London pre-open: Stocks to rise as UK CPI jumps past BoE target

20th Nov 2024 07:31

(Sharecast News) - London stocks were set to rise at the open on Wednesday as investors mulled the latest UK inflation reading and looked ahead to earnings from US tech giant Nvidia.

The FTSE 100 was called to open around 20 points higher.

Data released earlier by the Office for National Statistics showed that the consumer price index rose at an annual rate of 2.3% in October, up from 1.7% in September and above the 2.2% expected by economists.

This was also above the Bank of England's 2% target, and was put down to higher electricity and gas prices.

ONS chief economist Grant Fitzner said: "Inflation rose this month as the increase in the energy price cap meant higher costs for gas and electricity compared with a fall at the same time last year."

Ruth Gregory, deputy chief UK economist at Capital Economist, said October's "surprisingly large rebound" in CPI won't stop the Bank of England from cutting interest rates further.

"But it lends some support our view that the Bank will skip the December meeting and cut rates only gradually, by 25 basis points in February and at every other policy meeting until rates reach 3.50% in early 2026," she added.

In corporate news, Sage Group reported a 9% increase in full-year underlying total revenue to £2.33bn, driven by strong subscription-based recurring revenue growth.

The FTSE 100 firm said underlying operating profit rose 21% to £529m, supported by disciplined cost management, while free cash flow surged 30% to £524m, enabling a £400m share buyback and a 6% increase in the full-year dividend.

It noted an 11% rise in annualised recurring revenue, strong adoption of the Sage Business Cloud product, and advancements in AI-powered solutions like Sage Copilot, positioning it for continued growth.

Homewares retailer Dunelm said it had bought Irish soft furnishing chain Homefocus for an undisclosed sum.

Homefocus trades under the 'Home Focus at Hickeys' brand, with 13 physical stores across Ireland and an online operation.