London midday: Stocks stay up ahead of ECB rate cut

5th Jun 2024 11:13

(Sharecast News) - London stocks were still firmer by midday on Wednesday as weaker-than-expected US jobs data fuelled expectations of a rate cut by the Federal Reserve later this year and ahead of expected cuts by the Bank of Canada and the European Central Bank.

The FTSE 100 was up 0.3% at 8,254.52.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "The wheel of speculation over when interest rate cuts will come in the US has stopped in a more positive position, buoying sentiment and helping push up the FTSE 100 in early trade.

"Weaker JOLTS jobs data indicates that the negotiating stance of American employees for higher wages is more fragile, adding to hopes that stubborn price pressures will ease. With interest rate cuts spied again on the horizon, Wall Street ended in more upbeat territory, and more optimism is washing through into trading in Europe. The globally focused blue-chip index has also been buoyed by indications that China's recovery also appears more on track."

Looking ahead to the rest of the day, the US ADP report for May is out at 1315 BST. Investors were also eyeing the latest policy announcement from the Bank of Canada, while a decision from the European Central Bank is due on Thursday. Both are expected to cut rates by 25 basis points.

On home shores, a survey showed the services sector continued to expand last month, although the pace of growth eased.

The latest S&P Global UK services PMI business activity index came in at 52.9, the seventh successive month it has been above the neutral 50.0 level. A figure above 50.0 indicates growth while one below it suggests contraction.

However, May's reading was down on April's 11-month high of 55.0.

Respondents attributed May's output growth to stronger sales, with new business volumes rising again during the month.

There was also a slight pick-up in both jobs growth and business confidence, while input cost inflation fell to its weakest since February 2021. Input costs jumped in April after the increase in the national living wage pushed up labour costs.

New orders fell back slightly from the 11-month high seen in April, however. Respondents noted there had been a softer rise in demand, particularly from overseas customers.

The S&P Global UK composite PMI, a weighted average of comparable services and manufacturing indices, eased to 53.0 from April's one-year high of 54.1.

Joe Hayes, principal economist at S&P Global Market Intelligence, said: "Taken in tandem, the PMIs imply GDP growth of around 0.3% so far in the second quarter.

"The survey shows prices for UK services rising at the slowest pace for over three years; that's now three months on the trot that selling price inflation in the sector has eased. This will be very encouraging to the Monetary Policy Committee."

In equity markets, Haleon rallied after an initiation at 'buy' at Berenberg, while Taylor Wimpey was boosted by an upgrade to 'buy' from 'hold' by the same outfit.

Pearson got a lift after Citi opened a 90-day "positive catalyst watch" on shares of the education publisher, pointing to an attractive risk/reward.

Paragon Banking jumped as the specialist lender more than doubled interim profit and said it would extend its share buyback by up to £50m as customer demand returned after the 'mini-budget' fiasco of Liz Truss's short-lived government last October.

WH Smith gained as the retailer said it remains on track to hit full-year forecasts despite a slowdown in sales growth in third quarter, as strong growth in the travel division was tempered by falling sales on the high street.

On the downside, B&M European Value Retail fell sharply despite saying that said annual operating profits and sales grew in the double digits, helped by the opening of 78 gross new stores across the group, with earnings at the top end of guidance.

British Gas owner Centrica was in the red despite saying that current year trading was in line with expectations against the backdrop of a more "normalised" environment.

Ninety One slumped as it posted a drop in full-year assets under management and cut its dividend as it said business conditions remained "challenging".

Workspace lost ground as it reported strong rental income growth in the year to 31 March, but said losses widened substantially due to falling property valuations.

Market Movers

FTSE 100 (UKX) 8,254.52 0.27%

FTSE 250 (MCX) 20,709.51 -0.04%

techMARK (TASX) 4,860.26 0.86%

FTSE 100 - Risers

St James's Place (STJ) 519.00p 3.39%

Smith & Nephew (SN.) 1,027.50p 3.25%

Pearson (PSON) 962.40p 2.21%

GSK (GSK) 1,650.00p 2.17%

Rolls-Royce Holdings (RR.) 455.40p 1.65%

Taylor Wimpey (TW.) 152.20p 1.60%

Entain (ENT) 724.40p 1.46%

Rightmove (RMV) 554.40p 1.43%

Rentokil Initial (RTO) 430.00p 1.42%

BAE Systems (BA.) 1,404.00p 1.37%

FTSE 100 - Fallers

B&M European Value Retail S.A. (DI) (BME) 514.60p -5.82%

Centrica (CNA) 137.05p -3.66%

Mondi (MNDI) 1,527.50p -1.20%

Anglo American (AAL) 2,380.00p -0.98%

Fresnillo (FRES) 563.50p -0.88%

Sainsbury (J) (SBRY) 276.20p -0.86%

Auto Trader Group (AUTO) 818.80p -0.85%

Smith (DS) (SMDS) 373.20p -0.80%

Lloyds Banking Group (LLOY) 55.20p -0.79%

HSBC Holdings (HSBA) 685.30p -0.71%

FTSE 250 - Risers

TUI AG Reg Shs (DI) (TUI) 632.50p 7.66%

Aston Martin Lagonda Global Holdings (AML) 153.50p 4.64%

Workspace Group (WKP) 573.00p 3.99%

Mobico Group (MCG) 54.35p 3.03%

Paragon Banking Group (PAG) 790.00p 2.60%

Carnival (CCL) 1,203.50p 2.56%

JPMorgan Indian Investment Trust (JII) 958.00p 2.46%

Trustpilot Group (TRST) 216.00p 1.89%

WH Smith (SMWH) 1,163.00p 1.75%

Watches of Switzerland Group (WOSG) 420.80p 1.64%

FTSE 250 - Fallers

Ninety One (N91) 160.40p -6.03%

Discoverie Group (DSCV) 717.00p -3.37%

Energean (ENOG) 1,125.00p -2.09%

Elementis (ELM) 150.20p -1.57%

4Imprint Group (FOUR) 6,160.00p -1.44%

Bakkavor Group (BAKK) 145.00p -1.36%

Bank of Georgia Group (BGEO) 3,700.00p -1.33%

Man Group (EMG) 260.40p -1.29%

Mitchells & Butlers (MAB) 308.50p -1.28%

Tritax Big Box Reit (BBOX) 163.10p -1.27%