London open: Stocks fall as investors eye eurozone inflation data

London stocks fell in early trade on Tuesday as investors mulled the latest shop price inflation data and looked ahead to eurozone inflation figures later in the day.

At 0840 BST, the FTSE 100 was down 0.6% at 8,122.15.

Matt Britzman, equity analyst at Hargreaves Lansdown, said: "Some weakness has crept into the FTSE 100 this morning on a relatively quiet day for corporate news.

"Markets are gearing up eurozone inflation data and unemployment figures for the bloc. Expectations are that the European Central Bank will keep things as they are, with no real urgency to cut rates further."

On home shores, the latest shop price index from the British Retail Consortium and NielsenIQ showed that annual growth in prices at UK tills slowed significantly in June.

Shop price inflation eased to a year-on-year rate of just 0.2% last month, down from 0.6% in May and the lowest rate of price growth since October 2021.

Non-food prices were down 1% on last year, with deflation accelerating from the -0.8% level reported in May, while food inflation slowed to 2.5% from 3.2% a month earlier.

Slowdowns were reported in both fresh food (1.5%, down from 2.0%) and ambient food (3.9%, down from 4.8%).

The BRC said the deceleration in price growth was a result of heavy investments by retailers to improve operations and supply chains during the height of the cost-of-living crisis, to mitigate the impact of input cost pressures.

"This is clearly paying off, with shop prices having risen just 0.2% over the past 12 months," said the BRC's chief executive Helen Dickinson.

“Whoever wins Thursday’s election will benefit from the work of retailers to cut their costs and prices, easing the cost of living for millions of households.

"The last few years should serve as a warning that where business costs rise significantly, consumer prices are forced up too. The next government must address some of the major cost burdens weighing down the retail industry, including the broken business rates system, and inflexible apprenticeship levy."

In equity markets, Sainsbury's was under the cosh as it reported a slowdown in first-quarter like-for-like sales growth on the back of declines in general merchandise sales and at its Argos division.

Total retail sales excluding fuel increased by 2.6% year-on-year in the 16 weeks to 22 June, with like-for-like sales rising by 2.7%. That's down from the 4.8% LFL growth seen in the fourth quarter of the previous financial year and 7.4% growth in the third.

Outside the FTSE 350, Shoe Zone tumbled as it warned on profits, hit by rising shipping costs and bad weather.

The shoe retailer said it now expects adjusted pre-tax profit for the year to 2 October 2024 to be not less than £10m. In its interim results in June, Shoe Zone had already revised its guidance down from £15.2m to £13.8m.

Market Movers

FTSE 100 (UKX) 8,122.15 -0.55%
FTSE 250 (MCX) 20,168.49 -0.27%
techMARK (TASX) 4,679.55 -0.43%

FTSE 100 - Risers

BP (BP.) 483.45p 1.03%
F&C Investment Trust (FCIT) 1,010.00p 0.60%
National Grid (NG.) 890.20p 0.54%
Darktrace (DARK) 579.80p 0.52%
Shell (SHEL) 2,868.00p 0.37%
Smith (DS) (SMDS) 420.60p 0.33%
3i Group (III) 2,995.00p 0.30%
International Consolidated Airlines Group SA (CDI) (IAG) 164.35p 0.27%
Flutter Entertainment (DI) (FLTR) 14,685.00p 0.24%
Pershing Square Holdings Ltd NPV (PSH) 4,188.00p 0.19%

FTSE 100 - Fallers

Sainsbury (J) (SBRY) 250.80p -2.72%
Beazley (BEZ) 671.00p -2.26%
Kingfisher (KGF) 245.90p -2.19%
Anglo American (AAL) 2,380.00p -2.16%
Smurfit Kappa Group (CDI) (SKG) 3,468.00p -2.09%
Rentokil Initial (RTO) 451.50p -1.93%
Antofagasta (ANTO) 2,075.00p -1.80%
CRH (CDI) (CRH) 5,674.00p -1.66%
Spirax Group (SPX) 8,315.00p -1.60%
Compass Group (CPG) 2,139.00p -1.56%

FTSE 250 - Risers

Dr. Martens (DOCS) 77.00p 3.91%
Mony Group (MONY) 229.80p 3.23%
Close Brothers Group (CBG) 433.20p 2.41%
SDCL Energy Efficiency Income Trust (SEIT) 67.00p 1.82%
Ithaca Energy (ITH) 125.40p 1.62%
Me Group International (MEGP) 173.00p 1.53%
3i Infrastructure (3IN) 325.50p 1.40%
Tritax Eurobox (GBP) (EBOX) 64.00p 1.27%
JPMorgan Japanese Inv Trust (JFJ) 535.00p 1.13%
City of London Inv Trust (CTY) 423.50p 1.07%

FTSE 250 - Fallers

Quilter (QLT) 114.20p -3.30%
Trainline (TRN) 312.00p -2.68%
IP Group (IPO) 41.75p -2.68%
Wizz Air Holdings (WIZZ) 2,096.00p -2.51%
Kier Group (KIE) 130.80p -2.39%
Mitchells & Butlers (MAB) 280.50p -2.26%
AO World (AO.) 110.20p -2.13%
W.A.G Payment Solutions (WPS) 61.80p -1.90%
Greggs (GRG) 2,708.00p -1.88%
Target Healthcare Reit Ltd (THRL) 77.00p -1.79%