London open: Stocks gain; Rentokil surges on update

(Sharecast News) - London stocks rose in early trade on Tuesday, having avoided the broader selloff seen in markets a day earlier. At 0850 GMT, the FTSE 100 was up 0.3% at 8,531.31.

On Monday, the Nasdaq and the S&P 500 closed down 3.1% and 1.5%, respectively, led by a selloff in the tech sector amid concerns about Chinese AI app DeepSeek.

Derren Nathan, head of equity research at Hargreaves Lansdown, said: "The FTSE 100 looks set to up a small gain this morning after holding its head above water yesterday amidst a sea of red for tech stocks around the world.

"Defensive sectors had the best of it including non-cyclical consumer stocks such as Unilever and British American Tobacco, as well as the bigger pharmaceutical names. The same sectors were also in the green across the Atlantic, meaning those portfolios with broader exposure are likely to have smoothed out the market's most recent gyrations.

"Companies in the semiconductor industry have borne the brunt of the sell-off as the emergence of a new AI model from Chinese startup DeepSeek, reportedly developed on a shoestring budget of under $6m, raised concerns about the outlook for spending on cloud infrastructure. The authenticity of this figure has been widely contested.

"Nonetheless, Wall Street's darling Nvidia has lost its briefly held crown as the world's most valuable company, diving 17% and losing $600bn of market value along the way, the biggest ever loss for a stock in a single day.

"Other big semiconductor names caught in the crossfire include custom chip designer Broadcom and memory specialist Micron. Outside of the US, stocks that have taken a hit range from Taiwan Semiconductor Manufacturing Company through to the Dutch builder of chip printing machines ASML."

On home shores, investors were mulling the latest data from the British Retail Consortium, which showed that prices at tills decreased in January as retailers offered "deep discounts" on things like furniture and fashion.

Still, upcoming increases to labour-market bills could reignite inflationary pressures in the spring.

According to the BRC-NeilsenIQ shop price index for January, shop prices fell 0.4% month-on-month following a flat reading in December.

While food prices rose 0.5%, up from 0.1% the month before, non-food prices reduced by 0.9% after a 0.1% decline previously.

This meant that shop prices were 0.7% lower than they were in January 2024, following a 1.0% year-on-year fall in December.

The annual rate of food inflation, in particular, eased to 1.6% from 1.8%, coming in at its lowest rate since November 2021.

"Extensive January sales was good news for bargain hunters, with non-food products showing significant discounts, particularly for furniture and fashion, but less good news for retailers needing to shift excess stock," said the BRC's chief executive Helen Dickinson.

"Price cuts and deflation may not last much longer as retailers will soon feel the full impact of £7bn of new costs announced at the last Budget. Higher employer NICs, increased National Living Wage, and a new packaging levy mean that prices are expected to rise across the board," she said.

In equity markets, Rentokil Initial was the top gainer on the FTSE 100 as the pest control firm said it expects to meet expectations with its 2024 results, helped by a pick-up in organic growth in North America.

SSP Group was also in the black as the travel food outlet operator held annual guidance after like-for-like sales grew 6% in the first quarter driven by continued structural growth across the travel industry around the world.

Computacenter rose as it hailed a record second-half performance but also said pre-tax profit for 2024 was set to be at the low end of the range of analysts' forecasts.

Irn-Bru maker AG Barr was also higher after a well-received trading update.

Pets at Home was up as it backed its full-year guidance but reported a dip in third-quarter revenue as it pointed to a softer performance from its retail business.

Outside the FTSE 350, Halfords surged as it lifted its full-year profits expectations.

On the downside, industrial and electrical products distributor RS Group slumped as it said full-year profit would be at the bottom end of guidance after third-quarter revenues fell 3% due to declining output and falling business confidence among European customers.

SThree fell as the recruiter said that the challenging economic conditions, impacting new business activity, are expected to persist throughout FY25.

Market Movers

FTSE 100 (UKX) 8,531.31 0.32% FTSE 250 (MCX) 20,440.66 0.35% techMARK (TASX) 4,751.96 0.80%

FTSE 100 - Risers

Rentokil Initial (RTO) 401.10p 3.67% Kingfisher (KGF) 245.00p 2.77% Spirax Group (SPX) 7,875.00p 2.61% National Grid (NG.) 981.00p 2.06% Halma (HLMA) 2,895.00p 1.97% Smith & Nephew (SN.) 1,030.00p 1.83% Associated British Foods (ABF) 1,900.00p 1.63% Experian (EXPN) 3,884.00p 1.60% Haleon (HLN) 380.80p 1.52% SSE (SSE) 1,587.00p 1.47%

FTSE 100 - Fallers

Smiths Group (SMIN) 1,856.00p -1.43% Rolls-Royce Holdings (RR.) 582.00p -1.32% International Consolidated Airlines Group SA (CDI) (IAG) 318.60p -1.30% Smurfit Westrock (DI) (SWR) 4,382.00p -1.15% Melrose Industries (MRO) 589.80p -1.11% Mondi (MNDI) 1,210.00p -1.10% Standard Chartered (STAN) 1,054.50p -1.08% Fresnillo (FRES) 665.00p -0.97% Anglo American (AAL) 2,355.50p -0.95% Barclays (BARC) 285.75p -0.92%

FTSE 250 - Risers

SSP Group (SSPG) 182.60p 6.53% Computacenter (CCC) 2,190.00p 3.69% WH Smith (SMWH) 1,186.00p 3.40% Barr (A.G.) (BAG) 600.00p 2.92% Pets at Home Group (PETS) 216.20p 2.76% Oxford Nanopore Technologies (ONT) 140.30p 2.26% Harworth Group (HWG) 168.50p 2.12% Tate & Lyle (TATE) 659.50p 2.09% C&C Group (CDI) (CCR) 147.20p 2.08% Wetherspoon (J.D.) (JDW) 628.00p 2.03%

FTSE 250 - Fallers

RS Group (RS1) 632.00p -6.09% SThree (STEM) 270.50p -5.09% Ferrexpo (FXPO) 102.20p -3.22% Dr. Martens (DOCS) 69.60p -2.38% Softcat (SCT) 1,488.00p -2.23% Wood Group (John) (WG.) 65.75p -2.01% Quilter (QLT) 155.20p -1.46% Rathbones Group (RAT) 1,648.00p -1.32% Hochschild Mining (HOC) 169.80p -1.28% Ithaca Energy (ITH) 125.80p -1.10%