London midday: Stocks gain ahead of US inflation data

(Sharecast News) - London stocks had extended gains by midday on Friday, with Smiths Group pacing the gains on break-up plans, as investors mulled house price data from Nationwide and eyed the latest US inflation reading. The FTSE 100 was up 0.4% at 8,677.81.

Russ Mould, investment director at AJ Bell, said: "The FTSE 100 marked new record highs on Friday morning, taking its cues from solid trading on Wall Street as the recovery from Monday's DeepSeek related volatility continued.

"Defence and energy names were among those giving the UK's flagship index an end-of-week boost.

"Investors will be relieved that the markets have successfully negotiated a week full of major events including a Federal Reserve interest rate meeting and the start of the Magnificent Seven earnings season.

"Later on, there's one more hurdle to get over this week as core PCE inflation data is released in the US. This metric is a big factor in informing the decision making of the Fed so a surprise in either direction could make markets increasingly febrile again."

The PCE figures are due at 1330 GMT.

On home shores, data from Nationwide showed that growth in house prices eased in January.

House prices ticked up 0.1% on the month in January following a 0.7% increase in December 2024, missing expectations for 0.3% growth. On the year, house prices rose 4.1% in January following a 4.7% jump the month before.

The average price of a home was £268,213, down from £269,426.

Nationwide chief economist Robert Gardner said: "The housing market continues to show resilience despite ongoing affordability pressures. As we highlighted in our recent affordability report, while there has been a modest improvement over the last year, affordability remains stretched by historic standards.

"A prospective buyer earning the average UK income and buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 36% of their take-home pay - well above the long-run average of 30%.

"Furthermore, house prices remain high relative to average earnings, with the first-time buyer house price to earnings ratio standing at 5.0 at the end of 2024, still well above the long run average of 3.9. Consequently, the deposit hurdle remains high.

"This is a challenge that has been made worse by the record increase in rents in recent years, which, together with the cost-of-living crisis more generally, has hampered the ability of many in the private rented sector to save."

In equity markets, engineering business Smiths Group surged as it said it was selling its interconnect unit and planned to demerge or offload the detection operation as part of a strategic review that includes extending its share buyback to £500m.

Smiths added that the recent cyber attack was limited to internal enterprise systems, and it had "made good progress in the recovery of these, with most critical systems being back online".

Fashion and homeware retailer Next jumped after an upgrade to 'buy' from 'neutral' at UBS, which said the company was at an "inflection point" when it comes to growth and valuation. The target price was lifted to 11,700p from 10,500p.

Moonpig was also a high riser as Berenberg reiterated its 'buy' rating on shares of the online greeting cards and gift retailer.

On the downside, Sainsbury's fell after a downgrade to 'hold' by HSBC, while Admiral dipped after a downgrade to 'reduce' by Peel Hunt.

Market Movers

FTSE 100 (UKX) 8,677.81 0.36% FTSE 250 (MCX) 20,895.40 0.43% techMARK (TASX) 4,766.54 0.45%

FTSE 100 - Risers

Smiths Group (SMIN) 2,076.00p 11.31% Next (NXT) 10,020.00p 2.50% St James's Place (STJ) 1,055.00p 2.43% Smurfit Westrock (DI) (SWR) 4,304.00p 1.89% Rolls-Royce Holdings (RR.) 606.00p 1.68% BAE Systems (BA.) 1,228.50p 1.65% Entain (ENT) 711.20p 1.51% Mondi (MNDI) 1,249.50p 1.34% Scottish Mortgage Inv Trust (SMT) 1,084.50p 1.17% JD Sports Fashion (JD.) 88.18p 1.15%

FTSE 100 - Fallers

Smith (DS) (SMDS) 579.00p -1.61% Fresnillo (FRES) 702.50p -1.40% Sainsbury (J) (SBRY) 254.60p -1.39% SEGRO (SGRO) 713.60p -1.08% Haleon (HLN) 372.20p -0.93% Prudential (PRU) 683.00p -0.84% Games Workshop Group (GAW) 14,510.00p -0.75% Convatec Group (CTEC) 247.80p -0.64% BT Group (BT.A) 142.80p -0.59% Whitbread (WTB) 2,833.00p -0.56%

FTSE 250 - Risers

Bridgepoint Group (Reg S) (BPT) 378.40p 5.29% OSB Group (OSB) 419.60p 3.96% Paragon Banking Group (PAG) 793.00p 3.52% Moonpig Group (MOON) 226.00p 3.43% Pennon Group (PNN) 599.00p 3.01% Bakkavor Group (BAKK) 136.00p 2.64% QinetiQ Group (QQ.) 371.00p 2.26% Diversified Energy Company (DEC) 1,344.00p 2.05% Spirent Communications (SPT) 184.40p 1.60% Discoverie Group (DSCV) 651.00p 1.56%

FTSE 250 - Fallers

Future (FUTR) 911.50p -1.62% Syncona Limited NPV (SYNC) 95.40p -1.55% Investec (INVP) 518.50p -1.52% Trainline (TRN) 363.40p -1.25% Hochschild Mining (HOC) 178.20p -0.89% Domino's Pizza Group (DOM) 300.20p -0.86% Vietnam Enterprise Investments (DI) (VEIL) 602.00p -0.82% Victrex plc (VCT) 992.00p -0.80% Johnson Matthey (JMAT) 1,421.00p -0.77% Pantheon International (PIN) 323.50p -0.77%