London open: Stocks gain as miners rally; borrowing data in focus

(Sharecast News) - London stocks nudged higher in early trade on Tuesday following another record close on Wall Street, as investors mulled better-than-expected UK borrowing figures. At 0845 GMT, the FTSE 100 was up 0.1% at 7,497.65.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Positive sentiment appears to be clinging on, following continued optimism emanating from Wall Street about the prospects for a softer landing for the US economy as interest rate cuts are eyed up in the Spring.

"Although hopes for super-early rate cuts have dissipated there are still expectations that with inflation heading in the right direction in the US, policymakers will go easier. The S&P 500 crept even higher to fresh new levels, and the expectations are that this will support a slightly higher open again in Europe.

"The fresh wave of military action involving UK and US forces in Yemen, has sent oil prices higher, amid concerns of the potential of tensions escalating in the Middle East, disrupting supply."

On the macro front, figures released earlier by the Office for National Statistics showed the government borrowed much less than expected last month.

Public sector borrowing, excluding banks, rose £7.8bn in December, which was below the £14.1bn economists were expecting.

It was also £8.4bn below the amount borrowed a year earlier and marked the lowest borrowing for the month of December since 2019.

For the nine months to December, total public sector net borrowing came in at £119.1bn, which was £5bn below the £124.1bn forecast by the Office for Budget Responsibility.

Ruth Gregory, deputy chief UK economist at Capital Economics, said: "After nine months of the 2023/24 fiscal year, borrowing is on track to undershoot the OBR's full-year borrowing forecast of £123.9bn by £5.0bn.

"What's more, with market interest rate expectations and long-dated gilt yields having fallen since November, we suspect the OBR will revise down its borrowing forecast significantly from 2025/26.

"That may provide the Chancellor with 'headroom' against his fiscal mandate of about £20bn in the Budget. That will probably allow him to unveil a freeze in fuel duty in April 2024 (costing about £6.0bn a year) but perhaps also to announce more crowd-pleasing measures, such as a 1p cut to income tax (costing £6.9bn a year), while still maintaining fiscally prudent appearances."

In equity markets, heavily-weighted mining shares were up following a report that Chinese authorities are considering a package of measures aimed at stabilising the stock markets. According to Bloomberg, policymakers are looking to mobilise about 2 trillion yuan, mainly from the offshore accounts of Chinese state-owned enterprises, as part of a stabilisation fund to buy shares onshore through the Hong Kong exchange link.

Asia-focused Prudential also rose.

Associated British Foods advanced as it said sales at clothing retailer Primark grew 2.1% on a like-for-like basis over the Christmas period despite warmer weather. ABF also said it does not expect supply disruptions from attacks on commercial shipping in the Red Sea.

Mr Kipling and Bisto owner Premier Foods was a smidgen firmer after saying it was on track to hit profit forecasts this year following a solid third quarter with double-digit sales growth across the group.

Crest Nicholson was flat as the housebuilder posted a bigger-than-expected fall in annual profits but said it was encouraged by an increase in customer inquiries as borrowing costs fell.

In broker note action, Royal Mail parent IDS gained after an upgrade to 'buy' at HSBC.

Market Movers

FTSE 100 (UKX) 7,497.65 0.13% FTSE 250 (MCX) 19,086.53 0.06% techMARK (TASX) 4,351.84 0.18%

FTSE 100 - Risers

Anglo American (AAL) 1,793.80p 2.43% Smurfit Kappa Group (CDI) (SKG) 2,944.00p 2.22% Rio Tinto (RIO) 5,387.00p 1.87% Fresnillo (FRES) 486.20p 1.76% Prudential (PRU) 808.80p 1.56% Ocado Group (OCDO) 570.20p 1.53% Spirax-Sarco Engineering (SPX) 9,870.00p 1.50% Antofagasta (ANTO) 1,580.50p 1.35% BP (BP.) 451.70p 1.27% Associated British Foods (ABF) 2,296.00p 1.23%

FTSE 100 - Fallers

Compass Group (CPG) 2,140.00p -1.15% InterContinental Hotels Group (IHG) 7,414.00p -1.01% Whitbread (WTB) 3,525.00p -0.87% Diageo (DGE) 2,683.50p -0.63% Unite Group (UTG) 1,001.00p -0.60% Rolls-Royce Holdings (RR.) 307.10p -0.58% Pershing Square Holdings Ltd NPV (PSH) 3,700.00p -0.54% British American Tobacco (BATS) 2,322.00p -0.54% Pearson (PSON) 961.00p -0.46% SEGRO (SGRO) 845.40p -0.45%

FTSE 250 - Risers

International Distributions Services (IDS) 263.00p 3.42% Harbour Energy (HBR) 296.10p 3.13% Redde Northgate (REDD) 354.50p 3.05% Ruffer Investment Company Ltd Red PTG Pref Shares (RICA) 272.50p 3.02% Mobico Group (MCG) 88.95p 3.01% QinetiQ Group (QQ.) 348.60p 2.89% Indivior (INDV) 1,308.00p 2.59% Discoverie Group (DSCV) 759.00p 2.43% Trustpilot Group (TRST) 173.90p 2.23% Crest Nicholson Holdings (CRST) 209.00p 2.05%

FTSE 250 - Fallers

Carnival (CCL) 1,161.00p -4.05% Wood Group (John) (WG.) 171.80p -2.61% Rotork (ROR) 309.60p -2.27% FirstGroup (FGP) 164.30p -1.97% Quilter (QLT) 97.00p -1.62% Mitchells & Butlers (MAB) 265.60p -1.48% Investec (INVP) 515.40p -1.26% NB Private Equity Partners Ltd. (NBPE) 1,624.00p -1.22% Hochschild Mining (HOC) 85.75p -1.21% Smithson Investment Trust (SSON) 1,377.00p -1.15%