London close: Stocks manage gains amid wave of data

London’s stock market saw moderate gains on Wednesday, despite retreating from session highs by the close of trading.

The positive performance was buoyed in part by Prudential’s strong financial results, as well as the latest economic data releases on UK mortgage approvals and consumer credit.

By the close, the FTSE 100 was up 0.12% at 7,473.67 points, while the FTSE 250 performed slightly better, finishing the day with a 0.52% gain at 18,564.52.

In currency markets, the sterling was last up 0.62% to trade at $1.2722, while it managed gains of 0.2% against the euro to change hands at €1.1644.

“The FTSE 100 looks set for its 6th day of daily gains as it looks to build on its strong start to the week yesterday, helped by some of the factors that drove yesterday’s momentum, as lower yields and softer economic data reinforced hopes of a US rate pause next month,” said CMC Markets chief market analyst Michael Hewson.

“House builders are having another decent day after yesterday’s strong session which appeared to be driven by the announcement that the government would be watering down EU environmental rules, which could help speed up the planning process for new build homes.”

Hewson noted that Persimmon, Taylor Wimpey, and Barratt Developments appeared to be leading the gainers in the sector.

“Prudential shares are enjoying a decent session, having dropped to their lowest levels this year earlier this month, they’ve pushed to the top of the FTSE 100, after reporting adjusting operating profit of $1.46bn, a 4% improvement on last year’s $1.41bn.”

UK mortgage approvals drop, eurozone sentiment dips, and US second-quarter growth misses expectations

In economic news, the Bank of England, in its monthly money and credit report, disclosed that net mortgage approvals in the UK - approvals minus cancellations - decreased to 49,400 in July, from 54,600 in June.

The dip in mortgage approvals was generally anticipated by economists, and highlighted the strain of increasing living costs on potential homebuyers.

On the other hand, remortgaging approvals saw a minor uptick, moving from 39,100 to 39,300, although the figures only represented homeowners who switched lenders.

Interest rates on new mortgages rose yet again, this time by three basis points, to stand at 4.66% - a rate more than double that at the same period last year.

Consumer credit also took a step back, with net borrowing dropping to £1.2 billion in July from a five-year peak of £1.6 billion in June.

The central bank attributed the decline mainly to a reduction in non-credit card borrowing like car dealership financing and personal loans, while credit card borrowing remained relatively stable.

Turning to the eurozone, economic sentiment took a further dip in August, with the Sentix economic sentiment indicator falling to 93.3 from 94.5 in July.

That was slightly below the anticipated 93.7, adding another note of caution to the European economic landscape.

Germany, Europe’s largest economy, meanwhile saw a marginal decline in its non-harmonised inflation rate, which decreased to 6.1% in August from 6.2% in July.

However, when harmonised to compare with other EU countries, consumer prices actually rose 6.4%.

Across the Atlantic, the US economy also showed signs of a slowdown.

Revised estimates from the Bureau of Economic Analysis revealed that the US GDP grew by only 2.1% in the second quarter of 2023, less than the initial 2.4% estimate.

While that represented an improvement over the revised 2% growth seen in the first quarter, it falls short of expectations.

Prudential leads FTSE 100 gainers; Direct Line and Kingfisher struggle

On London’s equity markets, Prudential was the day’s standout, climbing 2% after it reported a 6% rise in its first-half operating profits.

That gain was primarily fuelled by increased sales in Hong Kong to Chinese investors, following the easing of Covid restrictions.

The insurance giant also announced a strategic pivot towards the Asian market.

Smiths Group also had a positive day, with a 1.17% increase in its share price.

The engineering firm said it was enhancing its US heating, ventilation, and air conditioning (HVAC) operations through the acquisition of Ohio-based Heating & Cooling Products for $82m.

Housebuilding companies Persimmon and Taylor Wimpey advanced 2.21% and 1.73% respectively.

Their stocks rallied following news on Tuesday that housing secretary Michael Gove was likely to ease planning regulations to encourage housebuilding.

Shares of media group Future soared 3.9% after reports that new CEO Jon Steinberg was considering divesting the company of its business-to-business operations, including SmartBrief, a digital newsletter provider.

