London open: Stocks rally as inflation eases more than expected

London stocks rallied in early trade on Wednesday after data showed that UK inflation slowed more than expected in November, boosting rate cut hopes for next year.

At 0840 GMT, the FTSE 100 was up 1.3% at 7,733.67, comfortably outperforming its European counterparts.

Figures released by the Office for National Statistics showed that consumer price inflation slowed to 3.9% from 4.6% in October. This marked the lowest reading since September 2021 and was below analysts’ expectations of 4.4%.

The ONS said the largest downward contributions came from transport, recreation and culture, and food and non-alcoholic beverages.

Core inflation - which strips out volatile food and energy prices - fell to 5.1% in November from 5.7% the month before. Economists were expecting it to ease to 5.6%.

ONS chief economist Grant Fitzner said: "Inflation eased again to its lowest annual rate for over two years, but prices remain substantially above what they were before the invasion of Ukraine.

"The biggest driver for this month’s fall was a decrease in fuel prices after an increase at the same time last year.

"Food prices also pulled down inflation, as they rose much more slowly than this time last year.

"There was also a price drop for a range of household goods and the cost of second-hand cars."

ING economist James Smith said markets are now pricing a whopping 140 basis points of rate cuts next year.

"That's maybe pushing it, but investors are right to be thinking about several cuts next year, despite the Bank of England's recent pushback," he said.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "November’s surprisingly sharp fall in CPI inflation reinforces the likelihood that the MPC will begin to reduce Bank Rate in the first half of 2024, far earlier than it has been prepared to signal so far."

Corporate news was scarce as we head towards the Christmas break, but Intertek jumped after a double upgrade to ‘outperform’ at Exane, which said consensus is now overly bearish on the testing and inspection company’s margin outlook.

Elsewhere, Petrofac surged 45% after it saying it has secured a second contract award under the six-project, $14bn multi-year framework agreement with Tennet, with its portion valued at around $1.4bn.

Market Movers

FTSE 100 (UKX) 7,733.67 1.25%
FTSE 250 (MCX) 19,522.98 1.07%
techMARK (TASX) 4,275.90 1.20%

FTSE 100 - Risers

Intertek Group (ITRK) 4,225.00p 3.07%
Barclays (BARC) 151.46p 2.57%
SEGRO (SGRO) 900.80p 2.43%
Vodafone Group (VOD) 68.40p 2.32%
Marks & Spencer Group (MKS) 270.60p 2.31%
Legal & General Group (LGEN) 251.20p 2.24%
Flutter Entertainment (CDI) (FLTR) 14,220.00p 2.16%
Airtel Africa (AAF) 130.30p 2.12%
Beazley (BEZ) 537.00p 2.09%
IMI (IMI) 1,686.00p 2.06%

FTSE 100 - Fallers

Smith (DS) (SMDS) 304.70p -2.03%
London Stock Exchange Group (LSEG) 9,230.00p -0.17%
Dechra Pharmaceuticals (DPH) 3,846.00p 0.05%
Smurfit Kappa Group (CDI) (SKG) 3,174.00p 0.06%
Centrica (CNA) 141.70p 0.25%
Rolls-Royce Holdings (RR.) 295.80p 0.27%
Experian (EXPN) 3,213.00p 0.31%
Halma (HLMA) 2,300.00p 0.35%
Rio Tinto (RIO) 5,807.00p 0.36%
Associated British Foods (ABF) 2,388.00p 0.38%

FTSE 250 - Risers

Diversified Energy Company (DEC) 1,164.00p 3.74%
Indivior (INDV) 1,185.00p 3.31%
Helios Towers (HTWS) 83.65p 3.27%
Currys (CURY) 50.95p 3.18%
IP Group (IPO) 58.70p 3.16%
Petershill Partners (PHLL) 165.20p 2.74%
Harbour Energy (HBR) 242.50p 2.71%
International Public Partnerships Ltd. (INPP) 139.00p 2.66%
Auction Technology Group (ATG) 528.00p 2.52%
Hargreaves Lansdown (HL.) 738.40p 2.47%

FTSE 250 - Fallers

Urban Logistics Reit (SHED) 123.20p -1.60%
Tullow Oil (TLW) 35.16p -1.18%
Sequoia Economic Infrastructure Income Fund Limited (SEQI) 83.60p -0.59%
BlackRock World Mining Trust (BRWM) 574.00p -0.52%
Rathbones Group (RAT) 1,710.00p -0.47%
Darktrace (DARK) 370.90p -0.32%
4Imprint Group (FOUR) 4,595.00p -0.22%
International Distributions Services (IDS) 279.40p -0.14%
Ferrexpo (FXPO) 78.50p -0.13%
Foresight Solar Fund Limited (FSFL) 97.60p -0.10%