London pre-open: Stocks to rise as inflation print adds weight to rate cut expectations

(Sharecast News) - London stocks were set to gain at the open on Wednesday as the latest UK inflation reading added weight to expectations of a March rate cut. The FTSE 100 was called to open around 24 points higher.

Figures released earlier by the Office for National Statistics showed that inflation fell to its lowest level in nearly a year in January.

The consumer price index declined to 3% from 3.4% in December, coming in as expected and marking the lowest rate of annual inflation since March 2025.

ONS chief economist Grant Fitzner said: "The cost of raw materials for businesses fell over the past year, driven by lower crude oil prices, while the increase in the cost of goods leaving factories slowed."

Martin Sartorius, lead economist at the Confederation of British Industry, said: "January's slowdown in inflation, alongside cooling labour market conditions, increases the likelihood that the Monetary Policy Committee will cut rates again over the next couple of months. Beyond then, the scope for further Bank Rate reductions will become more limited, as the Committee looks to ensure that inflation returns sustainably to the 2% target."

In corporate news, weapons maker BAE Systems reported a better-than-expected rise in annual profits as it cashed in on higher government defence spending amid rising geopolitical tensions.

The company said full-year underlying operating profit jumped 12% to £3.32bn, beating expectations of a 9% - 11% increase, with its order backlog hitting a record £83.6bn.

Mining giant Glencore posted a decline in full‑year profits as record copper prices were unable to offset weaker earnings from its coal division.

Glencore said core earnings fell 6% year‑on‑year to $13.5bn, though it also said it would still return $2bn to shareholders, including an $800m top‑up distribution. Revenues grew 7% to $247.53bn.