London midday: FTSE edges up as Rolls-Royce rallies; PMI in focus

London stocks had edged higher by midday on Thursday as investors cheered solid results from US AI chipmaker Nvidia overnight and strong numbers from engine maker Rolls-Royce.

The FTSE 100 was up 0.3% at 7,684.45.

Sentiment got a boost after Japan’s Nikkei hit a record high. Russ Mould, investment director at AJ Bell, said: "It’s a record-breaking day for stocks and shares after two major indices hit new highs. Japan’s Nikkei 225 and Europe’s Stoxx 600 pushed ahead to new record levels.

"The Nikkei has been rallying since the start of 2023 when Japan was flagged by many investment experts as having multiple attractions. Company valuations are attractive versus the US, there is the potential to get a growing stream of dividends thanks a structural shift in the country for corporates be more shareholder friendly, and it offers an alternative place to obtain Asian exposure for investors fed up with disappointment from China.

"This has become a compelling sales pitch for investors looking to diversify and the strong performance last year has also drawn in more people. The Nikkei beat the S&P 500 in 2023 with a 28.2% return versus 24.2% from the US index and that outperformance has continued in 2024. This year it has returned 16.8% compared with 4.4% from the S&P.

"Growing expectations for central banks to cut interest rates has boosted investors’ risk appetite for equities once again, and we’ve seen strong gains across multiple markets since autumn 2023.

"Nvidia’s better than expected results last night could help to keep investor sentiment high and that positivity has spread to other parts of the market. Futures prices point to a strong session on Wall Street when its markets open later today."

On home shores, data showed that private sector activity picked up to a nine-month high in February as solid service-sector growth made up for continued weakness in manufacturing.

The S&P Global/CIPS composite purchasing managers' index (PMI), a leading indicator gauging economic activity across services and manufacturing combined, rose to 53.3 this month, surprising analysts who had pencilled in no change from January's level of 52.9.

This was the fourth consecutive month of growth - indicated by any figure over 50 - and the strongest reading since May 2023.

S&P Global said that February's data highlighted a solid improvement in customer demand, with the biggest increase in new work for nine months. Meanwhile, hopes of a sustained domestic rebound in economic conditions resulted in the highest level of optimism regarding the year-ahead business outlook since February 2022.

The services PMI held steady at 54.3, ahead of the 54.1 consensus estimate, while the manufacturing PMI rose to a three-month high of 47.1 from 47.0, albeit missing the 47.5 expected by economists.

"UK economic growth has accelerated in February, with the early PMI survey data pointing to the largest rise in business activity for nine months," said Chris Williamson, chief business economist at S&P Global Market Intelligence.

"This is by no means a one-off improvement, as faster growth has now been recorded for four straight months after a brief spell of decline late last year."

Williamson added: "It's particularly encouraging to see that the upturn in growth has been accompanied by a surge in optimism about year-ahead prospects to the highest for two years, in turn encouraging a second month of increased employment."

In equity markets, Rolls-Royce jumped to the top of the FTSE 100 as it reported a more than doubling of its full-year profits, underpinned by its civil aerospace segment. Full-year 2023 underlying operating profit came in at £1.6bn, up from £652m a year earlier, with revenues rising to £15.4bn from £12.7bn. Analysts were expecting operating profit of £1.4bn.

Beazley rallied as it upgraded its guidance on the undiscounted combined ratio from low-80s to mid-70s for 2023 thanks to better-than-expected claims experience during the year. It also said that as well as an ordinary dividend, shareholders will receive an additional capital return for the year of around $300m.

Hikma Pharmaceuticals gained as it bumped up its dividend by almost a third following double-digit growth in full-year core revenues and profits in 2023.

Lloyds Bank reversed earlier losses to trade up, as it reported a 57% jump in full-year profits and announced another £2bn share buyback, but also set aside £450m for the regulatory probe into UK motor financing.

Anglo American was up despite slashing its annual dividend by a half after seeing profits plunge in 2023 on the back of impairments and downturns in the platinum and diamond markets.

Mondi advanced even as the paper and packaging firm reported lower full-year profits on the back of weaker demand and lower prices, with the latter continuing into the first quarter of 2024.

Indivior surged as the opioid addiction treatment maker said it was considering moving its primary listing to the US.

Jupiter Fund Management pushed higher as it said full-year underlying pre-tax profit rose 36%.

On the downside, advertising giant WPP lost ground even as full-year results came in as expected, while Hargreaves Lansdown fell as it posted a decline in net new business.

Market Movers

FTSE 100 (UKX) 7,684.45 0.29%
FTSE 250 (MCX) 19,258.56 0.73%
techMARK (TASX) 4,385.39 0.68%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 358.60p 8.83%
Beazley (BEZ) 632.50p 8.68%
Anglo American (AAL) 1,821.00p 6.01%
Hikma Pharmaceuticals (HIK) 2,098.00p 5.03%
Intertek Group (ITRK) 4,605.00p 2.84%
Scottish Mortgage Inv Trust (SMT) 783.80p 2.78%
Lloyds Banking Group (LLOY) 44.42p 2.62%
Rightmove (RMV) 546.40p 2.55%
Mondi (MNDI) 1,416.00p 2.20%
Smith (DS) (SMDS) 326.00p 1.87%

FTSE 100 - Fallers

WPP (WPP) 758.40p -2.82%
Tesco (TSCO) 279.20p -2.21%
Land Securities Group (LAND) 632.20p -2.11%
AstraZeneca (AZN) 9,891.00p -2.09%
Endeavour Mining (EDV) 1,291.00p -1.60%
Whitbread (WTB) 3,526.00p -1.37%
Unilever (ULVR) 4,000.00p -1.34%
Next (NXT) 8,458.00p -1.12%
Sainsbury (J) (SBRY) 256.40p -1.12%
SSE (SSE) 1,591.50p -1.12%

FTSE 250 - Risers

Indivior (INDV) 1,578.00p 16.37%
Me Group International (MEGP) 145.00p 9.19%
Jupiter Fund Management (JUP) 87.50p 6.71%
Carnival (CCL) 1,118.00p 5.97%
Lancashire Holdings Limited (LRE) 653.50p 5.74%
Close Brothers Group (CBG) 340.80p 5.38%
Genus (GNS) 2,010.00p 5.13%
Morgan Sindall Group (MGNS) 2,315.00p 4.51%
Diversified Energy Company (DEC) 995.00p 3.97%
Future (FUTR) 695.50p 3.73%

FTSE 250 - Fallers

Hargreaves Lansdown (HL.) 750.20p -6.85%
BBGI Global Infrastructure S.A. NPV (DI) (BBGI) 123.00p -2.54%
RHI Magnesita N.V. (DI) (RHIM) 3,364.00p -2.27%
Safestore Holdings (SAFE) 780.50p -2.01%
PZ Cussons (PZC) 101.20p -1.75%
The Renewables Infrastructure Group Limited (TRIG) 98.30p -1.50%
IP Group (IPO) 49.40p -1.40%
Tritax Eurobox (GBP) (EBOX) 51.90p -0.95%
Domino's Pizza Group (DOM) 375.80p -0.95%
British Land Company (BLND) 366.20p -0.87%