London open: FTSE gains as inflation reading boosts rate cut hopes

(Sharecast News) - London stocks rose in early trade on Wednesday as the latest UK inflation reading added weight to expectations of a March rate cut.

At 0820 GMT, the FTSE 100 was up 0.4% at 10,594.82.

Figures released earlier by the Office for National Statistics showed that inflation fell to its lowest level in nearly a year in January.

The consumer price index declined to 3% from 3.4% in December, coming in as expected and marking the lowest rate of annual inflation since March 2025.

Food and non-alcoholic beverages prices rose 3.6% in January, down from 4.5% in the 12 months to December 2025, while services inflation fell to 4.4% from 4.5%.

Core inflation - which excludes energy food, alcohol and tobacco - rose 3.1% in the 12 months to January, down from 3.2% in December and the lowest rate since September 2021, when it was 2.9%.

ONS chief economist Grant Fitzner said: "The cost of raw materials for businesses fell over the past year, driven by lower crude oil prices, while the increase in the cost of goods leaving factories slowed."

Fitzner added: "Airfares were another downward driver this month with prices dropping back following the increase in December. Lower food prices also helped push the rate down, particularly for bread and cereals and meat. These were partially offset by the cost of hotel stays and takeaways."

Martin Sartorius, lead economist at the Confederation of British Industry, said: "January's slowdown in inflation, alongside cooling labour market conditions, increases the likelihood that the Monetary Policy Committee will cut rates again over the next couple of months.

"Beyond then, the scope for further Bank Rate reductions will become more limited, as the Committee looks to ensure that inflation returns sustainably to the 2% target."

In equity markets, weapons maker BAE Systems shot to the top of the FTSE 100 after it reported a better-than-expected rise in annual profits as it cashed in on higher government defence spending amid rising geopolitical tensions.

The company said full-year underlying operating profit jumped 12% to £3.32bn, beating expectations of a 9% to 11% increase, with its order backlog hitting a record £83.6bn.

Mining giant Glencore rallied as its full-year earnings declined less than expected.

Miners more generally were in the black amid higher copper prices, with Antofagasta, Anglo American and Rio Tinto all higher.

Car dealership Inchcape got a boost after JPMorgan placed the shares on 'positive catalyst watch' and hiked the price target on the neutral-rated stock to 880p from 800p.

Market Movers

FTSE 100 (UKX) 10,594.82 0.37%

FTSE 250 (MCX) 23,587.24 0.13%

techMARK (TASX) 6,141.56 0.63%

FTSE 100 - Risers

BAE Systems (BA.) 2,133.00p 5.13%

Glencore (GLEN) 499.65p 2.81%

Fresnillo (FRES) 3,836.00p 2.73%

Airtel Africa (AAF) 355.80p 2.65%

Antofagasta (ANTO) 3,679.00p 1.71%

Babcock International Group (BAB) 1,373.00p 1.63%

Anglo American (AAL) 3,554.00p 1.57%

Rio Tinto (RIO) 7,199.00p 1.17%

Rolls-Royce Holdings (RR.) 1,310.00p 1.00%

Compass Group (CPG) 2,130.00p 0.90%

FTSE 100 - Fallers

Flutter Entertainment (DI) (FLTR) 9,020.00p -2.08%

DCC (CDI) (DCC) 5,135.00p -1.82%

Relx plc (REL) 2,185.00p -1.80%

Entain (ENT) 570.00p -1.14%

3i Group (III) 3,393.00p -1.08%

Diageo (DGE) 1,777.00p -1.06%

London Stock Exchange Group (LSEG) 7,514.00p -0.77%

Bunzl (BNZL) 2,104.00p -0.75%

National Grid (NG.) 1,366.50p -0.73%

Unilever (ULVR) 5,375.00p -0.70%

FTSE 250 - Risers

Savills (SVS) 1,012.00p 3.05%

Inchcape (INCH) 861.00p 2.87%

Senior (SNR) 260.00p 2.77%

AO World (AO.) 102.00p 2.72%

Oxford Instruments (OXIG) 2,680.00p 2.68%

Raspberry PI Holdings (RPI) 426.00p 2.65%

Foresight Group Holdings Limited NPV (FSG) 420.00p 2.44%

Hochschild Mining (HOC) 699.50p 2.42%

Johnson Service Group (JSG) 150.40p 2.31%

Drax Group (DRX) 894.00p 2.17%

FTSE 250 - Fallers

HGCapital Trust (HGT) 461.50p -2.22%

Morgan Advanced Materials (MGAM) 234.50p -2.09%

AEP Plantations (AEP) 1,470.00p -2.00%

Victrex plc (VCT) 690.00p -1.85%

TR Property Inv Trust (TRY) 345.00p -1.57%

Travis Perkins (TPK) 691.00p -1.29%

Fidelity China Special Situations (FCSS) 316.00p -1.25%

Ocado Group (OCDO) 220.80p -1.12%

JPMorgan Japanese Inv Trust (JFJ) 797.00p -1.12%

Vistry Group (VTY) 713.60p -1.00%