London open: Stocks rise but Next slides on cautious outlook

London stocks rose in early trade on Wednesday as worries about the banking sector continued to recede, but Next tumbled as it struck a cautious note on its outlook.

At 0840 BST, the FTSE 100 was 0.3% firmer at 7,503.49.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "’With banking worries put on the back burner for now, with no further stresses in the system emerging, investors’ appetite for a bit more risk is returning."

On the macro front, lending, consumer credit and mortgage approvals data are all due at 0930 BST.

CMC Markets analyst Michael Hewson said: "UK mortgage approvals have seen a sharp slowdown in the last few months as higher interest rates and the rising cost of living serves to crimp demand, even as the lead-up to Christmas tends to see a slowdown in demand.

"In January mortgage demand fell to its lowest level since 2020 at 39.6k, and today’s February numbers aren’t expected to see a significant pickup with expectations of around 40k.

"In January net consumer credit saw a sharp pickup to £1.6bn, after a slowdown at the end of last year that saw consumer borrowing slow to £800m from £1.5bn. This stop start nature of consumer borrowing points to a UK consumer that is very sensitive to the rising cost of living, and while consumer confidence has improved in recent months it remains very fragile.

"Today’s consumer credit numbers for February are expected to show a modest slowdown to £1.2bn, with recent trends in retail sales showing that discretionary demand has started to pick up as energy prices have fallen back."

In equity markets, WPP was the top riser on the FTSE 100 after an upgrade to ‘outperform’ at Exane, while Tesco was boosted by an upgrade to ‘overweight’ from ‘equalweight’ at Morgan Stanley.

Chemring gained after saying it had won a £43m order for the delivery of critical components used in the Next Generation Light Anti-Tank Weapon system (NLAW).

Essentra advanced after it confirmed its £150m return to shareholders and maintained guidance as it posted lower full-year profits following the disposal of its packaging business.

On the downside, retailer Next slumped after it posted a better-than-expected jump in full-year profit and said selling price inflation was set to be more benign than previously thought, but warned the year ahead will be "difficult" and that it continues to expect a decline in profit.

In the year to January 2023, pre-tax profit rose 5.7% to £870.4m, coming in ahead of company guidance of £860m. Total trading sales were up 8.4% to £5.1bn.

Smith & Nephew was knocked lower by a downgrade to ‘underweight’ from ‘overweight’ at Barclays.

Market Movers

FTSE 100 (UKX) 7,503.49 0.26%
FTSE 250 (MCX) 18,458.64 0.34%
techMARK (TASX) 4,518.87 0.33%

FTSE 100 - Risers

WPP (WPP) 936.60p 1.92%
3i Group (III) 1,640.00p 1.83%
Tesco (TSCO) 259.00p 1.61%
Prudential (PRU) 1,060.50p 1.53%
Burberry Group (BRBY) 2,445.00p 1.50%
Endeavour Mining (EDV) 1,908.00p 1.33%
Beazley (BEZ) 567.00p 1.25%
F&C Investment Trust (FCIT) 906.00p 1.12%
Halma (HLMA) 2,150.00p 1.03%
Abrdn (ABDN) 207.80p 1.02%

FTSE 100 - Fallers

Next (NXT) 6,322.00p -5.83%
Associated British Foods (ABF) 1,913.50p -1.97%
Smith & Nephew (SN.) 1,117.00p -1.24%
JD Sports Fashion (JD.) 166.15p -1.04%
Mondi (MNDI) 1,296.00p -0.92%
B&M European Value Retail S.A. (DI) (BME) 461.40p -0.90%
Kingfisher (KGF) 250.50p -0.72%
Vodafone Group (VOD) 88.57p -0.42%
Barratt Developments (BDEV) 446.90p -0.40%
Fresnillo (FRES) 716.80p -0.36%

FTSE 250 - Risers

Synthomer (SYNT) 117.20p 8.04%
Helios Towers (HTWS) 107.50p 4.78%
Bridgepoint Group (Reg S) (BPT) 208.00p 4.68%
Tritax Eurobox (GBP) (EBOX) 59.50p 4.39%
NCC Group (NCC) 157.00p 3.70%
Spirent Communications (SPT) 175.80p 2.87%
Softcat (SCT) 1,241.00p 2.13%
Witan Inv Trust (WTAN) 221.00p 2.08%
Bellway (BWY) 2,083.00p 2.06%
Darktrace (DARK) 260.80p 2.03%

FTSE 250 - Fallers

TUI AG Reg Shs (DI) (TUI) 689.00p -2.45%
TI Fluid Systems (TIFS) 97.20p -2.41%
Marks & Spencer Group (MKS) 155.20p -2.20%
Hammerson (HMSO) 21.00p -1.91%
Bakkavor Group (BAKK) 103.00p -1.90%
Target Healthcare Reit Ltd (THRL) 66.80p -1.64%
Dunelm Group (DNLM) 1,095.00p -1.53%
Drax Group (DRX) 573.00p -1.38%
Paragon Banking Group (PAG) 495.00p -1.30%
Chemring Group (CHG) 268.50p -1.10%