London midday: FTSE drifts lower; Diploma rallies on acquisition

London stocks were a little weaker by midday on Wednesday, struggling for direction as investors eyed a key US inflation reading later in the week.

The FTSE 100 was down 0.3% at 7,909.07.

Richard Hunter, head of markets at Interactive Investor, said: "A shortened trading week which coincides with the end of the first quarter has left investors sitting on their hands, seemingly unwilling to commit to new positions in the absence of any major corporate or economic catalysts.

"Inflation and therefore the direction of interest rates remains the central theme, with the latest Personal Consumption Expenditures report due on Friday, when markets are closed, thus pushing back any price reaction until next week. The inflation reading has the potential to unsettle sentiment, with some of the more recent data coming in slightly higher than expected, reducing pressure on the Federal Reserve even to consider cuts.

"The report is expected to show an increase of 0.4% for February and 2.5% annualised, with core inflation excluding volatile food and energy components estimated to rise by 0.3% and 2.8% respectively. Any deviation to these numbers in either direction would be market moving, leaving investors mostly on the sidelines for the next few days."

In equity markets, Diploma shot to the top of the FTSE 100 after saying it had bought Peerless Aerospace Fastener, a distributor of specialty fasteners into the US and European aerospace markets, for £236m.

DS Smith - which recently agreed to be taken over by Mondi - also racked up strong gains after confirming late on Tuesday that it was in talks with New York-listed International Paper about a possible takeover offer.

Under the terms of the proposal, DS Smith shareholders would receive 0.1285 shares in International Paper for each of theirs, meaning they would own around 33.8% of the combined entity.

Based on International Paper's share price of $40.85 at the close on Monday, this represents 415p and a premium of 45% to the closing DS Smith share price on 7 February, which was the last day before the start of the offer period with Mondi.

BA and Iberia owner IAG flew higher as JPMorgan Cazenove placed the shares on ‘positive catalyst watch’ ahead of first-quarter results. It said the Q1 results could be a catalyst to spur consensus 2024E EBIT upgrades on the stock, given a more positive pricing backdrop both for Q1 and into the summer.

CMC Markets surged after saying that FY 2024 net operating income was set to exceed the top end of the previously-guided range of £290m to £310m as positive momentum continued into the fourth quarter after a strong performance in Q3.

North Sea oil and gas producer Ithaca Energy gained after saying it was looking at a potential tie-up with Italy's Eni covering its UK assets. It also reported a slump in annual profits, blaming the British government’s energy tax and project impairments.

Primark owner Associated British Foods was also trading up, likely on positive read-across from H&M’s first-quarter results.

Travis Perkins rose as it said its chief executive Nick Roberts was stepping down from his position and the company's board after serving for five years.

On the downside, TI Fluid Systems slumped after BC Omega Holdco sold 50m ordinary shares in the company in a placing. BC Omega Holdco is an entity indirectly controlled by investment funds advised by Bain Capital, LP or its affiliates.

Market Movers

FTSE 100 (UKX) 7,909.07 -0.28%
FTSE 250 (MCX) 19,728.38 -0.25%
techMARK (TASX) 4,505.40 -0.31%

FTSE 100 - Risers

Diploma (DPLM) 3,812.00p 11.27%
Smith (DS) (SMDS) 390.30p 8.48%
Sainsbury (J) (SBRY) 270.00p 2.86%
International Consolidated Airlines Group SA (CDI) (IAG) 169.45p 2.08%
Associated British Foods (ABF) 2,515.00p 1.70%
AstraZeneca (AZN) 10,606.00p 1.59%
Fresnillo (FRES) 452.50p 1.50%
Airtel Africa (AAF) 104.00p 1.27%
SSE (SSE) 1,632.50p 1.21%
Rentokil Initial (RTO) 470.70p 0.99%

FTSE 100 - Fallers

Flutter Entertainment (DI) (FLTR) 16,480.00p -3.60%
Smiths Group (SMIN) 1,655.00p -2.07%
Standard Chartered (STAN) 682.80p -1.76%
Ocado Group (OCDO) 459.30p -1.71%
Spirax-Sarco Engineering (SPX) 10,140.00p -1.65%
Entain (ENT) 781.20p -1.59%
HSBC Holdings (HSBA) 617.40p -1.58%
BP (BP.) 491.95p -1.57%
St James's Place (STJ) 456.20p -1.51%
WPP (WPP) 730.80p -1.40%

FTSE 250 - Risers

Hochschild Mining (HOC) 123.00p 2.93%
Ithaca Energy (ITH) 145.70p 2.46%
Softcat (SCT) 1,588.00p 2.39%
Endeavour Mining (EDV) 1,537.00p 2.33%
Tate & Lyle (TATE) 616.00p 2.24%
Carnival (CCL) 1,242.00p 2.14%
Trustpilot Group (TRST) 193.60p 2.11%
Sirius Real Estate Ltd. (SRE) 94.90p 1.93%
Plus500 Ltd (DI) (PLUS) 1,800.00p 1.81%
Helios Towers (HTWS) 92.00p 1.55%

FTSE 250 - Fallers

TI Fluid Systems (TIFS) 141.80p -16.19%
Wood Group (John) (WG.) 132.90p -3.63%
Me Group International (MEGP) 163.00p -2.40%
Johnson Matthey (JMAT) 1,773.00p -2.34%
Pets at Home Group (PETS) 266.40p -2.27%
Oxford Instruments (OXIG) 2,055.00p -2.14%
Bellway (BWY) 2,632.00p -2.08%
Abrdn (ABDN) 141.65p -2.01%
Crest Nicholson Holdings (CRST) 191.90p -1.99%
Harbour Energy (HBR) 269.70p -1.93%