London open: Stocks fall but IDS jumps on takeover deal

London stocks fell in early trade on Wednesday, taking their cue from a downbeat session in Asia, but IDS bucked the trend after the Royal Mail owner accepted a takeover offer.

At 0900 BST, the FTSE 100 was down 0.3% at 8,233.37.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Financial markets are fracturing in terms of sentiment, with AI exuberance continuing to power mighty tech while worries about high interest rates lingering keep investors cautious elsewhere. The FTSE 100 has opened on the back foot, as stubborn inflation remains in focus and the General Election campaign continues to throw up economic and corporate uncertainty.

"A key inflation snapshot is due out later this week in the US, the core personal consumption expenditures price index, the Fed's preferred inflation barometer. This will be seen as a crucial part of the picture in determining whether high interest rates are set to linger for longer. It’s not expected to have budged much, and the worry is that stubborn prices will keep policymakers ultra-cautious. However, if the snapshot shows an easing of pressures, it’s likely to calm current jitters."

In equity markets, online supermarket Ocado was the worst performer on the FTSE 100 ahead of its expected demotion from the top-flight index in next week’s reshuffle. St James’s Place - in the same boat - was also trading down.

IWG was under the cosh after chief executive after chief executive Mark Dixon sold 35m shares in the company.

Anglo American lost ground as Australia's BHP requested that it extend its 'put up or shut up' deadline so the two can continue discussions about a potential £39bn takeover deal.

On the upside, Royal Mail owner International Distribution Services rallied after saying it had reached an agreement with Czech billionaire Daniel Kretinsky on a takeover of the 500 year old company worth up to £5.28bn.

Kretinsky’s EP Group is offering 360p a share along with the 2p final dividend for the year to March 31 and a special 8p dividend to be paid if the deal becomes unconditional. He has also pledged to maintain Royal Mail’s guarantee of services six days a week for five years.

Susannah Streeter said: "There is still some caution about whether the deal will go ahead, given that the government has the power under the National Security and investment act to potentially block the deal. IDS comes with a lot of Royal Mail baggage, particularly the obligation to deliver letters six days a week as the UK’s universal postal service, at a time when volumes are in sharp decline.

"But group’s international arm GLS has long been considered the jewel in the company’s crown, enjoying a level of success which Royal Mail has found elusive and EP Group will have been eyeing up the long-term opportunities here, particularly if inflation subsides further which should help margin growth."

Market Movers

FTSE 100 (UKX) 8,233.37 -0.25%
FTSE 250 (MCX) 20,656.89 -0.23%
techMARK (TASX) 4,799.24 -0.29%

FTSE 100 - Risers

Fresnillo (FRES) 624.50p 1.71%
BP (BP.) 493.50p 1.33%
Admiral Group (ADM) 2,724.00p 1.19%
Shell (SHEL) 2,807.00p 0.95%
United Utilities Group (UU.) 990.20p 0.86%
Sage Group (SGE) 1,072.00p 0.66%
Marks & Spencer Group (MKS) 303.90p 0.63%
Severn Trent (SVT) 2,400.00p 0.63%
Coca-Cola HBC AG (CDI) (CCH) 2,768.00p 0.44%
Associated British Foods (ABF) 2,652.00p 0.42%

FTSE 100 - Fallers

Ocado Group (OCDO) 388.00p -5.46%
International Consolidated Airlines Group SA (CDI) (IAG) 168.60p -2.94%
RS Group (RS1) 734.00p -2.59%
CRH (CDI) (CRH) 6,166.00p -1.85%
National Grid (NG.) 860.80p -1.80%
easyJet (EZJ) 456.20p -1.66%
Prudential (PRU) 753.20p -1.54%
St James's Place (STJ) 487.20p -1.54%
Entain (ENT) 664.20p -1.45%
WPP (WPP) 819.20p -1.37%

FTSE 250 - Risers

Ithaca Energy (ITH) 122.00p 4.45%
International Distribution Services (IDS) 330.00p 2.74%
Auction Technology Group (ATG) 610.00p 2.35%
Balanced Commercial Property Trust Limited (BCPT) 81.00p 1.89%
Lancashire Holdings Limited (LRE) 611.00p 1.66%
Mitchells & Butlers (MAB) 302.00p 1.51%
Asia Dragon Trust (DGN) 410.00p 1.49%
Genus (GNS) 1,822.00p 1.45%
Foresight Solar Fund Limited (FSFL) 87.60p 1.39%
SDCL Energy Efficiency Income Trust (SEIT) 66.30p 1.22%

FTSE 250 - Fallers

IWG (IWG) 194.00p -6.28%
Mobico Group (MCG) 56.55p -4.64%
Aston Martin Lagonda Global Holdings (AML) 130.40p -3.34%
Future (FUTR) 1,030.00p -2.74%
Grafton Group Ut (CDI) (GFTU) 970.90p -2.42%
Trustpilot Group (TRST) 210.00p -2.33%
Discoverie Group (DSCV) 729.00p -2.28%
Sirius Real Estate Ltd. (SRE) 94.80p -2.22%
Victrex plc (VCT) 1,266.00p -1.86%
Abrdn (ABDN) 152.05p -1.81%