London open: Miners pace the gains as investors eye Fed meeting

London stocks rallied in early trade on Tuesday, with miners and Ocado pacing the advance, as investors eyed the start of the Federal Reserve’s two-day policy meeting.

At 0840 GMT, the FTSE 100 was up 1.5% at 7,197.54, while sterling was 0.5% higher against the dollar at 1.1531.

Oanda market analyst Craig Erlam said: "While a 75-basis point hike looks locked in tomorrow, the messaging is what investors are interested in. Despite inflation remaining at eye-watering levels, there's a growing belief that the central bank will signal a desire to ease off the brake over the following few meetings starting with a 50bps hike in December.

"It may come too late to avoid a recession but the Fed has been very clear from the start that while a soft landing is the desirable and attainable outcome, getting inflation under control is the primary focus. The question is whether the central bank believes its efforts will achieve that or if more needs to be done.

"With the economy weakening, earnings not impressing and yield curves inverting - signalling an incoming recession - many now believe the risks of aggressive tightening are greater than a more gradual approach. The economy has a lot of tightening to absorb once rates likely hit the 3.75-4% range this week."

Erlam said a dovish signal could be an exciting moment for equity investors, "one they've craved all year, but that doesn't mean it'll be plain sailing from here".

On home shores, the latest survey from Nationwide showed that house prices suffered their first monthly decline in October since July 2021.

Prices fell 0.9% on the month, having been flat in September, marking the largest monthly fall since June 2020.

On the year, meanwhile, house prices were up 7.2% in October, down from 9.5% growth a month earlier, with the average price standing at £268,282.

Nationwide chief economist Robert Gardner said: "The market has undoubtedly been impacted by the turmoil following the mini-Budget, which led to a sharp rise in market interest rates. Higher borrowing costs have added to stretched housing affordability at a time when household finances are already under pressure from high inflation.

"The market looks set to slow in the coming quarters. Inflation will remain high for some time yet and Bank Rate is likely to rise further as the Bank of England seeks to ensure demand in the economy slows to relieve domestic price pressures."

Gardner said the outlook was "extremely uncertain", and much will depend on how the broader economy performs, "but a relatively soft landing is still possible".

In equity markets, Ocado rocketed after the online supermarket said it had signed a partnership between Ocado Solutions and Lotte Shopping, one of the largest business conglomerates in South Korea, to develop Lotte's online business with the Ocado Smart Platform.

Miners were also on the rise as the US dollar eased, with Glencore, Rio Tinto, Antofagasta and Anglo American among the top performers on the FTSE 100.

On the downside, pest control and business services group Rentokil fell despite posting a jump in third-quarter profit.

BP was a touch weaker even as it reported a surge in quarterly profit, well ahead of City expectations, and announced a further $2.bn share buyback, after Russia’s invasion of Ukraine pushed oil and gas prices to historic highs.

BP said third-quarter underlying replacement cost profits had come in at $8.15bn, compared to $3.32bn a year earlier, while total revenues and other income soared to $57.81bn from $37.87bn in 2021. Analysts had been expecting pre-tax profits to be closer to $6.1bn.

Profits were down slightly on the third quarter, however, when they came in at $8.45bn, following an easing in the oil price.

IWG lost ground after the office space provider posted a rise in third-quarter revenues but said full-year profit was set to be at the lower end of market expectations.

Market Movers

FTSE 100 (UKX) 7,197.54 1.45%
FTSE 250 (MCX) 18,119.93 1.29%
techMARK (TASX) 4,275.47 0.89%

FTSE 100 - Risers

Ocado Group (OCDO) 580.60p 22.90%
Prudential (PRU) 844.80p 4.19%
Glencore (GLEN) 519.70p 4.04%
Anglo American (AAL) 2,711.50p 3.95%
Rio Tinto (RIO) 4,714.00p 3.90%
Antofagasta (ANTO) 1,219.00p 3.70%
3i Group (III) 1,197.00p 3.15%
JD Sports Fashion (JD.) 100.25p 2.88%
Rightmove (RMV) 505.20p 2.72%
Intertek Group (ITRK) 3,753.00p 2.71%

FTSE 100 - Fallers

Rentokil Initial (RTO) 532.00p -2.28%
Pershing Square Holdings Ltd NPV (PSH) 2,825.00p -0.35%
Smith & Nephew (SN.) 1,029.00p -0.10%
Flutter Entertainment (CDI) (FLTR) 11,585.00p 0.04%
BAE Systems (BA.) 815.60p 0.15%
Unilever (ULVR) 3,980.50p 0.15%
Haleon (HLN) 268.50p 0.19%
BT Group (BT.A) 130.20p 0.31%
Aveva Group (AVV) 3,132.00p 0.38%
BP (BP.) 481.70p 0.40%

FTSE 250 - Risers

Wood Group (John) (WG.) 149.60p 6.93%
Spirent Communications (SPT) 273.80p 5.31%
Fidelity China Special Situations (FCSS) 186.80p 4.59%
IP Group (IPO) 61.55p 4.32%
Watches of Switzerland Group (WOSG) 806.00p 4.07%
Tullow Oil (TLW) 41.96p 3.60%
Weir Group (WEIR) 1,576.00p 3.51%
Warehouse Reit (WHR) 124.20p 3.50%
Coats Group (COA) 62.50p 3.31%
Molten Ventures (GROW) 330.40p 3.25%

FTSE 250 - Fallers

IWG (IWG) 128.25p -2.84%
Hilton Food Group (HFG) 600.00p -1.64%
JTC (JTC) 691.00p -1.14%
Helios Towers (HTWS) 124.10p -1.12%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 426.00p -0.81%
Moneysupermarket.com Group (MONY) 182.90p -0.27%
Allianz Technology Trust (ATT) 229.00p -0.22%
TBC Bank Group (TBCG) 1,880.00p -0.21%
Mediclinic International (MDC) 495.60p -0.08%
Finsbury Growth & Income Trust (FGT) 806.00p 0.00%