London open: Stocks rally as inflation print cements rate cut expectations

London stocks racked up strong gains in early trade on Wednesday as the latest UK inflation data cemented expectations of a rate cut from the Bank of England this week.

At 0825 GMT, the FTSE 100 was up 0.8% at 9,759.62, while sterling was down 0.7% against the dollar at 1.3327.

Figures released earlier by the Office for National Statistics showed inflation fell by more than expected in November, to the lowest level for eight months.

The consumer prices index rose by 3.2% in the 12 months to November, down from 3.6% in October. Consensus had been for 3.5%.

The Bank of England will announce its latest decision on interest rates on Thursday, and the fall will further bolster arguments for a cut. Should that be the case, it would be the fourth this year. However, inflation still remains above the BoE’s long-term 2% target.

Food and non-alcoholic beverages - which normally rise at this time of the year - made the largest downward contributions to inflation in November, the ONS said. Prices rose by 4.2%, down from 4.9% in October.

The biggest downward effects were seen in the prices of cakes, biscuits and breakfast cereals. Softer prices in dairy products and sugar - including jams and confectionary - also contributed.

Grant Fitzner, chief economist at the ONS, added: "The increase in the cost of goods leaving factories slowed, driven by lower food inflation, while the annual cost of raw materials for businesses continued to rise."

Core inflation, which strips out the more volatile elements of energy, food, alcohol and tobacco, fell to 3.2% from 3.4%.

Adam Deasy, economist at PwC, said: "After keeping rates on hold in November, a few factors point to the Bank being able to cut on Thursday.

"The Autumn Budget included several measures that will mechanically reduce inflation going forward, such as rail fare and prescription charge freezes. Together with today’s significantly softer CPI print and an uptick in the unemployment rate on Tuesday, the pain point for the UK economy may now be weakening demand rather than higher prices. At risk of counting our turkeys before they have hatched, 2026 could mark the long-awaited return to low and stable inflation."

In equity markets, Bunzl slumped as it backed its 2025 profit guidance despite "the ongoing macroeconomic challenges" in its key end markets. It also said group revenue for the year was expected to grow between 2% and 3%, at constant exchange rates, and to be broadly flat at actual exchange rates.

Admiral and M&G were both weaker after a downgrade to ‘neutral’ at UBS, but Phoenix Group rose after an upgrade to ‘buy’ by the same outfit.

HSBC was among the top risers following an upgrade to ‘outperform’ at KBW.

International Personal Finance surged as it said the deadline for takeover talks with BasePoint Capital has been extended.

Transact owner IntegraFin advanced as it posted a jump in full-year profit, hailing record gross inflows and a "substantial" increase in net inflows.

Government contractor Serco rallied as it lifted financial guidance on the back of contract wins, and announced the appointment of Proximus chief financial officer Mark Reid to the same role, succeeding Nigel Crossley.

Market Movers

FTSE 100 (UKX) 9,759.62 0.77%
FTSE 250 (MCX) 22,121.10 0.36%
techMARK (TASX) 5,541.54 0.20%

FTSE 100 - Risers

Fresnillo (FRES) 3,000.00p 2.60%
HSBC Holdings (HSBA) 1,139.40p 2.48%
Standard Chartered (STAN) 1,788.00p 1.94%
BP (BP.) 430.55p 1.91%
Phoenix Group Holdings (PHNX) 708.50p 1.80%
Anglo American (AAL) 2,887.00p 1.73%
Shell (SHEL) 2,669.00p 1.62%
Persimmon (PSN) 1,326.50p 1.61%
Barratt Redrow (BTRW) 367.40p 1.58%
Glencore (GLEN) 379.15p 1.57%

FTSE 100 - Fallers

Bunzl (BNZL) 2,116.00p -4.68%
Admiral Group (ADM) 3,096.00p -1.46%
Associated British Foods (ABF) 2,093.00p -1.18%
Diageo (DGE) 1,671.50p -0.65%
CRH (CDI) (CRH) 9,428.00p -0.63%
Croda International (CRDA) 2,752.00p -0.36%
Diploma (DPLM) 5,350.00p -0.28%
WPP (WPP) 333.00p -0.27%
3i Group (III) 3,202.00p -0.25%
M&G (MNG) 277.50p -0.22%

FTSE 250 - Risers

International Personal Finance (IPF) 220.00p 6.28%
IntegraFin Holding (IHP) 350.00p 3.55%
JPMorgan Emerging Markets Growth & Income (JMGI) 135.40p 2.42%
Serco Group (SRP) 258.00p 2.30%
Allianz Technology Trust (ATT) 525.00p 2.14%
Savills (SVS) 1,028.00p 1.98%
Future (FUTR) 536.50p 1.80%
Ibstock (IBST) 137.00p 1.78%
Close Brothers Group (CBG) 475.00p 1.76%
Polar Capital Technology Trust (PCT) 458.00p 1.66%

FTSE 250 - Fallers

Dr. Martens (DOCS) 76.10p -2.81%
Ceres Power Holdings (CWR) 228.00p -2.65%
Trustpilot Group (TRST) 158.00p -2.05%
Foresight Group Holdings Limited NPV (FSG) 407.00p -1.69%
Barr (A.G.) (BAG) 624.00p -1.58%
Wizz Air Holdings (WIZZ) 1,232.00p -1.28%
TBC Bank Group (TBCG) 4,020.00p -1.11%
Carnival (CCL) 1,961.00p -0.86%
Victrex plc (VCT) 642.00p -0.77%
Domino's Pizza Group (DOM) 172.80p -0.75%