It was a positive start to the day for London stocks on Wednesday, with the FTSE 100 holding up by lunchtime as easing UK inflation reinforced expectations of a Bank of England interest rate cut.
By mid-day, the FTSE 100 index was up 1.6%, the FTSE 250 gained 1.0%, and the AIM All-Share rose 0.5%.
Investors are also watching Thursday’s central bank decisions, with the BoE widely expected to cut rates while the European Central Bank is anticipated to hold policy steady.
UK inflation data added to the upbeat sentiment. The Office for National Statistics reported that the CPIH, which includes owner occupiers’ housing costs, rose 3.5% year-on-year in November, down from 3.8% in October. Food and non-alcoholic beverage prices slowed to 4.2% annual growth from 4.9% previously. Month-on-month, CPIH fell 0.1%, compared with a 0.2% rise last year.
Headline CPI also eased to 3.2% year-on-year, down from 3.6% in October and slightly below analyst expectations of 3.5%.
Phoenix Group led the FTSE 100 higher, up 4.1%, after UBS upgraded the insurer to ‘buy’ from ‘neutral’ and lifted its price target to 770p from 670p. Bunzl was the biggest laggard, down 3.1%, after reiterating its 2025 outlook amid ongoing macroeconomic challenges.
On the FTSE 250, Serco jumped 5.5% following an upgrade to its underlying operating profit guidance and the announcement of a new CFO starting in March. The firm now expects £270 million for 2025, up from £260 million, and issued initial guidance for 2026 of £300 million.
Greencore and Bakkavor gained 2.4% and 1.5% respectively, after Greencore confirmed its £1.2 billion acquisition of Bakkavor will complete in January following CMA approval.
Elsewhere, Synectics fell 18%, despite solid demand and visibility on its new business pipeline. Its order book at November 30 stood at £26.5 million, down from £38.5 million a year earlier, while it expects adjusted pretax profit of at least £6.0 million on revenue around £68 million.
In the US, stocks opened mixed. The Dow Jones Industrial Average added 0.4%, while the S&P 500 slipped 0.1% and the Nasdaq fell 0.3%. Tech stocks were hit again by AI-related trade worries after a Financial Times report said Oracle’s $10 billion data centre project lost backing from private lender Blue Owl Capital. Oracle shares fell around 4%.