London open: FTSE gains as gold miners shine; BoE eyed

London stocks rose in early trade on Monday, underpinned by a strong showing from gold miners, at the start of a week that will see the release of UK jobs data, inflation figures and the latest Bank of England policy announcement.

At 0825 GMT, the FTSE 100 was 0.5% higher at 9,695.20.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: "UK markets have a clear focal point this week, with the Bank of England in the spotlight and a rate cut on Thursday widely seen as a done deal.

"Markets are pricing in around a 90% chance of a move, so, absent any shocks, the decision itself matters less than the Bank’s tone. Beyond domestic policy, UK assets will also take cues from the flood of delayed US economic data, making this a week where macro forces are firmly in the driving seat.

"US markets are trying to find their feet, with futures pointing to a firmer open as dip-buyers step back in, hopeful that a Santa rally can still materialise after Friday marked the S&P 500’s worst session since 20 November. Attention now shifts to a heavy week of economic data, with a backlog of delayed releases finally hitting the tape following the government shutdown.

"The spotlight is firmly on Tuesday’s jobs report and Thursday’s inflation print, both of which could sway expectations for when, and how fast, interest rates might come down. Markets are tentatively pencilling in two cuts next year, but we know from history that these predictions can easily change."

Central bank policy announcements are also due on Thursday from the European Central Bank, Riksbank, and Norges Bank.

Investors were mulling Nationwide’s house price review and outlook for 2026, in which the building society said it expects house prices to grow between 2% and 4% next year.

Nationwide chief economist Robert Gardner said: "Looking ahead, we expect housing market activity to strengthen a little further as affordability improves gradually (as it has been in recent quarters) via income growth outpacing house price growth and a further modest decline in interest rates. We expect annual house price growth to remain broadly in the 2 to 4% range next year.

"The changes to property taxes announced in the Budget are unlikely to have a significant impact on the market. The high value council tax surcharge is not being introduced until April 2028 and will apply to less than 1% of properties in England and around 3% in London. The increase in taxes on income from properties may dampen buy-to-let activity further and hold down the supply of new rental properties coming onto the market, which could in turn maintain some upward pressure on private rental growth."

In equity markets, precious metals miner Fresnillo and gold miners Hochschild and Endeavour all shone as gold prices rose.

Britzman said: "Gold continues to sparkle, hovering just shy of record highs as investors wait on a packed slate of US economic data for fresh clues on the Federal Reserve’s next move.

"The precious metal is up more than 60% this year, on track for its strongest annual performance since 1979, fuelled by strong central‑bank buying, safe‑haven demand and a sweet spot of cooling US rates alongside inflation that’s expected to stay higher for longer."

Hikma Pharmaceuticals fell as it said its chief executive has stepped down just over a month after the blue chip warned on profits. Riad Mishlawi - who has been with the business for 35 years, the last two of which as chief executive - is leaving by mutual agreement.

He will be replaced by former incumbent and current executive chair Said Darwazah.

Retailers were in focus after Jefferies adjusted its ratings on a host of UK stocks, having updated its consumer disposable spend forecasts for 26/27.

The bank said the update shows a potential mismatch developing between consensus like-for-like sales and a more muted spending environment.

"This more cautious view prevents us arguing for further multiples expansion at Tesco/Next after their justifiable year-to-date rerating," it said.

Jefferies downgraded both Tesco and Next to ‘hold’ from ‘buy’ but lifted the price targets to 450p from 440p and to 1,400p from 1,300p, respectively. Sainsbury’s was kept at ‘hold’ but its price target increased to 330p from 300p.

Associated British Foods slumped after Jefferies said it sees "more pressing concerns", with Primark's challenges likely to continue. As a result, it downgraded the shares to ‘underperform’ from ‘hold’ and cut the price target to 1,800p from 2,000p.

Marks & Spencer remained the bank’s key pick, rated at ‘buy’, although it cut the price target to 400p from 440p.

Elsewhere, Smith & Nephew was a touch weaker after a downgrade to ‘sector perform’ from ‘outperform’ at RBC Capital Markets.