
Bridgepoint Group (Reg S) (BPT) 220.20p -5.90%
Beazley (BEZ) 592.00p -5.28%
Dr. Martens (DOCS) 274.60p -4.98%
Johnson Matthey (JMAT) 2,031.00p -3.74%
Elementis (ELM) 101.70p -3.60%
Aston Martin Lagonda Global Holdings (AML) 128.70p -3.31%
Dunelm Group (DNLM) 945.00p -2.63%
PZ Cussons (PZC) 200.00p -2.44%