London open: Stocks fall as BP shines, Diageo tumbles

London stocks fell in early trade on Tuesday as investors waded through a barrage of earnings from the likes of BP, Standard Chartered and Diageo, and looked ahead to rate announcements from the Federal Reserve and the Bank of England this week.

At 0845 BST, the FTSE 100 was down 0.5% at 8,252.64.

A survey out earlier from the British Retail Consortium and NielsenIQ showed that shop inflation was unchanged in July, but cost pressures were "lurking over the horizon" as commodity prices remained at risk from climate change and geopolitical tensions.

Shop price annual inflation was unchanged at 0.2%, below the three-month average rate of 0.3%, while annual growth remained at its lowest rate since October 2021.

Non-food remained in deflation at -0.9% in July, up from -1.0% in the preceding month, while food inflation slowed to 2.3% from 2.5% in June. A poor summer and weak demand saw clothing and footwear prices down for the seventh consecutive month while book prices also fell.

Fresh food inflation slowed further in July, to 1.4% from 1.5% in June. This is below the three-month average rate of 1.6%. Inflation is its lowest rate since November 2021.

"The 2023 declines in global food commodity prices continued to feed through, helping bring down food inflation rates over the first seven months of 2024. However this shows signs of reversing, suggesting renewed pressure on food prices in the future," said BRC chief executive Helen Dickinson.

Sports gatherings for Wimbledon and the Euros benefited from discounted snacking items such as crisps and soft drinks, she added.

"With the outlook for commodity prices remaining uncertain due to the impact of climate change on harvests domestically and globally, as well as rising geopolitical tensions, renewed inflationary pressures could be lurking just over the horizon."

In equity markets, Diageo tumbled as the drinks maker reported a drop in full-year organic operating profit, citing a weaker performance in Latin America and the Caribbean (LAC).

Accounting software firm Sage was also in the red despite reiterating guidance and delivering in-line revenue growth for the first nine months of the year.

Croda fell as the chemicals company cut its full-year profit outlook, pointing to a weaker-than-expected performance in the life sciences segment, with continued destocking in crop protection and consumer health.

On the upside, Asia-focused bank Standard Chartered was a high riser as it unveiled its biggest-ever share buyback and lifted guidance as interim earnings beat estimates.

The company said it would buy back $1.5bn in shares starting immediately. Pre-tax profit for the first six months of the year rose 5% to $3.5bn, compared with average forecasts of $3.46bn.

StanChart said it now expects operating income to grow more than 7% at constant currency rates compared with a previous projection of between 5% and 7%.

BP gushed higher after saying it swung into the red on a reported basis in the second quarter due to $2.77bn of so-called "adjusting items", but the energy giant beat market forecasts on an underlying basis and unveiled another $1.75bn share buyback programme.

Weir Group gained as the engineering firm reported a small rise in first-half adjusted profits and said that strong aftermarket demand had bolstered its project outlook, but said full-year revenues will likely miss forecasts.

Flutter Entertainment was boosted as Citi opened a ‘positive catalyst watch’ on the shares ahead of results on 13 August.

St James’s Place surged after announcing plans to cut costs by £100m a year by 2027, with anticipated cumulative net savings of nearly £500m through to 2030.

Greggs gained as the bakery chain lifted its interim dividend and reported a jump in profit and revenue as it benefited from an expanded food and drinks range.

Market Movers

FTSE 100 (UKX) 8,252.64 -0.48%
FTSE 250 (MCX) 21,230.69 -0.10%
techMARK (TASX) 4,784.03 -0.61%

FTSE 100 - Risers

Standard Chartered (STAN) 761.60p 4.79%
Fresnillo (FRES) 585.50p 2.36%
Reckitt Benckiser Group (RKT) 4,177.00p 2.05%
BP (BP.) 462.00p 1.99%
Weir Group (WEIR) 1,965.00p 1.81%
Centrica (CNA) 132.30p 1.03%
Pearson (PSON) 1,054.50p 0.91%
BT Group (BT.A) 142.95p 0.78%
Flutter Entertainment (DI) (FLTR) 15,165.00p 0.73%
Burberry Group (BRBY) 739.80p 0.57%

FTSE 100 - Fallers

Diageo (DGE) 2,338.00p -8.22%
Sage Group (SGE) 1,004.00p -7.59%
Croda International (CRDA) 3,907.00p -4.80%
Convatec Group (CTEC) 241.80p -3.97%
AstraZeneca (AZN) 12,156.00p -1.68%
Anglo American (AAL) 2,306.00p -1.43%
Entain (ENT) 588.20p -1.41%
Rio Tinto (RIO) 4,919.50p -1.40%
Smurfit Westrock (DI) (SWR) 3,695.00p -1.36%
Lloyds Banking Group (LLOY) 60.28p -1.34%

FTSE 250 - Risers

St James's Place (STJ) 656.00p 17.46%
4Imprint Group (FOUR) 6,170.00p 3.35%
Indivior (INDV) 1,022.00p 3.18%
Supermarket Income Reit (SUPR) 76.50p 2.82%
Hays (HAS) 94.85p 2.76%
Bank of Georgia Group (BGEO) 4,615.00p 2.44%
Greggs (GRG) 2,988.00p 1.77%
Softcat (SCT) 1,619.00p 1.63%
Crest Nicholson Holdings (CRST) 267.20p 1.60%
Carnival (CCL) 1,231.50p 1.57%

FTSE 250 - Fallers

Bodycote (BOY) 674.00p -5.73%
Ocado Group (OCDO) 410.00p -5.22%
Spectris (SXS) 2,900.00p -3.40%
Close Brothers Group (CBG) 509.00p -2.96%
Games Workshop Group (GAW) 9,915.00p -2.79%
Man Group (EMG) 240.00p -2.60%
Inchcape (INCH) 820.00p -2.50%
RHI Magnesita N.V. (DI) (RHIM) 3,515.00p -2.50%
Asia Dragon Trust (DGN) 401.00p -2.20%
Grafton Group Ut (CDI) (GFTU) 1,030.00p -2.07%