Interactive Investor

FTSE 100 round-up: inflation, Persimmon, Rolls-Royce and Coca-Cola HBC

An inflation surprise fired up FTSE 100 interest today as several widely held stocks and one lesser light enjoyed strong sessions. Our City writer looks at the big movers.

14th February 2024 13:26

Graeme Evans from interactive investor

Revived hopes for a summer cut in interest rates today lifted Persimmon (LSE:PSN) and Taylor Wimpey (LSE:TW.) alongside Vodafone Group (LSE:VOD), Rolls-Royce Holdings (LSE:RR.) and BT Group (LSE:BT.A) on a packed FTSE 100 risers board.

The latest surge for the housebuilding pair came after January’s reading of 4% boosted City speculation that inflation could still reach the Bank of England’s 2% target by April.

Capital Economics said this prospect should make Bank policymakers “much more comfortable” with cutting interest rates, perhaps in June.

The consultancy added: “Moreover, our forecast that inflation will fall below 1% later this year explains why we think rates will have to be reduced to 3% next year, which is much further than current market pricing.”

The improved outlook for mortgage rates and buyer affordability lifted Persimmon by 55p to 1417p, extending the rally for the York-based builder to 47% since late October. Taylor Wimpey is also up by around 40%, having lifted 3.5p to 145p in today’s session.

The inflation update by the Office for National Statistics (ONS) eased jitters after yesterday’s surprisingly strong US figure of 3.1% triggered a Wall Street sell-off.

The FTSE 100 index today put back all of Tuesday’s loss of 61 points, with other beneficiaries of the improved interest rate outlook including BT Group after a rise of 1.9p to 104.2p. 

The shares were 160p last April but have slid as investors worry about the consumer spending outlook and potential dividend threat caused by higher debt costs. 

In a better session for the struggling telecoms sector, Vodafone rallied 2.2p to 66.4p after it announced that the chief executive of its Abu Dhabi-based major shareholder e& has been cleared by regulators to join the UK company’s board later this month. 

Vodafone chair Jean-François van Boxmeer said the arrival of Hatem Dowidar as a non-executive director will bring extensive experience from across several telecoms markets and further strengthen the strategic partnership between the two firms.

Legal & General Group (LSE:LGEN) rose after a report in the Financial Times said the Bank of England planned to stress test industry exposure to funded reinsurance deals in the bulk purchase annuity market.

While early days, Deutsche Bank said a restriction on the use of third-party capital could end up being a positive for the larger insurers and particularly L&G as its top pick in UK insurance. Shares rose 5.2p to 236p.

The renewed momentum for Rolls-Royce, which lifted 7.4p to 313.9p, came after US bank Jefferies upped its price target to 390p from 310p.

Meanwhile, UBS said its monitoring of the company’s January flying hours pointed to 98% of 2019 levels and approximately 105% for the 2024 financial year compared with the current City consensus model of 100%.

The biggest rise in London’s top flight came from bottling firm Coca-Cola HBC AG (LSE:CCH), which rebounded 158p to 2364p after strong volume growth of 6.8% in the fourth quarter resulted in a 2023 performance ahead of expectations. 

Chief executive Zoran Bogdanovic highlighted a third year of double-digit growth and record profits, while forecasting revenues growth of 6%-7% in the current year.

UBS said inflationary pricing in key emerging markets and prospects for a return to volume growth in Europe meant this guidance looked to be on the conservative side as it increased its price target to 2650p.

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