London open: Stocks gain as AstraZenca, Next rally

London stocks racked up healthy gains in early trade on Wednesday, with AstraZeneca and Next pacing the advance.

At 0840 BST, the FTSE 100 was up 0.7% at 7,075.87.

Investors were mulling over the latest industry figures from the British Retail Consortium, which showed that retail prices are rising as cost pressures feed into consumers' shopping baskets, with more to come.

Food prices rose 0.1% in September from a year earlier - the first rise in six months. Price rises were led by ambient food where inflation accelerated to 0.8% from 0.3% a year earlier.

Non-food deflation slowed to 1% in September from a decline of 1.2% in August. The BRC said some items, such as for DIY and gardening, rose at the fastest rate since summer 2018 and furniture and electricals prices are also on the up due to shipping problems and high demand.

Overall prices fell 0.5% in September but this was the slowest rate of decline since January 2020 as price rises filtered into the total. The BRC said rising transport costs, labour shortages, Brexit red tape and higher commodity costs lay behind the increases.

Helen Dickinson, the BRC's chief executive, said: "It is inevitable that prices will continue to rise, but government intervention would minimise the impact on consumers. Supply chains have been put to the test recently, with CO2 and HGV shortages."

In equity markets, AstraZeneca gained after announcing that its newly-acquired Alexion business will buy the remaining shares of drug maker Caelum Biosciences for up to $500m.

Fashion retailer Next advanced after it raised full-year guidance as it reported a rise in interim profits and sales as stores reopened from Covid pandemic lockdowns.

The company forecast pre-tax profit of £800m, up 6.9% from 2019 and £36m ahead of previous guidance of £764m. Full price sales for the rest of the year were expected to be 10% higher from 2019.

Richard Hunter, head of markets at Interactive Investor, said: "Next is a tightly run ship which is able to respond to a fluid trading environment both in terms of evolving fashion trends as well as financial challenges. The company is not only exceeding pre-pandemic levels of trading, but has also demonstrated that the measures it has taken in the interim leave it strongly placed to benefit from the new environment.

"The shares have also responded, having risen by 34% over the last year, as compared to a gain of 19% for the wider FTSE 100. Equally noticeable is that after years of investors taking a neutral view on the stock, the potential for Next’s strategy is now being taken on board. The market consensus has at last improved to a buy on this renewed optimism on prospects."

On the downside, Upper Crust and Ritazza owner SSP fell after saying sales in the latest week were half of pre-pandemic levels, as it remained cautious on the pace of the recovery. SSP said it was assuming a slightly slower recovery in sales during the 2022 financial year due to uncertainty in the pace of post pandemic recovery. Revenue in the latest week of the year was 53% of 2019 levels.

Royal Mail was under the cosh after a downgrade to ‘sell’ at UBS.

Market Movers

FTSE 100 (UKX) 7,075.87 0.68%
FTSE 250 (MCX) 23,318.98 0.82%
techMARK (TASX) 4,666.02 0.92%

FTSE 100 - Risers

Ferguson (FERG) 10,530.00p 2.88%
AstraZeneca (AZN) 8,705.00p 2.73%
Next (NXT) 8,298.00p 2.70%
Ashtead Group (AHT) 5,750.00p 2.53%
Spirax-Sarco Engineering (SPX) 15,435.00p 2.12%
Croda International (CRDA) 8,644.00p 1.98%
SEGRO (SGRO) 1,220.00p 1.92%
Hikma Pharmaceuticals (HIK) 2,432.00p 1.89%
Halma (HLMA) 2,893.00p 1.87%
JD Sports Fashion (JD.) 1,070.00p 1.86%

FTSE 100 - Fallers

Royal Mail (RMG) 455.40p -4.97%
Rolls-Royce Holdings (RR.) 139.16p -2.45%
Royal Dutch Shell 'A' (RDSA) 1,617.80p -1.46%
Royal Dutch Shell 'B' (RDSB) 1,607.20p -1.46%
BP (BP.) 331.95p -1.38%
BHP Group (BHP) 1,827.60p -1.04%
Vodafone Group (VOD) 114.12p -0.75%
Rio Tinto (RIO) 4,748.50p -0.57%
Pearson (PSON) 707.00p -0.42%
SSE (SSE) 1,588.00p -0.41%

FTSE 250 - Risers

Reach (RCH) 365.50p 4.13%
Darktrace (DARK) 841.00p 3.38%
Baltic Classifieds Group (BCG) 214.00p 2.88%
Cineworld Group (CINE) 83.54p 2.83%
Dechra Pharmaceuticals (DPH) 4,850.00p 2.58%
Discoverie Group (DSCV) 1,076.00p 2.48%
Kainos Group (KNOS) 1,909.00p 2.30%
Diploma (DPLM) 2,932.00p 2.23%
Impax Environmental Markets (IEM) 534.00p 2.10%
Wizz Air Holdings (WIZZ) 5,346.00p 2.06%

FTSE 250 - Fallers

Virgin Money UK (VMUK) 208.00p -2.99%
SSP Group (SSPG) 281.90p -2.69%
Harbour Energy (HBR) 363.20p -2.37%
Wood Group (John) (WG.) 225.50p -1.83%
Cairn Energy (CNE) 181.30p -1.57%
Greencore Group (CDI) (GNC) 144.30p -1.57%
Capita (CPI) 51.58p -1.26%
Micro Focus International (MCRO) 410.80p -1.23%
Wetherspoon (J.D.) (JDW) 1,049.00p -1.04%
easyJet (EZJ) 678.40p -0.91%