London midday: Stocks tick up ahead of expected ECB rate cut

6th Jun 2024 10:49

(Sharecast News) - London stocks had ticked higher by midday on Thursday as investors eyed an expected 25 basis points rate cut from the European Central Bank.

The FTSE 100 was up 0.3% at 8,274.16.

Russ Mould, investment director at AJ Bell, said: "Nvidia's valuation topping $3 trillion, a storming run for the Nasdaq index in the US last night, and the prospect of interest rate cuts in Europe today have all combined to put investors in a good mood.

"The ECB is expected to follow the likes of Canada, Sweden and Switzerland by cutting rates later today, bringing the long-awaited pivot in monetary policy and signalling the start of a new era.

"After a long period of rock-bottom rates, the subsequent period shocked markets to the core as interest rates soared amid high levels of inflation. We're now beginning the next phase in the cycle where inflationary pressures ease and central banks move to a new playbook to help prop up a flagging economy and make life easier for consumers and businesses who have had to stomach sky-high borrowing costs.

"The Bank of England and Federal Reserve might give the impression they aren't swayed by what the ECB and other countries do, but the greater the number of central banks cutting, the more pressure they will be under to do the same."

The ECB announcement is due at 1315 BST.

On home shores, a survey showed the construction sector grew in May at its fastest pace in two years.

The S&P Global purchasing managers' index for the sector rose to 54.7 from 53.0 in April, coming in above the 50.0 mark that separates contraction from expansion for the third month in a row. Analysts were expecting a decline to 52.5.

For the first time since May 2022, all three categories saw an increase in activity. The sharpest rise was seen in the commercial segment, where the rate of growth accelerated to a two-year high. Civil engineering activity rose at a "solid, but slightly softer pace", but expansion in activity on residential projects was only marginal.

Andrew Harker, economics director at S&P Global Market Intelligence, said: "The UK construction sector looks to be building good momentum as we approach the middle of 2024, highlighted by activity increasing at the fastest pace in two years during May. Particularly pleasing was the broad-based nature of the rise in activity as work on housing projects increased for the first time in more than a year-and-a-half.

"Firms are gearing up for further growth in the months ahead, posting renewed expansions in both employment and purchasing activity as workloads increase. Moreover, the supply-chain environment continued to improve in May. Companies were able to secure inputs much more quickly than in April and at prices that were only slightly higher than in the previous month on average. These factors should help constructors in their efforts to ramp up operations in line with greater new order inflows."

In equity markets, JD Sports was the standout gainer on the FTSE 100 after US sportswear retailer Lululemon lifted its profit outlook.

Wood Group surged as it said late on Wednesday that it had decided to "engage" with Sidara after the Dubai-based engineering and consulting firm made an improved and final takeover proposal last week at 230p a share.

"The board remains confident in Wood's strategic direction and its fundamental prospects," it said. "However, having now weighed all relevant factors including, in particular, feedback received from Wood shareholders, the board has decided to engage with Sidara to determine if a firm offer can be made on the same financial terms as the final proposal. Accordingly, the board will grant Sidara access to due diligence materials."

On the downside, Mitie reversed earlier gains as the outsourcer said annual profits surged as revenues hit a record £4.5bn - in line with company expectations.

Vodafone, WPP, Sainsburys, National Grid, Informa, Johnson Matthey, Pets at Home, Assura and Energean were all weaker as they traded without entitlement to the dividend.

Market Movers

FTSE 100 (UKX) 8,274.16 0.33%

FTSE 250 (MCX) 20,736.70 0.31%

techMARK (TASX) 4,856.61 0.26%

FTSE 100 - Risers

JD Sports Fashion (JD.) 130.80p 3.56%

St James's Place (STJ) 532.00p 2.31%

Sage Group (SGE) 1,061.50p 2.21%

Convatec Group (CTEC) 252.00p 1.86%

Burberry Group (BRBY) 1,043.50p 1.61%

Prudential (PRU) 762.40p 1.55%

Rightmove (RMV) 566.00p 1.47%

Fresnillo (FRES) 585.50p 1.39%

Legal & General Group (LGEN) 252.90p 1.36%

Diageo (DGE) 2,692.50p 1.36%

FTSE 100 - Fallers

Vodafone Group (VOD) 72.62p -5.25%

WPP (WPP) 771.60p -4.34%

National Grid (NG.) 864.60p -4.10%

Sainsbury (J) (SBRY) 265.20p -3.21%

easyJet (EZJ) 477.80p -1.95%

Informa (INF) 841.20p -1.20%

Hikma Pharmaceuticals (HIK) 1,954.00p -1.11%

Ocado Group (OCDO) 358.40p -1.05%

British American Tobacco (BATS) 2,408.00p -0.78%

Marks & Spencer Group (MKS) 307.10p -0.65%

FTSE 250 - Risers

Wood Group (John) (WG.) 204.20p 9.78%

Aston Martin Lagonda Global Holdings (AML) 166.60p 6.11%

Endeavour Mining (EDV) 1,721.00p 3.43%

Babcock International Group (BAB) 548.00p 3.01%

Discoverie Group (DSCV) 742.00p 2.91%

Watches of Switzerland Group (WOSG) 424.00p 2.42%

FirstGroup (FGP) 174.70p 2.16%

Bakkavor Group (BAKK) 144.00p 2.13%

Workspace Group (WKP) 596.00p 1.88%

WH Smith (SMWH) 1,168.00p 1.83%

FTSE 250 - Fallers

Indivior (INDV) 1,313.00p -5.06%

Energean (ENOG) 1,053.00p -4.19%

Johnson Matthey (JMAT) 1,654.00p -3.61%

Drax Group (DRX) 493.20p -2.91%

Pets at Home Group (PETS) 310.40p -2.45%

TUI AG Reg Shs (DI) (TUI) 608.50p -1.85%

Marshalls (MSLH) 313.50p -1.57%

Computacenter (CCC) 2,752.00p -1.50%

Capital Gearing Trust (CGT) 4,695.00p -1.47%

Assura (AGR) 41.80p -1.37%