London open: Stocks, sterling rise as Truss plans energy bill freeze

London stocks rose in early trade on Tuesday as sterling was boosted by news that new prime minister Liz Truss is planning to freeze energy bills.

At 0840 BST, the FTSE 100 was 0.4% firmer at 7,314.34. Meanwhile, the pound was up 0.7% against the dollar and 0.3% versus the euro at 1.1592 and 1.1629, respectively, amid reports that Truss has drafted plans to fix annual electricity and gas bills for a typical UK household at or below the current level of £1,971.

According to Bloomberg, Truss has settled on a mechanism that will avert the big jump in energy bills that is due to kick in at the start of next month under the existing pricing system. The policy could cost as much as £130bn over the next 18 months.

Energy bills were due to rise 80% from October to £3,548 a year for the average household. Under the plans drawn up by Truss’s team, that pricing regime will effectively be abolished and the energy regulator Ofgem will be sidelined, Bloomberg said. Instead, ministers will set a new unit price that households will pay for electricity and gas.

Neil Wilson, chief market analyst at Markets.com, said: "Capping energy prices - albeit kicking the can down the road again - would certainly help rein in inflation expectations and help shove the genie back in the bottle."

Investors were also digesting the latest survey from the British Retail Consortium and KPMG, which showed that retail sales growth slowed in August.

In equity markets, retailers were among the top performers on the FTSE 100, with JD Sports, Next and Kingfisher all sharply higher.

Berkeley Group rallied after saying it was on track to meet full-year profit guidance, despite a "volatile" operating environment. Updating on trading ahead of its annual general meeting, the housebuilder said it had continued to trade "well" during the first four months of the current financial year.

As a result, it is on course to meet pre-tax profit guidance of £600m for the current year, and £625m in the year to 30 April 2024.

British Gas owner Centrica was higher following a Financial Times report suggesting it is in talks to secure billions in additional financing amid rising collateral demands.

Equipment rental company Ashtead fell despite posting a rise in revenue and profits for the three months ended 31 July, driven by "ongoing momentum" in supportive end markets.

Market Movers

FTSE 100 (UKX) 7,314.34 0.37%
FTSE 250 (MCX) 18,884.92 1.37%
techMARK (TASX) 4,259.29 0.36%

FTSE 100 - Risers

JD Sports Fashion (JD.) 129.35p 5.33%
Next (NXT) 6,354.00p 5.27%
Kingfisher (KGF) 251.60p 5.01%
Berkeley Group Holdings (The) (BKG) 3,615.00p 4.87%
Howden Joinery Group (HWDN) 575.60p 4.05%
Barratt Developments (BDEV) 423.50p 3.65%
Ocado Group (OCDO) 745.80p 3.64%
Lloyds Banking Group (LLOY) 45.02p 3.62%
Taylor Wimpey (TW.) 107.60p 3.46%
Hargreaves Lansdown (HL.) 824.20p 3.28%

FTSE 100 - Fallers

Ashtead Group (AHT) 4,237.00p -1.74%
BT Group (BT.A) 142.35p -1.59%
Shell (SHEL) 2,318.50p -1.26%
BP (BP.) 457.75p -1.21%
Airtel Africa (AAF) 131.00p -1.13%
AstraZeneca (AZN) 10,550.00p -0.92%
Reckitt Benckiser Group (RKT) 6,384.00p -0.87%
GSK (GSK) 1,348.20p -0.71%
Dechra Pharmaceuticals (DPH) 3,104.00p -0.70%
Avast (AVST) 714.60p -0.56%

FTSE 250 - Risers

Aston Martin Lagonda Global Holdings (AML) 440.00p 8.64%
Dunelm Group (DNLM) 729.50p 6.96%
Marks & Spencer Group (MKS) 131.90p 6.67%
ASOS (ASC) 707.50p 6.07%
Watches of Switzerland Group (WOSG) 807.50p 5.62%
Greggs (GRG) 1,941.00p 5.37%
Domino's Pizza Group (DOM) 243.00p 5.29%
Countryside Partnerships (CSP) 252.60p 5.25%
Vistry Group (VTY) 794.00p 5.17%
Baltic Classifieds Group (BCG) 136.40p 4.92%

FTSE 250 - Fallers

JPMorgan Japanese Inv Trust (JFJ) 455.00p -1.52%
Baillie Gifford Japan Trust (BGFD) 725.00p -1.36%
Fidelity China Special Situations (FCSS) 242.00p -1.02%
Alliance Trust (ATST) 958.00p -0.73%
The Renewables Infrastructure Group Limited (TRIG) 142.00p -0.70%
HICL Infrastructure (HICL) 173.00p -0.69%
Darktrace (DARK) 505.60p -0.43%
Templeton Emerging Markets Inv Trust (TEM) 147.20p -0.41%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 499.00p -0.40%
Balanced Commercial Property Trust Limited (BCPT) 100.40p -0.40%