London midday: Stocks stay up but Reckitt tanks on litigation concerns

29th Jul 2024 11:12

(Sharecast News) - London stocks were still in the black by midday on Monday as investors eyed a week jam-packed with earnings releases and the latest policy announcements from the Federal Reserve and the Bank of England.

The FTSE 100 was up 0.9% at 8,358.12.

Richard Hunter, head of markets at Interactive Investor, said earnings season was set to be "at full throttle" in the UK this week.

"Updates from BP and Shell will be among the highlights, in addition to releases from the likes of Diageo, Next, International Consolidated Airlines and Rolls-Royce," he said.

"For the banks, HSBC, Standard Chartered and Barclays will round off the season, hoping to repeat the strong lead given so far from Lloyds Banking and NatWest, where creditable half-year performances were boosted by a strong second quarter.

"There will also be some focus on the Bank of England, which will reveal its latest interest rate decision on Thursday. At present, the consensus is evenly split between a cut and a no-change decision, with the latest economic data having seemingly been unbale to provide a definitive steer. A cut at some point this year is nevertheless expected, although the timing remains on the flip of a coin."

Investors were mulling the latest data from the Bank of England, which showed that mortgage approvals fell marginally in June as the upwards momentum seen earlier in the year year continues to tail off, though there are signs that the housing market is beginning to stabilise.

Net mortgage approvals for house purchases slipped to 59,976 last month, down slightly from the 60,134 recorded in May.

Approvals have declined since March, when they reached 61,080 - their highest since September 2022. However, last month's figure remains significantly higher than the 53,620 recorded in June 2023. Meanwhile, approvals for remortgaging fell to 27,500 from 29,300 the month before.

Individuals borrowed a net £2.7bn for mortgages in June, nearly double the £1.3bn borrowed in May.

The BoE also announced that net consumer credit borrowing fell slightly in June to £1.2bn, from £1.5bn in May, with the annual growth of consumer credit easing to 8.0% from 8.4%.

Investors were also eyeing a statement to Parliament on Monday afternoon by Chancellor Rachel Reeves, who is expected to reveal cuts to plug a £20bn black hole in public finances.

In equity markets, oil giants BP and Shell both gushed higher as oil prices nudged up. "Oil prices had been on a downward trend since early July, so finding price stability has offered some reassurance," said Dan Coatsworth, investment analyst at AJ Bell.

Elsewhere, consumer goods firm Reckitt Benckiser tumbled amid potential litigation concerns, after a US jury found on Friday that infant formula by Abbott Laboratories had caused a girl to develop a serious bowel disease. Abbott was ordered to pay $495m in damages.

AJ Bell's Coatsworth said: "Reckitt's shares have been severely depressed since March as the market worries about the scale of any potential liabilities if the company loses legal battles around the safety of its baby formula.

"A US court case has already awarded $60 million in damages to a mother who said her baby died after consuming Reckitt's Enfamil baby formula. Several hundred similar claims have been in filed in US courts targeting Reckitt and Abbott.

"The more setbacks for either baby formula maker, the more complicated it becomes for Reckitt to sell its nutrition arm. Reckitt last week indicated it might be up for sale, saying it was considering all options for the business.

"Any potential buyer could be put off by the possibility of liabilities from the court cases, meaning the pressure is growing for Reckitt to find a way to ringfence a large amount of money in case it loses big time in the court battles."

Educational publisher Pearson nudged down despite saying it delivered a "solid" performance in the first half, with underlying sales and profits ahead of last year, as it reiterated its outlook for the next two years.

Entain fell as it said that BetMGM, its sports betting and iGaming operator in the US, surpassed the $1bn mark for revenues in the first half, but still made a loss as a result of heavy investments during the period.

Market Movers

FTSE 100 (UKX) 8,358.12 0.87%

FTSE 250 (MCX) 21,450.63 0.44%

techMARK (TASX) 4,857.03 0.70%

FTSE 100 - Risers

SEGRO (SGRO) 923.20p 3.50%

Airtel Africa (AAF) 113.30p 3.19%

NATWEST GROUP (NWG) 370.80p 2.46%

JD Sports Fashion (JD.) 126.10p 2.23%

Prudential (PRU) 700.20p 2.22%

Unite Group (UTG) 955.50p 2.19%

Centrica (CNA) 133.10p 2.19%

Barclays (BARC) 236.30p 2.12%

Land Securities Group (LAND) 641.00p 1.99%

3i Group (III) 3,088.00p 1.98%

FTSE 100 - Fallers

Reckitt Benckiser Group (RKT) 4,057.00p -9.56%

Entain (ENT) 599.20p -7.67%

Flutter Entertainment (DI) (FLTR) 15,155.00p -1.27%

International Consolidated Airlines Group SA (CDI) (IAG) 165.60p -0.93%

Fresnillo (FRES) 574.00p -0.86%

Anglo American (AAL) 2,370.00p -0.71%

F&C Investment Trust (FCIT) 1,038.00p -0.38%

Diageo (DGE) 2,556.00p -0.37%

Whitbread (WTB) 2,887.00p -0.31%

Coca-Cola HBC AG (CDI) (CCH) 2,840.00p -0.21%

FTSE 250 - Risers

W.A.G Payment Solutions (WPS) 66.80p 4.05%

Me Group International (MEGP) 191.60p 3.34%

Cranswick (CWK) 4,680.00p 3.08%

PureTech Health (PRTC) 181.80p 2.83%

Bridgepoint Group (Reg S) (BPT) 281.60p 2.77%

IP Group (IPO) 41.80p 2.58%

Great Portland Estates (GPE) 355.50p 2.30%

Direct Line Insurance Group (DLG) 191.80p 2.29%

Safestore Holdings (SAFE) 806.50p 2.22%

Tritax Big Box Reit (BBOX) 166.90p 2.14%

FTSE 250 - Fallers

Energean (ENOG) 1,046.00p -4.47%

Indivior (INDV) 963.00p -2.43%

NB Private Equity Partners Ltd. (NBPE) 1,700.00p -2.30%

Man Group (EMG) 253.80p -2.16%

Aston Martin Lagonda Global Holdings (AML) 160.30p -2.14%

HGCapital Trust (HGT) 518.00p -2.08%

Inchcape (INCH) 844.50p -1.97%

Pagegroup (PAGE) 424.40p -1.90%

Patria Private Equity Trust (PPET) 556.00p -1.77%

Genus (GNS) 1,814.00p -1.73%