London open: Stocks edge up as investors mull borrowing data
London stocks edged higher in early trade on Tuesday as investors mulled the latest government borrowing figures.
At 0845 GMT, the FTSE 100 was 0.3% firmer at 7,467.09, while sterling was up 0.1% against the dollar at 1.3176.
Ahead of the Spring statement on Wednesday, data from the Office for National Statistics showed that borrowing fell in February. The gap between spending and income came in at £13.1bn, down £2.4bn on the same month a year earlier, but marking the second-highest borrowing figure for February since records began in 1993. This was above expectations of £8.5bn and the Office for Budget Responsibility’s forecast of £8.0bn.
However, the figures also showed that borrowing is now £25.9bn lower than the OBR expected for the year so far, and less than half of what was recorded last year, at £138.4bn.
Compared with February 2020, before the pandemic hit, borrowing was up £12.8bn.
The data showed that interest payment on government debt surged 52.7% from a year earlier to a record £8.2bn last month amid soaring inflation.
Martin Beck, chief economic advisor to the EY ITEM Club, said: "While the Chancellor can take heart from a decreasing deficit as he prepares for Wednesday’s Spring Statement, recent geopolitical developments point to a tougher 2022-2023.
"Rising energy and commodity prices means inflation this year is on course to exceed the OBR’s forecast by a significant margin. By depressing real income growth, high inflation will weigh on economic activity and employment, negatively affecting tax receipts. It will also add further to the interest cost of inflation-linked gilts.
"Borrowing may also be lifted if the Chancellor responds to recent calls for more fiscal activism to alleviate cost of living pressures, such as cutting fuel duty or raising benefits. With so many moving parts, and uncertainty over how much of the recent strength in tax receipts will prove persistent, predicting the medium-term fiscal outlook is tricky. But we won’t have to wait long for more clarity."
In equity markets, JD Sports was the standout gainer on the FTSE 100 following well-received third-quarter earnings from Nike in the US.
Banks were also on the rise, with HSBC, Prudential, NatWest and Standard Chartered all higher, boosted by hawkish comments overnight from US Federal Reserve Chair Jerome Powell. In a speech at the National Association of Business Economics conference, Powell said the US central bank must move "expeditiously" to raise rates and possibly "more aggressively".
IT infrastructure provider Softcat surged to the top of the FTSE 250 after it said first-half profit was ahead of its expectations and that the outturn for the full year would be ahead of previous estimates.
On the downside, B&Q owner Kingfisher lost ground as it said current-year first-quarter sales were down 8.1%, and reported 2021/22 profits up by a third.
Review website Trustpilot also fell despite reporting a jump in full-year revenue and saying it expects to deliver constant currency revenue growth in line with current management expectations in 2022.
Market Movers
FTSE 100 (UKX) 7,467.09 0.33%
FTSE 250 (MCX) 21,055.90 0.23%
techMARK (TASX) 4,343.38 0.01%
FTSE 100 - Risers
JD Sports Fashion (JD.) 154.50p 3.76%
Prudential (PRU) 1,111.00p 2.49%
HSBC Holdings (HSBA) 512.30p 2.30%
NATWEST GROUP PLC ORD 100P (NWG) 220.60p 2.22%
Standard Chartered (STAN) 515.20p 1.82%
Melrose Industries (MRO) 132.30p 1.61%
Barclays (BARC) 170.92p 1.44%
British American Tobacco (BATS) 3,207.00p 1.36%
InterContinental Hotels Group (IHG) 5,264.00p 1.31%
Imperial Brands (IMB) 1,624.50p 1.25%
FTSE 100 - Fallers
Croda International (CRDA) 7,428.00p -1.22%
Spirax-Sarco Engineering (SPX) 12,540.00p -1.22%
Severn Trent (SVT) 2,922.00p -1.05%
Ocado Group (OCDO) 1,086.00p -1.00%
DCC (CDI) (DCC) 5,894.00p -0.94%
London Stock Exchange Group (LSEG) 7,842.00p -0.88%
Halma (HLMA) 2,515.00p -0.83%
Admiral Group (ADM) 2,592.00p -0.73%
ITV (ITV) 82.28p -0.63%
Rio Tinto (RIO) 5,772.00p -0.55%
FTSE 250 - Risers
Softcat (SCT) 1,847.00p 7.45%
XP Power Ltd. (DI) (XPP) 3,895.00p 7.15%
Ninety One (N91) 251.00p 3.21%
Sirius Real Estate Ltd. (SRE) 123.80p 2.82%
TP Icap Group (TCAP) 121.80p 2.35%
ICG Enterprise Trust (ICGT) 1,210.00p 2.20%
easyJet (EZJ) 531.80p 2.19%
Big Yellow Group (BYG) 1,496.00p 2.19%
Mitie Group (MTO) 61.30p 2.17%
Tullow Oil (TLW) 53.54p 2.10%
FTSE 250 - Fallers
Trustpilot Group (TRST) 133.00p -17.80%
Diploma (DPLM) 2,672.00p -3.54%
Standard Life Private Equity Trust (SLPE) 516.00p -3.37%
Discoverie Group (DSCV) 792.00p -3.30%
Helios Towers (HTWS) 122.80p -2.54%
Marks & Spencer Group (MKS) 160.35p -1.47%
Ferrexpo (FXPO) 161.60p -1.40%
IWG (IWG) 265.10p -1.34%
Wood Group (John) (WG.) 176.80p -1.34%
Morgan Advanced Materials (MGAM) 314.50p -1.10%