London midday: FTSE flat as investors mull Fed's hawkish pause

London stocks had pared earlier losses to trade flat by midday on Thursday after the US Federal Reserve left rates unchanged but signalled that two more hikes were on the way this year.

The FTSE 100 was steady at 7,605.51.

Richard Hunter, head of markets at Interactive Investor, said any thoughts of rate cuts this year by the Fed have "finally evaporated".

"Although rates were unchanged for the first time in many months, the Fed surprised investors with a suggestion that two further rises could be in the pipeline this year, depending on ongoing economic data. The accompanying comments led investors to dub the decision as a ‘hawkish hold’ as Chair Powell gave an overview of the latest thinking," he said.

"With US growth and the labour market showing few signs of wilting, the groundwork is laid for an economy which at present can clearly withstand the hiking pressure it has been under. By the same token, the previously announced moderation of consumer prices was followed yesterday by a release which showed producer prices falling more than expected. The news prompted Chair Powell to observe that the conditions for slowing inflation were ‘coming into place’, but that the process would nonetheless ‘take some time’."

A disappointing batch of Chinese data was also in focus, as it prompted the country’s central bank to cut its benchmark policy rate for the first time in almost a year.

The People’s Bank of China clipped its medium-term lending facility rate to 2.65% from 2.75% in an effort to stimulate the economy towards its growth target of 5%.

Official data showed retail sales and industrial production both came in lower than forecast, rising 12.7% and 3.5% respectively year-on-year last month but lower than the 18.4% and 5.6% recorded in April. The annual rise was distorted by a low base given Covid lockdowns in the second quarter of 2022.

Figures also showed that fixed assets investments rose 4% year-on-year in May, having risen 4.7% the month before, missing consensus expectations for a 4.4% jump.

Later on Thursday, eyes will be on the European Central Bank as it delivers its latest policy announcement.

In equity markets, Halma slumped as it posted a dip in full-year pre-tax profit, but lifted its dividend as revenues jumped 21%.

Melrose Industries fell after chief executive officer Simon Peckham sold 2m shares in the company at 525p "as a result of a change in personal circumstances".

Elsewhere, RS Group, Land Securities, Intermediate Capital, Pets at Home, Computacenter and 3i Infrastructure all lost ground as they traded without entitlement to the dividend.

Specialist international distribution and services group Bunzl fell after saying it expects underlying revenue growth in the first half of the year to be broadly flat and for group adjusted operating margin to be around the same as the first six months of 2022.

Legal & General was down as it appointed António Simões as chief executive officer. He joins from Banco Santander, where he has been regional head of Europe since September 2020.

Drinks company Diageo was knocked lower by a rating downgrade at Goldman Sachs.

On the upside, events organiser Informa rallied after it lifted its full-year profit and revenue outlook, citing strong performances in all businesses, with revenue now expected to exceed pre-Covid levels.

Pointing to "strong underlying performances combined with portfolio additions", the company upped its adjusted operating profit guidance by 10% to between £750m and £790m, while revenue guidance was boosted 7% to between £2.95bn and £3.05bn.

Asos surged as the online fashion retailer hailed a return to profitability and reiterated its full-year guidance.

Market Movers

FTSE 100 (UKX) 7,605.51 0.04%
FTSE 250 (MCX) 19,047.91 -0.67%
techMARK (TASX) 4,557.69 -0.04%

FTSE 100 - Risers

Ocado Group (OCDO) 423.50p 3.52%
Informa (INF) 723.60p 2.73%
Vodafone Group (VOD) 73.87p 1.41%
Reckitt Benckiser Group (RKT) 5,988.00p 1.39%
Imperial Brands (IMB) 1,766.50p 1.38%
GSK (GSK) 1,380.60p 1.26%
Haleon (HLN) 322.75p 1.21%
Unilever (ULVR) 4,015.00p 1.20%
Shell (SHEL) 2,330.50p 1.13%
British American Tobacco (BATS) 2,598.50p 1.11%

FTSE 100 - Fallers

Halma (HLMA) 2,291.00p -5.68%
Smurfit Kappa Group (CDI) (SKG) 2,846.00p -2.93%
Melrose Industries (MRO) 510.20p -2.71%
NATWEST GROUP (NWG) 258.40p -2.64%
Smith (DS) (SMDS) 305.80p -2.55%
Legal & General Group (LGEN) 232.00p -2.52%
Frasers Group (FRAS) 681.00p -2.51%
Anglo American (AAL) 2,518.50p -2.48%
JD Sports Fashion (JD.) 144.90p -2.26%
Johnson Matthey (JMAT) 1,724.00p -2.07%

FTSE 250 - Risers

ASOS (ASC) 371.70p 13.32%
JTC (JTC) 748.00p 3.46%
Energean (ENOG) 1,128.00p 2.36%
Telecom Plus (TEP) 1,534.00p 2.27%
International Distributions Services (IDS) 210.80p 1.79%
Tullow Oil (TLW) 25.54p 1.59%
Drax Group (DRX) 582.80p 1.43%
Man Group (EMG) 229.00p 1.42%
4Imprint Group (FOUR) 5,050.00p 1.41%
TBC Bank Group (TBCG) 2,540.00p 1.40%

FTSE 250 - Fallers

Synthomer (SYNT) 83.50p -6.60%
Intermediate Capital Group (ICP) 1,429.50p -5.05%
SDCL Energy Efficiency Income Trust (SEIT) 83.90p -3.89%
Watches of Switzerland Group (WOSG) 645.00p -3.87%
Bakkavor Group (BAKK) 92.60p -3.74%
Aston Martin Lagonda Global Holdings (AML) 288.00p -3.55%
W.A.G Payment Solutions (WPS) 87.00p -3.33%
Pets at Home Group (PETS) 374.80p -3.20%
IWG (IWG) 151.90p -3.19%
Warehouse Reit (WHR) 86.60p -3.13%