- FTSE 100 up 118 points to 10,122.73
- Ocado up 11%
- Wall Street set for quiet start
- Can Next continue to outperform?
- Shop prices head higher
And that's a wrap
The FTSE 100 surged deeper into record territory on Tuesday, climbing to around 10,123 as energy and defence stocks drove a broad-based rally in London.
The advance extended a run that has already seen the UK market outperform both Wall Street and its European peers in the past year.
Geopolitical tensions provided the main fuel. Oil prices firmed following US action in Venezuela, lifting heavyweight energy names Shell and BP.
Defence stocks also rallied sharply as investors positioned for sustained increases in global military spending, with Rolls-Royce and BAE Systems among the strongest performers.
Support came closer to home as well. Markets took reassurance from resilient UK borrowing figures and growing expectations that the Bank of England will eventually begin easing monetary policy, even as household spending remains cautious under the weight of higher living costs.
Company-specific updates added further momentum. Fashion retailer Next upgraded its profit guidance once again, while online grocer Ocado impressed investors with robust Christmas trading.
With gains spread across sectors and driven by both global and domestic forces, London’s stock market rally is proving increasingly difficult for investors to overlook.
3.34pm: Ocado wakes from its five-year coma
After losing almost nine-tenths of their value over five bruising years, shares in Ocado Group PLC suddenly found a pulse. The stock jumped 11% in late afternoon trading after landing on JP Morgan’s Positive Catalyst Watch ahead of results due on 26 February.
The rally says more about expectations than redemption. JP Morgan’s Marcus Diebel argues that while volatility defined 2025, the groundwork for stability is taking shape. Kroger is sticking with six sites, Ocado’s balance sheet has been shored up, and a £260 million termination payment has eased financial strain.
Management, JPM reckons, will now talk tough on costs and margins. The bank forecasts Core Tech Solutions EBITDA margins climbing to 40 per cent by 2027 and free cash flow breakeven the same year.
Ending exclusivity in most markets adds flexibility, particularly in the US. It’s hardly a comeback story yet, but for a stock down 89%, even a flicker of optimism travels fast.
1:40pm: FTSE 100 builds to new high
London's FTSE 100 continued higher in Tuesday's trade, climbing 104 points or 1.05%, to 10,109 as the march from 10,000 pressed on in the first trading week of 2026.
It marks the latest new high for the benchmark.
Crude oil was on the agenda across the City, meanwhile, with London oil firm supporting the index.
"Even though oil prices are heading lower following the US government's ousting of Venezuelan President Maduro over the weekend, the move gives America a larger say over Venezuela's vast oil reserves. President Trump has wasted no time in saying that major firms, including Chevron, ExxonMobil, and ConocoPhillips, could be central to reviving Venezuela's crippled oil sector. This optimism is translating into European oil firms BP and Shell," said Fiona Cincotta, Senior Market Analyst at City Index.
These stocks are being buoyed by the prospect of politically backed projects in Venezuela, even if the potential payoff could be slow, risky, and far from guaranteed.
12.22pm: Wall Street set to draw breath
US stock futures steadied on Tuesday after Monday’s record run, as investors paused to digest fresh signals from the artificial intelligence sector.
Contracts tied to the S&P 500 and Dow Jones hovered around flat, while Nasdaq 100 futures edged lower.
Attention centred on the Consumer Electronics Show in Las Vegas, where Nvidia and AMD set out rival visions for the next phase of AI computing.
Nvidia unveiled its Vera Rubin platform and outlined ambitions in humanoid robotics, while AMD showcased its Helios system, promising a significant leap in data-centre performance.
Further updates from Intel, Qualcomm and others are expected to keep the AI trade firmly in focus.
Geopolitics barely registered. Markets largely shrugged off developments in Venezuela, viewing them less as a destabilising force and more as a potential opening for US corporate interests, particularly in energy and defence.
In commodities, copper pushed to fresh highs above $13,000 a tonne, driven by tariff concerns and aggressive stockpiling in the US, leaving global supply increasingly tight.
11.15am: Can Next maintain the momentum?
So, some analysis of Next, up 2% and which delivered another strong Christmas performance, reinforcing its reputation for disciplined execution.
While the performance was, as always, very solid, analysts at Shore Capital warn that tougher market conditions at home could make further upgrades harder to come by.
Full-price sales rose 10.6% in the nine weeks to 27 December, comfortably ahead of management’s 7% guidance.
As has become a familiar pattern, the standout driver was international online, where sales surged more than 38%, building on already strong year-to-date growth.
By contrast, UK trading slowed over the festive period, but not as sharply as feared, with sales up 5.9%.
Shore Capital, which is highly rated in the retail sector, points to the continued importance of growth engines beyond the traditional store estate.
Third-party brands sold through Next’s LABEL platform and international online remain the main contributors to earnings momentum, offsetting slower growth in the more mature UK retail business.
That mix, the broker argues, underpins confidence in the longer-term shape of the group.
9.40am: Shop prices edge up, but inflation relief still on the horizon
UK retail prices delivered a small surprise in December, edging higher rather than falling further. The latest BRC-NIQ Shop Price Index shows prices up 0.7% year on year, a 0.1 percentage point monthly increase, driven mainly by food.
Food inflation rose to 3.3%, with fresh food leading the move. Importantly, this is not about higher commodity or energy costs. Instead, retailers are still absorbing higher domestic costs, including rises in National Insurance, the National Living Wage and new producer responsibility charges.
Outside food, pricing remains benign. Non-food goods are still in deflation, helped by heavy discounting in clothing after a mild autumn hit seasonal demand. Electrical prices also fell more slowly, a modest positive for a sector under pressure.
Looking ahead, the outlook is more encouraging. With sterling stable, oil prices low and no obvious supply shocks, food inflation is expected to ease through 2026 towards 2–2.5%. That should pull overall inflation lower, support real incomes and keep the door open for further interest rate cuts, even if consumer confidence remains fragile.
8.25am: Strong opening
The blue-chip index got off to a better-than-expected start on Tuesday as it rose 52 points to 10,056.35 and above January 2 record close, with the natural resources sector providing the impetus.
However, the stand-out stock, with a 3% gain, was Next, after its post-Christmas trading statement, which once again carried on the retailer's long-standing tradition of over-delivering against expectations.
Positive start expected
Morning, folks. We are heading for rarified air as UK blue-chips eye a new record. Whether the index makes it above the 10.0035.18 level set on January 2 remains to be seen, but it looks like we'll get fairly close early on.
The FTSE 100 is forecast to open 30 points higher on Tuesday at 10,034.57, as global equities advance on renewed appetite for technology shares and a calmer outlook in energy markets.
Most Asian indices gained ground, mirroring Wall Street’s upbeat start to the year, where the Dow Jones Industrial Average closed at a fresh high.
The rally was driven by strong demand for artificial intelligence-linked technology stocks such as Amazon and Meta, alongside gains in energy majors.
The S&P 500 and Nasdaq also rose, buoyed by weaker US manufacturing data, which investors see as giving the Federal Reserve further room to consider interest rate cuts.
Markets appeared to shrug off geopolitical tensions following the sudden extradition of Venezuelan President Nicolás Maduro to the United States.
Oil prices steadied after a volatile session triggered by the news, with analysts noting Venezuela’s limited near-term capacity to boost crude output.
Gains were broad across Asia, led by Hong Kong, Tokyo and Shanghai. Hyundai shares rose in Seoul after it showcased its new AI-powered robot, though they later pared early gains. Australian shares dipped, even as BlueScope Steel surged on news of a potential US$8.8bn takeover approach.