London open: Stocks rally on US cues; Vodafone gains on update

London stocks rose in early trade on Wednesday, taking their cue from a positive session on Wall Street.

At 0840 GMT, the FTSE 100 was up 0.5% at 7,571.93 as investors eyed policy announcements from the European Central Bank and the Bank of England on Thursday.

Victoria Scholar, head of investment at Interactive Investor, said: "European markets continue their February ascent, attempting to build on recent bullish momentum after January’s rout.

"The Stoxx 600 is attempting to regain ground with most stocks trading in the green with technology and travel & leisure are at the top of the basket. The FTSE 100 is driving higher outperforming other bourses as the UK index inches closer to 7,600 as the next major resistance hurdle to watch."

Market participants were digesting a survey which showed that the rate of price rises in UK shops almost doubled in January, adding to pressure on the cost of living with more increases to come.

Shop-price annual inflation accelerated to a near-decade high of 1.5% from 0.8% a month earlier, the British Retail Consortium's survey showed. The rate of increase was higher than the six-month average rise of 0.1% and was the highest since December 2012.

The increase was driven by a 0.9% rise in non-food inflation, rebounding from a 0.2% decline in December. Furniture and flooring prices rose particularly fast because of strong demand and higher shipping costs.

Food-price inflation strengthened to 2.7% from 2.4% a month earlier. Fresh food inflation was little changed at 2.9% but the rate of price increases for ambient food rose to 2.4% from 1.7%. Prices were affected by poor harvests, labour shortages and rising global food prices.

The BRC said prices were likely to keep rising strongly. The trend will put further pressure on household budgets with domestic energy prices surging and an increase in national insurance contributions on the way.

BRC chief executive Helen Dickinson said: "The rise in shop prices is playing into wider UK inflation, which is pushing cost of living to the forefront of the political agenda. Many households will find it difficult to absorb the additional costs, as well as others on the horizon. As commodity prices, energy prices and transportation costs continue to rise, it is inevitable that retail prices will continue to follow."

In equity markets, online supermarket Ocado surged to the top of the FTSE 100 after a double upgrade to ‘outperform’ by Credit Suisse, while Auto Trader rose after an upgrade to ‘buy’ from ‘hold’ at Jefferies.

Telecoms giant Vodafone gained after it reported higher third-quarter services revenue, driven by growth in Europe and Africa as it reiterated annual guidance.

Molten Ventures, formerly Draper Esprit, was also on the rise after a well-received investment update.

On the downside, Playtech edged lower after the gambling software group said it was unlikely shareholders would approve a takeover offer by Australia’s Aristocrat Leisure based on proxy counts, and that it was looking at "attractive alternatives" if the deal collapsed.

Market Movers

FTSE 100 (UKX) 7,571.93 0.48%
FTSE 250 (MCX) 22,354.36 0.84%
techMARK (TASX) 4,465.53 0.77%

FTSE 100 - Risers

Ocado Group (OCDO) 1,538.50p 7.51%
Auto Trader Group (AUTO) 699.80p 3.58%
Dechra Pharmaceuticals (DPH) 4,344.00p 2.36%
Vodafone Group (VOD) 130.80p 2.22%
Entain (ENT) 1,654.50p 2.07%
Ferguson (FERG) 11,855.00p 2.02%
Croda International (CRDA) 8,168.00p 2.00%
Flutter Entertainment (CDI) (FLTR) 11,535.00p 1.94%
Spirax-Sarco Engineering (SPX) 13,540.00p 1.88%
Abrdn (ABDN) 245.10p 1.87%

FTSE 100 - Fallers

BAE Systems (BA.) 569.60p -1.86%
Standard Chartered (STAN) 541.80p -0.66%
British American Tobacco (BATS) 3,154.50p -0.60%
Rolls-Royce Holdings (RR.) 116.66p -0.48%
Compass Group (CPG) 1,648.00p -0.42%
HSBC Holdings (HSBA) 541.80p -0.31%
Fresnillo (FRES) 647.80p -0.28%
BP (BP.) 392.25p -0.27%
AstraZeneca (AZN) 8,487.00p -0.26%
Meggitt (MGGT) 742.40p -0.22%

FTSE 250 - Risers

Molten Ventures (GROW) 819.00p 4.46%
Darktrace (DARK) 402.20p 3.29%
Oxford Biomedica (OXB) 904.00p 3.20%
Trainline (TRN) 239.60p 2.66%
Hochschild Mining (HOC) 109.20p 2.63%
Renishaw (RSW) 4,620.00p 2.62%
Allianz Technology Trust (ATT) 306.50p 2.51%
Discoverie Group (DSCV) 865.00p 2.37%
Bytes Technology Group (BYIT) 476.40p 2.32%
Games Workshop Group (GAW) 8,515.00p 2.22%

FTSE 250 - Fallers

Fidelity China Special Situations (FCSS) 296.50p -2.63%
Harbour Energy (HBR) 357.20p -2.24%
Caledonia Investments (CLDN) 3,665.00p -2.14%
Petropavlovsk (POG) 15.00p -1.32%
BlackRock World Mining Trust (BRWM) 635.00p -1.09%
Ultra Electronics Holdings (ULE) 2,922.00p -1.02%
Mediclinic International (MDC) 320.60p -0.62%
GCP Infrastructure Investments Ltd (GCP) 106.00p -0.56%
PZ Cussons (PZC) 191.40p -0.52%
Carnival (CCL) 1,406.60p -0.42%