Portfolio

London midday: Stocks gain as investors mull UK PMIs

By Michele Maatouk

Date: Friday 22 Oct 2021

London midday: Stocks gain as investors mull UK PMIs

(Sharecast News) - London stocks had extended gains by midday on Friday despite disappointing retail sales data and a slump in consumer confidence, as worries about China's Evergrande eased and following the release of encouraging UK growth figures.
The FTSE 100 was 0.5% higher at 7,226.36.

Richard Hunter, head of markets at Interactive Investor, said: "Overnight news that Chinese property company Evergrande would be making an interest payment due on one of its bonds to avoid defaulting lifted sentiment, which has also fed through to the UK in opening exchanges.

"This in turn has resulted in some small relief for mining shares, which have been under pressure in recent sessions given the large exposure to China."

Also helping to boost the mood was a survey showing that UK economic growth gathered pace in October, underpinned by the services sector, although the manufacturing sector was hit by supply issues.

The IHS Markit/CIPS composite flash composite output index, which measures activity in the manufacturing and services sectors, rose to a three-month high of 56.8 from 54.9 September. This was above consensus expectations for a reading of 54.0.

A reading over 50.0 indicates expansion, while a reading below signals contraction.

The manufacturing output index fell to an eight-month low of 50.6 in October from 52.7 the month before. This marked the weakest output performance for eight months, with manufacturers highlighting difficulties meeting customer demand due to capacity constraints resulting from lengthy supplier lead times and shortages of staff.

Around 64% of UK manufacturers reported worsening supplier delivery times in October, with only 1% seeing an improvement.

However, the services index rose to a three-month high of 58.0 from 55.4 in September.

Chris Williamson, chief business economist at IHS Markit, said: "The UK economy picked up speed again in October, but the expansion is looking increasingly dependent on the service sector, which in turn looks prone to a slowdown amid the recent rise in Covid-19 cases.

"Growth is also being accompanied by an unprecedented rise in inflationary pressures, which will inevitably feed through into higher consumer prices in coming months.

"The news comes at a time when the Bank of England is already leaning towards hiking interest rates to safeguard against inflationary expectations becoming entrenched. The record readings of the PMI survey's price gauges will inevitably pour further fuel on these inflation worries and add to the case for higher interest rates."

Other figures released earlier by the Office for National Statistics showed retail sales unexpectedly fell in September for the fifth month in a row, while a survey from GfK revealed that consumer sentiment slumped in October amid economic turmoil including fuel shortages and rising prices.

In equity markets, miners were among the best performers, with Antofagasta, BHP and Rio all up.

JD Sports Fashion rallied after saying it had bought 80% of family-owned Greek firm Cosmos Sport for an undisclosed sum.

London Stock Exchange fell after it posted 7.6% growth in third-quarter income but cautioned that supply chain issues could delay some of its technology spending plans.

InterContinental Hotels lost ground even as it reported a "significant" jump in third-quarter room revenue towards pre-Covid pandemic levels after a rebound in bookings during the summer as travel restrictions were eased. Premier Inn owner Whitbread was also lower.

Sainsbury's was a touch weaker after saying it had ended talks over the sale of its banking operation, claiming the potential bid did not offer good value for shareholders.



Market Movers

FTSE 100 (UKX) 7,226.36 0.50%
FTSE 250 (MCX) 22,946.51 0.13%
techMARK (TASX) 4,595.01 0.21%

FTSE 100 - Risers

Antofagasta (ANTO) 1,489.50p 4.12%
Evraz (EVR) 642.60p 3.15%
JD Sports Fashion (JD.) 1,065.50p 2.50%
Croda International (CRDA) 9,242.00p 2.44%
Polymetal International (POLY) 1,408.50p 2.29%
BHP Group (BHP) 1,967.60p 2.03%
Rio Tinto (RIO) 4,734.00p 1.83%
Bunzl (BNZL) 2,595.00p 1.76%
Legal & General Group (LGEN) 284.70p 1.71%
Johnson Matthey (JMAT) 2,728.00p 1.68%

FTSE 100 - Fallers

London Stock Exchange Group (LSEG) 7,824.00p -3.22%
InterContinental Hotels Group (IHG) 4,842.00p -3.08%
International Consolidated Airlines Group SA (CDI) (IAG) 156.00p -2.60%
Associated British Foods (ABF) 1,725.50p -1.51%
Whitbread (WTB) 3,130.00p -1.17%
Taylor Wimpey (TW.) 150.50p -1.15%
Compass Group (CPG) 1,441.00p -0.96%
Next (NXT) 7,838.00p -0.94%
Barratt Developments (BDEV) 644.80p -0.92%
ITV (ITV) 104.20p -0.81%

FTSE 250 - Risers

Baltic Classifieds Group (BCG) 212.00p 4.43%
SSP Group (SSPG) 255.00p 3.79%
WH Smith (SMWH) 1,600.00p 3.73%
Ferrexpo (FXPO) 314.20p 3.15%
Petropavlovsk (POG) 24.94p 2.38%
Grafton Group Ut (CDI) (GFTU) 1,324.00p 2.24%
Ninety One (N91) 269.00p 2.20%
Essentra (ESNT) 260.00p 2.16%
Trustpilot Group (TRST) 343.20p 2.14%
Ibstock (IBST) 199.00p 2.10%

FTSE 250 - Fallers

Micro Focus International (MCRO) 367.90p -3.16%
Vistry Group (VTY) 1,164.50p -3.12%
Wood Group (John) (WG.) 223.40p -2.95%
Renishaw (RSW) 5,015.00p -2.72%
easyJet (EZJ) 584.40p -2.57%
CLS Holdings (CLI) 223.00p -2.19%
Energean (ENOG) 860.00p -2.16%
Moneysupermarket.com Group (MONY) 221.00p -2.04%
Cairn Energy (CNE) 189.20p -1.92%
AO World (AO.) 152.80p -1.80%

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