London midday: Stocks struggle for direction as risk appetite declines

The UK stock market was more or less flat on Wednesday as strong gains in retail, led by Marks & Spencer, were offset by falls in the financial and mining sectors.

The FTSE 100 was struggling for direction for most of the morning, swinging between gains and losses as investors continued to act cautiously following strong gains made last week.

By 1221 GMT, the index was up just 0.1% at 7,415.

Sentiment in London was dampened in morning trade after Bank of England governor Andrew Bailey said it was too early to talk about when to cut interest rates. This followed recent comments by the Bank’s chief economist, Huw Pill, who said that market expectations for rate cuts to begin in August 2024 seemed reasonable.

“This felt like a shot across the bow, aimed at Huw Pill,” said David Morrison, senior market analyst at Trade Nation. “Gilt yields rose on Mr Bailey’s comments, having dropped on Mr Pill’s, while sterling managed to stop falling, finding support around the 1.2250 level. Mr Pill is speaking again tomorrow morning, and it will be interesting to hear if he rows back from earlier comments,” Morrison said.

In other news on Wednesday, German consumer prices stalled over the month of October, meaning the annual rate of inflation held steady at 3.8%, as expected by the market.

Eurozone retail sales fell by 0.3% in September, falling for the third straight month, slightly worse than expectations, though August’s data was upwardly revised to -0.7% from -1.2% initially.

Looking ahead, eyes will turn to Federal Reserve chair Jerome Powell, who is due to give a speech at 1415 GMT, as markets look for any indication of how future monetary policy will pan out.

M&S impresses

UK retailer Marks & Spencer on Wednesday reinstated its dividend and delivered a 56.2% rise in first-half profits, causing shares to surge over 10%. The company posted pre-tax profits of £325.6m in the six months to September 30, compared with £208m a year ago. Revenue rose 10.8% to £6.1bn, driven by a 14.7% rise in food sales, up 11% on a like-for-like basis.

“Marks & Spencer’s first-half results are so good that management’s biggest challenge now may be to stop analysts getting over-excited and prevent them from upgrading their numbers too much and setting too high a bar of expectations,” says AJ Bell investment director Russ Mould

Sector peers Next, B&M, AB Foods and Ocado were also performing well early on.

On the downside were a bunch of financial and mining stocks as risk appetite waned, with shares in Hargreaves Lansdown, Prudential and Legal & General all lower, along with Fresnillo, Anglo American and Endeavour Mining.

Anglo American also fell after reporting another big slide in diamond sales at its latest tender of De Beers, blaming continuing macroeconomic "challenges". De Beers sold just $80m of rough diamonds in its ninth sales cycle of the year, down from $200m at the previous tender and $454m in the ninth tender of 2022.

ITV disappointed after reporting just a 1% improvement in total revenue for the first nine months of the year to £2.98bn, causing shares to slide. The broadcaster said the growth in revenue from ITV Studios and M&E digital revenues offset the decline in linear advertising revenue as it continued to diversify its business.

Pub operator JD Wetherspoon rose after announcing a 9.5% increase in like-for-like sales in the first quarter, driven by growth in bar, food, and fruit machine sales.

Market Movers

FTSE 100 (UKX) 7,415.03 0.07%
FTSE 250 (MCX) 17,791.26 0.17%
techMARK (TASX) 4,098.57 0.13%

FTSE 100 - Risers

Marks & Spencer Group (MKS) 248.50p 10.35%
Rolls-Royce Holdings (RR.) 236.10p 4.47%
Entain (ENT) 973.20p 3.42%
Associated British Foods (ABF) 2,315.00p 2.89%
Unite Group (UTG) 940.50p 1.95%
Flutter Entertainment (CDI) (FLTR) 13,755.00p 1.51%
International Consolidated Airlines Group SA (CDI) (IAG) 151.80p 1.44%
B&M European Value Retail S.A. (DI) (BME) 539.00p 1.24%
Melrose Industries (MRO) 512.60p 1.14%
Compass Group (CPG) 2,071.00p 1.02%

FTSE 100 - Fallers

Hargreaves Lansdown (HL.) 705.60p -3.05%
SSE (SSE) 1,620.00p -2.50%
National Grid (NG.) 967.60p -2.28%
Prudential (PRU) 888.00p -1.55%
Centrica (CNA) 148.60p -1.49%
BT Group (BT.A) 122.20p -1.49%
Fresnillo (FRES) 543.00p -1.42%
Vodafone Group (VOD) 77.09p -1.38%
St James's Place (STJ) 649.60p -1.28%
Legal & General Group (LGEN) 219.50p -1.04%

FTSE 250 - Risers

Dr. Martens (DOCS) 124.50p 2.72%
Hilton Food Group (HFG) 692.00p 2.67%
Hiscox Limited (DI) (HSX) 997.00p 2.62%
Vietnam Enterprise Investments (DI) (VEIL) 552.00p 2.41%
Investec (INVP) 489.60p 2.38%
888 Holdings (DI) (888) 81.90p 2.31%
Octopus Renewables Infrastructure Trust (ORIT) 92.00p 2.22%
Trainline (TRN) 290.40p 2.11%
Digital 9 Infrastructure NPV (DGI9) 49.50p 2.06%
W.A.G Payment Solutions (WPS) 92.80p 1.98%

FTSE 250 - Fallers

ITV (ITV) 62.26p -5.09%
CLS Holdings (CLI) 91.60p -3.48%
4Imprint Group (FOUR) 4,290.00p -3.27%
Liontrust Asset Management (LIO) 539.00p -3.14%
CAB Payments Holdings (CABP) 60.25p -2.82%
Pennon Group (PNN) 723.50p -2.49%
FDM Group (Holdings) (FDM) 458.00p -2.24%
Ferrexpo (FXPO) 73.85p -2.06%
Ceres Power Holdings (CWR) 209.00p -1.97%
Playtech (PTEC) 409.60p -1.87%