London stocks higher ahead of key US data, FTSE outperforms major peers

London’s leading share index rose in early trade on Monday, outperforming its European peers, as investors looked ahead to key US inflation figures and a government funding deadline later this week.

The FTSE 100 was up 0.7% at the open, rising more than the CAC 40 in Paris and DAX 30 in Frankfurt. Gains were driven by insurer Phoenix Group and defence giant BAE Systems, while steep losses in IT services firm FDM Group weighed on the mid-cap FTSE 250 index.

After hawkish comments from Federal Reserve officials last week, market participants will be closely monitoring the latest US consumer price inflation data due on Tuesday. The figures could impact expectations for further interest rate hikes, after the Fed signalled a potential pause in its aggressive tightening cycle at its November meeting.

There will also be retail sales numbers on Wednesday, providing more clues about the state of the US economy amid high inflation and rising borrowing costs. The data comes ahead of a December 16 deadline for Congress to pass legislation to avoid a partial government shutdown.

In stock news, Phoenix Group shares jumped over 7% after the insurer raised its cash generation guidance following the completion of a major merger. It now expects £1.8 billion cash generation next year.

Defence company BAE Systems gained 0.3% as it noted strong order flow and sales growth in a trading update. But postal service Royal Mail owner International Distributions Services fell 0.9% on a £5.6 million fine from Ofcom for missing delivery targets.

Mid-cap FDM Group saw its shares plunge 15% as the IT consultant warned of delayed client decisions amid macro uncertainty. But it said 2023 financial performance should remain broadly in line with expectations.