London open: FTSE edges up after solid NatWest results, ahead of US inflation

(Sharecast News) - London stocks edged higher in early trade on Friday following a solid set of results from NatWest, as investors looked ahead to the latest US inflation reading.

At 0825 GMT, the FTSE 100 was 0.2% firmer at 10,419.96.

Derren Nathan, head of equity research at Hargreaves Lansdown, said: "London's leading index briefly touched a fresh intra-day high yesterday, boosted by Nuveen's bid for UK fund manager Schroders, but commodity price gyrations and weak UK GDP data saw the index end the day down. With nerves running high, certain defensive sectors seem to be performing relatively well, with UK-listed utility and healthcare stocks having a good run of it this week.

"It's been a bumpier ride for UK bank stocks, but a profit beat by NatWest, coupled with an upgrade to its longer-term capital efficiency targets, could help lift sentiment today."

Investors were also mulling news that US President Donald Trump is planning to roll back some tariffs on steel and aluminium products.

Trump hit steel and aluminium imports with tariffs of up to 50% last summer and has expanded the taxes to a range of goods made from those metals including washing machines and ovens.

But according to the Financial Times, citing three people familiar with the matter, his administration is now reviewing the list of products affected by the levies and plans to exempt some items, halt the expansion of the lists and instead launch more targeted national security probes into specific goods.

Sources told the FT that trade officials in the commerce department and US trade representative's office believed the tariffs were hurting consumers by raising prices for goods such as pie tins and food and drink cans.

Looking ahead to the rest of the day, the US consumer price index for January is due at 1330 GMT.

Darren Nathan said: "Hopes of a US rate cut next month are now below 8% down from over 18% just a week ago, after stronger-than-expected US jobs data earlier this week. Inflation's the number to watch today. January core CPI inflation is expected to rise 0.34% over December, with the annualised number forecast to fall from 2.6% to 2.5%, the lowest level since March 2021.

"The key question is whether labour market strength can continue to build without injecting unwanted heat into the economy. Given the high tension levels on Wall Street, markets are likely to be more sensitive than usual to a miss in either direction."

On home shores, industry data out earlier showed that retail footfall softened slightly in January, although the pace of decline was a notable improvement on December.

According the latest BRC-Sensormatic footfall monitor, total UK footfall fell 0.6% in January year-on-year, as stormy winter weather kept shoppers at home. However, it was a notable improvement on the previous month's 2.9% slide.

Leading the rebound were retail parks, where footfall rose 1.1% following a 2.5% fall in December. Shopping centres were also stronger, with footfall down just 0.8% compared to December's 5.1% slump.

However, shoppers continued to avoid high streets, where footfall compounded December's 0.9% decline and fell 1.9%

Andy Sumpter, retail consultant, EMEA, at Sensormatic, said: "January offered a welcome reset. Shopper traffic remained in negative territory, but the dial moved in the right direction, marking a clear improvement on December and the wider golden quarter.

"Some of this uplift will have been driven by savvier spending behaviours, as consumers took advantage of new year promotions and sought out value after a stretched festive period."

However, Sumpter acknowledged that Storm Goretti had "put a dampener on activity...disrupting travel and suppressing visits - a reminder that weather can play an outsized role in shaping shopping behaviour".

Helen Dickinson, chief executive of the British Retail Consortium, said: "Although footfall edged down, it was much better than the disappointing Christmas period.

"An uptick in consumer confidence and possible signs of a footfall recovery offer some cautious optimism for some Spring-like green shoots."

In equity markets, NatWest gained as it reported a better-than-expected increase in full-year profits and lifted performance targets. Pre-tax operating profit in the 12 months to December jumped 24.4% to �7.7bn, beating the �7.5bn company-compiled forecast. The lender also announced a �750m share buyback for the first half of 2026.

NatWest stretched its outlook for a return on tangible equity - a key industry measure - out to 2028, targeting more than 18% by the end of that year, up from previous guidance of greater than 15% in 2027. For this year it is set to be greater than 17%.

Flutter Entertainment tumbled after US online betting company DraftKings' 2026 outlook for sales and profit missed expectations, sending the shares sharply lower.