Stocks up; UK grocery price inflation cools

(Alliance News) - Stock prices in London opened higher on Tuesday, after new data showed that UK grocery price inflation eased in January.

The FTSE 100 index opened up 36.35 points, 0.5%, at 7,669.09. The FTSE 250 was up 67.77 points, 0.4%, at 19,378.93, and the AIM All-Share was up 1.40 points, 0.2%, at 751.68.

The Cboe UK 100 was up 0.5% at 765.99, the Cboe UK 250 was up 0.4% at 16,824.78, and the Cboe Small Companies was down 0.9% at 14,790.61.

The economic calendar for this week has the US Federal Reserve announcing its latest interest rate decision on Wednesday at 1900 GMT, followed by the Bank of England on Thursday at 1200 GMT. Both central banks are expected to keep rates on hold.

Before then, investors will be digesting news that shop price inflation in the UK fell in January to its lowest rate since May 2022 as retailers offered heavy discounts to entice customers.

January's shop prices eased to 2.9% higher than a year ago, down from 4.3% in December and below the three-month average of 3.9%, according to the British Retail Consortium-NielsenIQ Shop Price Index.

The BRC said the easing is "good news for the morning brew" as the price of tea and milk fell, while alcohol remained more expensive on the back of increased duties.

Meanwhile, numbers from Kantar showed that UK consumers continued to hunt for deals during their supermarket shopping in January.

Kantar said grocery sales in the 12 weeks to January 21 were up 5.5% at GBP35.85 billion, compared to GBP33.97 billion a year before.

Annual grocery price inflation in January eased slightly to 6.8% from a revised figure of 6.9% in December, which was first estimated at 6.7%.

"There's been a lot of speculation about the impact the Red Sea shipping crisis might have on the cost of goods, but the story in the grocery aisles this January is more about the battle between the supermarkets to offer best value, rather than geopolitics," said Fraser McKevitt, head of retail & consumer insight at Kantar.

Supermarket share prices were mixed on Tuesday, following the data. Tesco lost 0.1%, but Sainsbury's rose 0.4% and Ocado was up 0.1%.

The pound was quoted at USD1.2689 early on Tuesday in London, higher compared to USD1.2675 at the equities close on Monday. The euro stood at USD1.0821, up against USD1.0802. Against the yen, the dollar was trading at JPY147.48, down compared to JPY147.72.

In the FTSE 100, WPP rose 6.6%.

WPP announced its next phase of its strategy to capture the opportunities offered by artificial intelligence, to "maximise the potential of creative transformation and deliver faster growth, higher margins and improved cash generation."

It also said it expects 2023 results to be in line with guidance. They will be released on February 22.

Chief executive Mark Read said: "The past three years have demonstrated the power of brands, creativity and investment in marketing to drive growth for clients and to build significant value. Research demonstrates that those companies with the strongest brands deliver the highest returns to shareholders."

Diageo lost 3.4%, putting it towards the bottom of the FTSE 100 index.

The London-based brewer and distiller with brands such as Guinness and Baileys said sales in the six months ended December 31 fell 2.8% to USD15.18 billion from USD15.61 billion a year earlier. Pretax profit dropped 15% to USD3.08 billion from USD3.61 billion the year before.

However, Diageo upped its dividend by 5.0% to 40.50 US cents from 38.57 cents.

Looking ahead, the company said it expects organic net sales growth rate in the second half to "gradually improve" compared to the growth rate in the first half. "In Europe, Asia Pacific and Africa, we expect continued growth in the second half, recognizing that macroeconomic volatility and consumer uncertainty will likely persist," it added.

In the FTSE 250 index, Auction Technology jumped 13%.

Auction Technology said it has started its financial year in line with expectations, with total revenue up 11% annually to USD43.9 million in the three months ended December 31. The London-based online auction operator said that growth has been "driven by the continued strong growth in value-added services offsetting the wider market dynamics in gross merchandise value."

Germany's Delivery Hero lost 6.2% in Frankfurt.

On late Tuesday said it sold its entire 4.5% stake in UK food delivery peer Deliveroo, raising GBP76.8 million.

The Berlin-based delivery platform said about 68 million Deliveroo shares were placed with institutional investors at GBP1.13 per share. Deliveroo shares fell 5.5% to 115.20p.

Delivery Hero said it has no remaining Deliveroo shares, adding the disposal shows its "commitment to disciplined capital allocation".

In European equities on Tuesday, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was up 0.1%.

In Asia on Tuesday, the Nikkei 225 index in Tokyo closed up 0.1%. In China, the Shanghai Composite closed up 1.8%, while the Hang Seng index in Hong Kong was down 2.3%. The S&P/ASX 200 in Sydney closed up 0.3%.

In the US on Monday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.6%, the S&P 500 up 0.8% and the Nasdaq Composite up 1.1%

Brent oil was quoted at USD81.59 a barrel early in London on Tuesday, down from USD82.01 late Monday. Gold was quoted at USD2,037.20 an ounce, higher against USD2,026.77.

Still to come on Tuesday's economic calendar, there is GDP data from the eurozone at 1000 GMT, as well as consumer confidence and economic sentiment data.

Across the pond, there is US house price index and consumer confidence data.

By Sophie Rose, Alliance News senior reporter

Comments and questions to [e-mail]

Copyright 2024 Alliance News Ltd. All Rights Reserved.