According to sources, Future had engaged JEGI Clarity, a media-focused advisory firm, to assess interest from potential buyers.

Energy stocks also had a strong showing, with Diversified Energy and Harbour Energy up by 5.03% and 1.66% respectively, primarily benefiting from a rise in oil prices.

On the downside, Direct Line Insurance Group saw its shares drop by 1.37%.

Despite naming Adam Winslow as the incoming CEO to replace acting CEO Jon Greenwood, the stock reversed earlier gains by the end of the afternoon.

Winslow, who currently heads Aviva's UK and Ireland general insurance business, was slated to begin his term in the first quarter of 2024.

Elsewhere, Kingfisher was down 2.37% after JPMorgan Cazenove cut its price target on the stock from 230p to 220p and placed it on a 'negative catalyst watch’.

Kingfisher, the owner of B&Q, was set to announce its first-half results on 19 September.

“Whilst data for UK and French home improvement has remained strong, both countries slowed in July, and housing markets have softened,” JPMorgan noted.

“Combined with our view that we could see more promotional behaviour from competitor Leroy Merlin, as it targets regaining share, we continue to see downside risk to forecasts … and therefore place the stock on negative catalyst watch.”

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,473.67 0.12%
FTSE 250 (MCX) 18,564.52 0.52%
techMARK (TASX) 4,293.58 0.04%

FTSE 100 - Risers

Persimmon (PSN) 1,062.50p 2.26%
Fresnillo (FRES) 583.20p 2.21%
Taylor Wimpey (TW.) 115.10p 1.95%
Rolls-Royce Holdings (RR.) 216.80p 1.83%
Prudential (PRU) 999.80p 1.52%
Barratt Developments (BDEV) 454.30p 1.52%
B&M European Value Retail S.A. (DI) (BME) 573.80p 1.49%
Admiral Group (ADM) 2,467.00p 1.44%
Berkeley Group Holdings (The) (BKG) 4,098.00p 1.44%
Ocado Group (OCDO) 793.40p 1.43%

FTSE 100 - Fallers

Kingfisher (KGF) 231.00p -2.37%
BT Group (BT.A) 114.15p -1.64%
Hiscox Limited (DI) (HSX) 990.00p -1.30%
SSE (SSE) 1,630.50p -1.24%
JD Sports Fashion (JD.) 143.25p -1.24%
International Consolidated Airlines Group SA (CDI) (IAG) 161.20p -1.16%
Antofagasta (ANTO) 1,446.00p -1.06%
Flutter Entertainment (CDI) (FLTR) 14,210.00p -0.98%
HSBC Holdings (HSBA) 590.70p -0.84%
Hargreaves Lansdown (HL.) 770.20p -0.75%

FTSE 250 - Risers

Mobico Group (MCG) 83.45p 5.57%
BBGI Global Infrastructure S.A. NPV (DI) (BBGI) 140.60p 5.08%
Diversified Energy Company (DEC) 96.00p 5.03%
Future (FUTR) 777.00p 3.60%
Mitie Group (MTO) 97.10p 3.30%
HICL Infrastructure (HICL) 132.00p 3.29%
IntegraFin Holding (IHP) 236.60p 3.05%
GCP Infrastructure Investments Ltd (GCP) 72.90p 2.97%
Baltic Classifieds Group (BCG) 216.00p 2.86%
Vistry Group (VTY) 773.50p 2.72%

FTSE 250 - Fallers

Synthomer (SYNT) 64.85p -3.50%
Molten Ventures (GROW) 241.60p -2.82%
Dr. Martens (DOCS) 156.10p -2.32%
Spire Healthcare Group (SPI) 216.50p -2.04%
FDM Group (Holdings) (FDM) 578.00p -2.03%
Capita (CPI) 17.70p -1.67%
TI Fluid Systems (TIFS) 126.60p -1.40%
Direct Line Insurance Group (DLG) 158.60p -1.34%
NCC Group (NCC) 98.10p -1.31%
Babcock International Group (BAB) 379.20p -1.30%