London open: Stocks in the black; Bunzl surges on profit upgrade

London stocks rose in early trade on Tuesday as traders returned to their desks after the long weekend.

At 0845 BST, the FTSE 100 was up 0.6% at 8,375.28.

Richard Hunter, head of markets at Interactive Investor, said: "After an extended Bank Holiday weekend, UK markets opened briskly with the premier index registering some early strength.

"The fresh round of conflicts in the Middle East had lifted the oil price over the weekend, which fed through to gains for BP and Shell, while the buying interest spilled over to commodities, lifting mining stocks such as Anglo American and Rio Tinto."

Oil prices jumped following strikes over the weekend between Israel and Hezbollah and on news that Libya was set to pause production.

Investors were also mulling the latest retail industry data, which showed that shop prices in August experienced deflation for the first time since October 2021, with a decrease of 0.3%.

That marked a significant shift from the prior month's slight inflation of 0.2%.

The drop brought the annual growth rate to its lowest level in nearly three years, according to the latest BRC-NielsenIQ Shop Price Index.

Non-food items saw the most significant deflation, with prices falling by 1.5% in August - a further decline from the 0.9% drop in July.

That was the lowest inflation rate in the non-food sector since July 2021.

Food prices, while still experiencing inflation, showed a marked slowdown.

Overall food inflation decreased to 2% in August from 2.3% in July, reaching its lowest level since November 2021.

Fresh food prices, in particular, saw a notable decline in inflation, dropping to 1% in August, down from 1.4% in July, the lowest since October 2021.

Ambient food inflation also decelerated slightly, falling to 3.4% in August from 3.6% in July, marking its lowest rate since March 2022.

"Shop prices fell into deflation for the first time in nearly three years," said Helen Dickinson, chief executive of the British Retail Consortium.

"This was driven by non-food deflation, with retailers discounting heavily to shift their summer stock, particularly for fashion and household goods.

"This discounting followed a difficult summer of trading caused by poor weather and the continued cost of living crunch impacting many families."

Dickinson said food inflation eased with fresh food prices, especially fruit, meat and fish, seeing the biggest monthly decrease since December 2020 as supplier input costs lessened.

"Retailers will continue to work hard to keep prices down, and households will be happy to see that prices of some goods have fallen into deflation.

"The outlook for commodity prices remains uncertain due to the impact of climate change on harvests domestically and globally, as well as rising geopolitical tensions.

"As a result, we could see renewed inflationary pressures over the next year."

In equity markets, Bunzl surged to the top of the FTSE 100 after it lifted its adjusted operating profit guidance for the full year and announced a £250m share buyback.

Mining giant BHP advanced as it reported a bigger-than-expected increase in full-year underlying profits, helped by record volumes of iron ore and higher copper output, but warned of an "uneven" recovery in China.

Ocado ticked higher as it said operations have finally started at two customer fulfilment centres in Australia a year later than planned, as part of its partnership with retail chain Coles.

Harbour Energy gained after saying it expects to complete the acquisition of the Wintershall Dea asset portfolio in early September, versus previous guidance of early in the fourth quarter.

On the downside, Primark owner AB Foods was under the cosh after downgrades to ‘sell’ at Deutsche Bank and Morningstar. DB cut its price target on the stock to 2,190p from 2,290p as it said the company’s profit recovery phase has come to an end.

Market Movers

FTSE 100 (UKX) 8,375.28 0.57%
FTSE 250 (MCX) 21,213.63 0.11%
techMARK (TASX) 4,874.65 0.30%

FTSE 100 - Risers

Bunzl (BNZL) 3,586.00p 11.57%
Smurfit Westrock (DI) (SWR) 3,489.00p 2.50%
Anglo American (AAL) 2,299.00p 2.18%
Rio Tinto (RIO) 4,845.00p 1.75%
Pershing Square Holdings Ltd NPV (PSH) 3,698.00p 1.59%
BP (BP.) 436.10p 1.58%
Diageo (DGE) 2,566.00p 1.38%
GSK (GSK) 1,623.00p 1.28%
Sage Group (SGE) 1,008.50p 1.23%
BT Group (BT.A) 137.45p 1.18%

FTSE 100 - Fallers

Associated British Foods (ABF) 2,450.00p -2.55%
Scottish Mortgage Inv Trust (SMT) 845.20p -2.09%
JD Sports Fashion (JD.) 146.20p -2.04%
3i Group (III) 3,147.00p -1.99%
Vistry Group (VTY) 1,375.00p -1.43%
Berkeley Group Holdings (The) (BKG) 5,145.00p -1.15%
Barclays (BARC) 228.15p -1.00%
Persimmon (PSN) 1,689.50p -0.94%
CRH (CDI) (CRH) 6,760.00p -0.91%
Rolls-Royce Holdings (RR.) 494.40p -0.90%

FTSE 250 - Risers

Harbour Energy (HBR) 294.90p 4.98%
Discoverie Group (DSCV) 665.00p 3.58%
Network International Holdings (NETW) 397.80p 3.32%
W.A.G Payment Solutions (WPS) 70.00p 3.24%
Moonpig Group (MOON) 221.50p 2.78%
Investec (INVP) 581.00p 2.74%
Energean (ENOG) 955.00p 2.69%
Diversified Energy Company (DEC) 965.50p 1.95%
Sirius Real Estate Ltd. (SRE) 98.80p 1.80%
Indivior (INDV) 941.50p 1.78%

FTSE 250 - Fallers

Bakkavor Group (BAKK) 150.00p -3.23%
AO World (AO.) 112.00p -2.61%
RHI Magnesita N.V. (DI) (RHIM) 3,495.00p -2.51%
Patria Private Equity Trust (PPET) 568.00p -2.41%
NCC Group (NCC) 150.80p -2.33%
Genuit Group (GEN) 456.00p -2.15%
Watches of Switzerland Group (WOSG) 405.00p -2.13%
Allianz Technology Trust (ATT) 355.50p -2.07%
Telecom Plus (TEP) 1,790.00p -1.86%
Helios Towers (HTWS) 120.80p -1.79%