FTSE 100 close: Ocado drags London index into black as markets brace for inflation data

London’s FTSE 100 squeezed out gains today that have pushed it back into the black in 2023, propped up by shares in online grocer Ocado soaring after a decent set of results.

The capital’s premier index jumped 0.64 per cent to 7,453.68 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, leapt 1.16 per cent to 18,618.22 points.

The list of shares in Britain’s largest companies managed to just about keep its head above water in 2023 largely due to middle-class favourite Ocado kicking more than 12 per cent higher today. So far this year, the FTSE 100 is up 0.03 per cent, although that is a big climb down from February from it reached a record high of over 8,000 points.

Ocado this morning in a trading update said it swung back to profit, with its underlying measure of earnings hitting £16.6m, up from losses of £13.6 million a year earlier.

It means the online supermarket’s – which partners with Marks and Spencer to provide groceries – share price is now up in 2023. It had been one of the worst performers on the FTSE 100.

Slowing demand for digital food shopping after the end of pandemic lockdowns prompted traders to sour on Ocado shares.

FTSE 250-listed Marks and Spencer closed up nearly four per cent in Ocado’s slip stream.

When accounting for its pivotal warehouse robotic distribution arm, Ocado posted higher pre-tax losses of nearly £290m in the first half of the year, up from a loss of £211.3m.

Part of the reason why Ocado’s shares have underperformed over the last year has been due to the online grocer consistently failing to meet its potential, analysts said.

“Ocado has become something of a perennial “jam tomorrow” stock, which investors have abandoned after patience wore thin,” Richard Hunter, head of markets at interactive investor, said.

Markets are gearing up for a crucial set of new inflation data tomorrow from the Office for National Statistics. The City thinks the rate of price increases trimmed to 8.2 per cent in June from 8.7 per cent.

“Caution is set to dominate trading in London ahead of tomorrow’s latest reading on consumer prices. Headline inflation is expected to limp downwards, but worries will be creeping back in about food prices staying sticky, with Russia exiting the Black Sea grain deal,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, said.

Numbers from research firm Kantar today revealed food prices rose 14.9 per cent over the last year to July, down from an increase of 16.5 per cent in the previous month.

Pound sterling weakened 0.26 per cent against the US dollar.

Oil prices leapt around two per cent.