London midday: FTSE maintains gains; services PMI in focus
By Michele Maatouk
Date: Thursday 03 Jul 2025
(Sharecast News) - London stocks were still higher by midday on Thursday as UK bond markets and the pound recovered some poise following a selloff a day earlier after prime minister Keir Starmer failed to back chancellor Rachel Reeves during PMQs.
The FTSE 100 was up 0.3% at 8,803.98, also underpinned by an encouraging reading on the UK services sector.
Neil Wilson, UK investor strategist at Saxo Markets, said: "UK gilts are firming up this morning along with the pound as the PM gives his chancellor much more vigorous backing following a tricky session on Wednesday. Gilt yields had spiked sharply and sterling retreated as bond markets interpreted a visibly upset Rachel Reeves during PMQs as a sign that her days as chancellor were numbered. It was an unusual situation, but it looked like the bond market had her back in a way - it didn't like the way the PM did not give her his full backing during PMQs.
"It may have been an overreaction - Starmer may not have been quick enough on his feet to realise the implication; markets took it to mean the worst and sold gilts. Who really knows what is going on? What I can say is the calculation was that she's probably the most market-friendly chancellor Labour could field, so replacing her indicated a higher chance of changing fiscal rules, implying more debt and instability. But there is a deeper problem for the government here even if she stays - the market is getting nervous about its ability to make the sums add up whether she is 'market-friendly' or not - and the economic outlook is hardly improving."
Investors mulled a survey showing the UK services sector rebounded modestly in June, boosted by a pick-up in consumer and business sentiment.
The final S&P Global services PMI business activity index was 52.8, up from 50.9 in May and the highest since August.
It was also ahead of the preliminary print of 51.3. A reading below the neutral 50.0 benchmark indicates contraction, while one above it suggests growth.
As a result, the UK PMI composite output index rose nearly two points, to 52.0 from 50.3 in May.
The composite index is a weighted average of the manufacturing output index and services business activity index.
Respondents to the services PMI said input cost inflation had eased for the second month running and was now the lowest so far this year. Order books also improved during the month, with rising output levels attributed to improved business and consumer spending.
Headwinds remain, however, with respondents flagging subdued economic conditions in the UK, the impact of US tariffs and adverse geopolitical factors.
Tim Moore, economics director at S&P Global Market Intelligence, said the sector's "modest" rebound had been "fuelled by a turnaround in domestic business and consumer spending after a soft patch during the spring".
He continued: "While total new work picked up, shrinking export sales were a constraint on growth. Meanwhile, concerns about elevated payroll costs meant that service providers were reluctant to turn on the hiring taps."
Looking ahead to the rest of the day, attention will turn to the non-farm payrolls report, unemployment rate and average earnings for June.
Stephen Innes, managing partner at SPI Asset Management, said: "Economists are pencilling in 110,000 jobs for June - the softest in four months - alongside a mild uptick in the unemployment rate to 4.3%. Wednesday's ADP already cracked the surface, showing the first drop in private payrolls in over two years. And while Powell keeps insisting the labour market remains 'solid', the Fed's been hiding behind that strength to justify its inaction."
In equity markets, Close Brothers jumped to the top of the FTSE 250 index, while Lloyds also gained, albeit to a lesser extent. Neil Wilson said: "It could be related to optimism over the imminent motor finance ruling by the Supreme Court. There is a growing sense/hope that a very unfavourable outcome for lenders is unlikely and stocks are already well priced for the decision."
Electricals and tech retailer Currys surged as it resumed dividend payments following a spike in annual sales and profits. The FTSE 250 firm said group revenues rose 3% in the year to 3 May, to £8.7bn, or by 2% on a like-for-like basis. Within that, sales in the UK and Ireland were 4% stronger on an underlying basis, and flat in the Nordics.
Great Portland Estates rallied as it reported a strong start to the year in a first-quarter update.
Baltic Classifieds tumbled after full-year results, while Watches of Switzerland slumped as it posted record revenue but reported a fall in annual profits and warned US products would be hit by tariff increases.
Market Movers
FTSE 100 (UKX) 8,803.98 0.33%
FTSE 250 (MCX) 21,583.99 0.61%
techMARK (TASX) 5,076.70 0.30%
FTSE 100 - Risers
Croda International (CRDA) 3,073.00p 2.40%
Pershing Square Holdings Ltd NPV (PSH) 4,082.00p 2.10%
Convatec Group (CTEC) 262.80p 2.10%
Berkeley Group Holdings (The) (BKG) 3,672.00p 2.00%
SSE (SSE) 1,849.50p 1.87%
Coca-Cola HBC AG (CDI) (CCH) 3,880.00p 1.73%
Lloyds Banking Group (LLOY) 74.78p 1.69%
NATWEST GROUP (NWG) 481.10p 1.54%
Whitbread (WTB) 2,942.00p 1.48%
Airtel Africa (AAF) 180.40p 1.46%
FTSE 100 - Fallers
Melrose Industries (MRO) 521.60p -1.77%
Rio Tinto (RIO) 4,337.00p -1.00%
Rolls-Royce Holdings (RR.) 937.20p -0.66%
GSK (GSK) 1,401.00p -0.60%
Anglo American (AAL) 2,251.00p -0.55%
F&C Investment Trust (FCIT) 1,116.00p -0.53%
Scottish Mortgage Inv Trust (SMT) 1,027.00p -0.53%
Entain (ENT) 916.80p -0.46%
HSBC Holdings (HSBA) 882.20p -0.35%
Unilever (ULVR) 4,476.00p -0.22%
FTSE 250 - Risers
Close Brothers Group (CBG) 398.80p 7.20%
Currys (CURY) 125.60p 5.99%
Genus (GNS) 2,065.00p 3.35%
Greggs (GRG) 1,729.00p 3.22%
Hochschild Mining (HOC) 274.80p 2.77%
Murray Income Trust (MUT) 874.00p 2.58%
Vistry Group (VTY) 633.40p 2.49%
Telecom Plus (TEP) 1,984.00p 2.48%
TBC Bank Group (TBCG) 4,695.00p 2.40%
Bodycote (BOY) 601.50p 2.38%
FTSE 250 - Fallers
Baltic Classifieds Group (BCG) 312.50p -11.60%
Watches of Switzerland Group (WOSG) 389.20p -7.69%
Keller Group (KLR) 1,364.00p -4.88%
Workspace Group (WKP) 396.00p -2.94%
FirstGroup (FGP) 222.80p -2.28%
W.A.G Payment Solutions (WPS) 85.80p -2.05%
Big Yellow Group (BYG) 947.00p -1.87%
JPMorgan European Discovery Trust (JEDT) 564.00p -1.57%
Renishaw (RSW) 2,855.00p -1.55%
Wizz Air Holdings (WIZZ) 1,066.00p -1.30%
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN