Share prices opened higher on Wednesday, amid a series of broker rating upgrades, as the market shrugged off another record high UK inflation reading ahead of the 'spring statement' by Chancellor Rishi Sunak.
The FTSE 100 index was up 24.84 points, or 0.3%, at 7,501.56 early Wednesday. The mid-cap FTSE 250 index was up 2.47 points at 21,115.07. The AIM All-Share index was down 2.14 points, or 0.2%, at 1,035.44.
The Cboe UK 100 index was up 0.5% at 745.91. The Cboe 250 was up 0.1% at 18,647.74. The Cboe Small Companies was down 0.3% at 15,069.31.
In mainland Europe, the CAC 40 stock index in Paris was up 0.2%, while the DAX 40 in Frankfurt was 0.1% higher.
In the FTSE 100, BP was the best performer, up 3.0%, after Morgan Stanley raised the oil major to 'overweight' from 'equal-weight'.
Diageo was up 1.5% after Keppler Cheuvreux upgraded the distiller and brewer to 'buy' from 'hold'.
Halma was up 1.0%. The hazard detection and life protection firm said it expects annual adjusted pretax profit to be in line with forecasts.
Halma said it has made good progress so far in the second half of the financial year ending March 31. It said it continues to benefit from a diverse portfolio and long-term growth drivers.
Halma anticipates adjusted pretax profit for the year to be in line with market consensus expectations. Further, it expects to deliver a sequential improvement in revenue in the second half of the year and substantial revenue growth in the year as a whole.
Reckitt Benckiser was the worst large-cap performer in London, down 3.0%, after Jefferies downgraded the household goods maker to 'underperform' from 'hold'.
In the FTSE 250, Watches of Switzerland was the best performer, up 2.3%, after Societe Generale started coverage on the Rolex dealer with a 'buy' rating.
Elsewhere in London, Pendragon was down 5.5%, even as the car dealer reported positive annual results.
For 2021, it posted a pretax profit of £61.5 million, swinging from a £24.7 million loss in 2020, on revenue of £3.45 billion, up 18% from £2.92 billion in 2020. Pendragon said it delivered record underlying pretax profit of £83.0 million, multiplied from £8.2 million in 2020.
Pendragon declared no dividend for 2021 but cut its net debt in half. It said underlying profit in January and February are ahead of the same months last year, despite continued supply chain constraints.
In Asia on Wednesday, the Japanese Nikkei 225 index closed up 3.0%. In China, the Shanghai Composite ended up 0.3%, while the Hang Seng index in Hong Kong gained 1.3%. The S&P/ASX 200 in Sydney closed up 0.5%.
The pound was quoted at $1.3261 early Wednesday, up from $1.3255 at the London equities close Tuesday, ahead of the UK spring statement at around 1230 GMT.
The UK annual inflation figure hit its highest level since March 1992 as the country grapples with a cost of living crisis, data from the Office for National Statistics showed on Wednesday.
On an annual basis, the UK consumer price index rose by 6.2% in February, accelerating sharply from a 5.5% rise in January. The reading was higher than the market forecast, cited by FXStreet, of 5.9%.
‘UK inflation is set to peak a little above 8% in April as higher petrol prices combine with the dramatic increase in the electricity/gas price cap. The situation later this year is looking less worrisome than it was a few weeks ago given the pullback in gas prices, but inflation is still likely to end the year above 6%,’ said analysts at ING.
The annual inflation rate remains well above the Bank of England's 2.0% target, as UK Chancellor of the Exchequer Sunak faces increasing pressure to take action over the country's cost of living squeeze.
The chancellor will present the latest updates from the Office for Budget Responsibility on the state of the UK economy and public finances as part of the spring statement later on Wednesday. He is set to unveil new plans to help struggling households as he is set to vow to ‘stand by’ British families amid the deepening cost of living crisis.
Sunak will be forced to address a crisis at home - with Labour dubbing him the ‘high-tax chancellor’ and the Federation of Small Businesses urging him to provide more help. It has been suggested Sunak may look to ease the burden on the taxpayer by cutting fuel duty and raising the income threshold at which people begin to pay national insurance.
‘Yesterday's monthly public finance figures certainly suggested some scope for additional public spending,’ commented Daiwa Capital Markets Europe.
‘Indeed, despite coming in a little higher than expected in February, as public spending on debt interest continued to rise due to high inflation, public sector net borrowing was still on track to come in some £26 billion lower in the current fiscal year than the OBR previously expected.’
UK public sector net borrowing - excluding public sector banks - was £13.1 billion in February. This was an improvement from £15.5 billion posted in February of 2021.
The ONS on Tuesday said last month's figure represented the second-highest February borrowing since monthly records began in 1993. Though £2.4 billion less than in February last year, it still was £12.8 billion more than in February 2020, before the coronavirus pandemic. Borrowing in February 2020 was £300 million.
The euro stood at $1.1025 early Wednesday in London, firm on $1.1014. Against the yen, the dollar was trading at JP¥121.03, higher against JP¥120.55 late Tuesday in London.
Brent oil was quoted at $116.41 a barrel Wednesday morning, up from $115.05 a barrel late Tuesday. Gold stood at $1,919.80 an ounce, slightly lower against $1,922.93.
In the economic calendar, eurozone consumer confidence is at 1500 GMT.
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