London close: FTSE pares gains to end flat

London stocks ended flat on Friday, unable to hold on to earlier gains despite reassuring comments from a Fed official and encouraging Chinese and UK data.

The FTSE 100 closed unchanged at 7,947.11, having opened in the black and spent most of the day there as investors welcomed comments from Atlanta Federal Reserve President Raphael Bostic, who said on Thursday that he was in favour of "slow and steady" quarter-point US rate increases to limit risk to the economy.

Neil Wilson, chief market analyst at Finalto said: "This seemed to placate markets somewhat after being on a relentless ‘higher for longer’ train for the last few days."

The latest data out of China also helped to underpin the mood as it showed that activity in the services sector picked up more than expected in February amid a recovery in demand.

The Caixin services purchasing managers' index rose to 55.0 from 52.9 in January. This was above consensus expectations for a reading of 54.5 and comfortably above the 50.0 mark that separates contraction from expansion.

Wilson said: "The Chinese recovery is important…a smart exit from Covid and surge in demand from Chinese consumers could be all that’s needed to get the global economy out of its funk".

On home shores, a survey showed the service sector returned to growth in February as business activity expanded at the fastest pace since June 2022.

The S&P Global/CIPS services purchasing managers’ index rose to 53.5 from 48.7 in January, coming in above the 50.0 mark that separates contraction from expansion for the first time in six months. The reading was above the initial estimate of 53.3.

The composite PMI, which measures activity in services and manufacturing, ticked up to 53.1 in February from 48.5 the month before. This was above the initial estimate of 53.0.

In the US, the Institute for Supply Management’s services PMI for February came in at 55.1%, down a touch from 55.2% the previous month but above consensus expectations of 54.5%. The survey showed that business activity, new orders and employment rose last month.

Chris Beauchamp, chief market analyst at IG, said: "This afternoon has seen yet another strong piece of data, this time in the form of the ISM services PMI for the US, but this time around the mood appears to have shifted.

"Recent declines in equities, even the modest ones seen in Europe, appear to have removed some of the hesitancy among investors about putting more money into stocks, having trimmed valuations a touch. This combines with some less hawkish commentary from the Atlanta Fed chair and hopes that China’s parliament will lay out a solid growth target next week."

In equity markets, miners rallied as metals prices rose on the back of the Chinese services data, with Antofagasta, Glencore and Rio Tinto all up.

Persimmon was the top gainer on the FTSE 100, however, having tumbled earlier in the week after a profit warning.

Airlines flew higher after solid received results from Lufthansa, with IAG, Wizz Air and easyJet all up. Cruise operator Carnival also advanced.

On the downside, heavily-weighted BP and Shell were down but off earlier lows, as oil prices slid after the Wall Street Journal reported that the United Arab Emirates is considering leaving the Opec cartel of oil producing countries.

Educational publisher Pearson fell despite reporting a better-than-expected rise in annual profits driven by revenue growth and cost savings and saying it would grow sales by low to mid-single digits this year.

Property portal Rightmove lost ground after it posted a rise in full-year operating profit, pointing to "resilient traffic despite a significantly less frenetic property market than 2021". In the year to the end of December 2022, operating profit was up 7% at £241.3m, with revenues 9% higher at £332.6m.

Rightmove said a total of 16.3bn minutes were spent on the platform during the year, down from 18.3bn in 2021 but still 34% higher than the pre-pandemic record of 2019.

IMI slipped even after the engineering group reported a rise in full-year profits and revenue and hiked its dividend as it said all three divisions had achieved organic revenue growth.

In broker note action, Admiral was knocked lower by a downgrade to ‘neutral’ from 'buy' at Citi, while Hunting slumped after a downgrade to ‘hold’ from ‘buy’ at Berenberg.

Market Movers

FTSE 100 (UKX) 7,947.11 0.04%
FTSE 250 (MCX) 19,937.55 0.43%
techMARK (TASX) 4,643.59 0.13%

FTSE 100 - Risers

Persimmon (PSN) 1,290.00p 4.54%
Ocado Group (OCDO) 550.20p 4.48%
Legal & General Group (LGEN) 263.90p 3.29%
Barratt Developments (BDEV) 447.90p 2.75%
Antofagasta (ANTO) 1,664.00p 2.65%
Severn Trent (SVT) 2,750.00p 2.46%
Ashtead Group (AHT) 5,722.00p 2.40%
BT Group (BT.A) 144.85p 2.37%
Glencore (GLEN) 523.00p 2.35%
International Consolidated Airlines Group SA (CDI) (IAG) 154.70p 2.29%

FTSE 100 - Fallers

Pearson (PSON) 888.00p -3.75%
Frasers Group (FRAS) 778.50p -2.20%
Bunzl (BNZL) 2,939.00p -2.20%
Hiscox Limited (DI) (HSX) 1,097.00p -2.05%
Admiral Group (ADM) 2,111.00p -1.86%
Land Securities Group (LAND) 661.40p -1.40%
BAE Systems (BA.) 908.00p -1.26%
Burberry Group (BRBY) 2,498.00p -1.11%
Rightmove (RMV) 557.80p -1.06%
BP (BP.) 555.30p -1.05%

FTSE 250 - Risers

Aston Martin Lagonda Global Holdings (AML) 239.00p 9.38%
Pennon Group (PNN) 857.50p 6.52%
ASOS (ASC) 925.00p 6.14%
Carnival (CCL) 821.20p 5.72%
International Distributions Services (IDS) 246.60p 5.07%
Wizz Air Holdings (WIZZ) 2,865.00p 4.91%
easyJet (EZJ) 505.00p 4.19%
Watches of Switzerland Group (WOSG) 818.50p 3.15%
AJ Bell (AJB) 335.20p 3.14%
W.A.G Payment Solutions (WPS) 82.50p 3.12%

FTSE 250 - Fallers

Hunting (HTG) 282.00p -7.69%
Coats Group (COA) 74.40p -5.82%
Baltic Classifieds Group (BCG) 155.20p -5.25%
Just Group (JUST) 79.85p -5.17%
Apax Global Alpha Limited (APAX) 177.40p -4.11%
Bakkavor Group (BAKK) 107.00p -3.08%
Vietnam Enterprise Investments (DI) (VEIL) 554.00p -2.64%
Oxford Instruments (OXIG) 2,565.00p -2.29%
Mitie Group (MTO) 79.40p -2.22%
TBC Bank Group (TBCG) 2,465.00p -2.18%