The FTSE 100 was up 0.7% to 7,173.5 in midday trading on Tuesday, as the market continued to recover from its beating last week over fears of a rate hiking cycle that could push major economies into recession.
A rally in oil prices pulled oil stocks higher, as the price of benchmark Brent crude recovered slightly to $115 per barrel, boosting Shell and BP shares as the oil giants rose 2.4% to 2,162.2p and 2% to 399.6p, respectively. Harbour Energy shares gained 3.1% to 367.6p.
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Meanwhile, reports that food inflation was heading towards a 13-year record of 8.3% – according to data from Kanta – dragged grocery stocks down on the index.
Associated British Foods dipped 1.7% to 1,618p, Tesco slid 0.5% to 250.5p and Sainsbury’s fell 0.4% to 207.5p.
Meanwhile, Ocado shares tumbled 6.3% to 821.8p as investors met the delivery group’s latest fundraise of £578 million for its technology business with a cold burst of cynicism.
Some investors showed concerns around company’s move to channel more cash into its floundering businesses that have struggled to hold onto the benefits from a surge in demand during the pandemic.
“Ocado remains a jam tomorrow story, with the company having greased its baking trays by means of winning numerous contracts with third party grocery sellers,” said AJ Bell investment director Russ Mould.
“The next stage is to fill these trays with the right ingredients to support their online grocery operations, and that’s where all the extra money is needed alongside making improvements to its systems.”
“While there remains excitement about the online grocery space, Ocado can’t keep burning through cash indefinitely. At some point soon it will have to start generating profits and making money, as that’s been the missing component with its story so far.”