The FTSE 100 gained on Tuesday as UK-centric stocks drove the index higher amid optimism around Ukraine talks and UK grocery inflation data.
London’s leading index was 0.2% higher at the time of writing.
In addition to the end of human suffering in Ukraine, investors will be pleased that last night’s talks hinted at a path to peace in Eastern Europe and the potential removal of inflationary pressures on oil and food prices caused by the conflict.
“There’s relief that talks between Trump, Zelensky and European leaders appear to have made good progress,” said Susanah Streeter, head of money and markets, Hargreaves Lansdown.
“With the US President sounding highly positive on giving security guarantees and protection to Europe, it has bolstered hopes for a longer lasting settlement. Ukraine is offering to purchase around $90 billion of American-made military equipment as part of the deal.”
UK consumer sensitive stocks had a solid session on Tuesday after promising data from Worldpanel on grocery inflation.
JD Sports, Marks & Spencer, and Persimmon were the FTSE 100’s top risers after data showed grocery inflation slowed, hinting at an easing of the pressure on household budgets.
“We’ve seen a marginal drop in grocery price inflation this month, but we’re still well past the point at which price rises really start to bite and consumers are continuing to adapt their behaviour to make ends meet,” commented Fraser McKevitt, head of retail and consumer insight at Worldpanel.
Should the worst of grocery inflation be behind us, investors will be hopeful that consumers have more to spend on JD’s £180 trainers, Marks & Spencer’s premium food ranges, and may even consider upsizing to one of Persimmon’s newly built homes.
JD Sports was the top riser as the combination of positive grocery prices and a price target upgrade from Deutsche Bank helped shares rise 6%. Deutsche Bank analysts now have a 100p target on the stock.
The resulting good news from last night’s Ukraine meeting sapped demand for the FTSE 100’s defence shares. Babcock shares sank 6% while BAE Systems lost 3%.
Although Ukraine has committed to defence spending, the funds will flow into the coffers of US defence firms, bypassing Babcock and BAE Systems.