London midday: FTSE higher but gains muted ahead of US election

London stocks had pushed a little higher by midday on Tuesday, but gains were unspectacular as investors erred on the side of caution as Americans headed to the polls.

The FTSE 100 was up 0.2% at 8,199.03.

Russ Mould, investment director at AJ Bell, said: "European indices including the FTSE 100 pressed ahead on US election day.

"The fact both defensive sectors including utilities and tobacco and cyclical sectors such as miners were in demand would suggest that investors might be hedging their bets ahead of the US election result. A series of broker upgrades for the UK utilities sector also helped.

"A contested election result could cause volatility on the markets which theoretically would see defensive stocks provide some portfolio ballast. Equally, a clear winner quickly after voting ends could provide some relief to investors and keep markets trucking along.

"Whether that remains the case a few days later is uncertain as investors haven’t priced in a particular win yet, and there will be good and bad points to digest for markets if either Donald Trump or Kamala Harris wins. Once investors have had time to consider the new lay of the land, there will almost certainly be shifts in investment portfolios."

On home shores, a survey showed that service sector growth eased to its lowest level in nearly a year in October as heightened uncertainty ahead of the Autumn Budget delayed spending decisions.

The S&P Global purchasing managers' index for the UK services sector fell to 52.0 last month. While this was slightly ahead of the 51.7 level expected by economists, it was down from 52.4 in September and the lowest level since November 2023.

Respondents suggested that improving economic conditions had helped to lift overall business activity in October - indicated by any figure over the neutral 50-point level - though geopolitical tensions and caution ahead of the budget weighed on clients' willingness to spend.

Longer sales conversion cycles also contributed to a softer rate of new business growth, with the increase in new work slowing to its lowest rate since June. As a result, staffing numbers fell for the first time since December, with firms citing budget constraints due to higher wages.

Nevertheless, export sales grew at their fastest clip since March 2023, with stronger demand from EU clients despite ongoing trade frictions due to Brexit, S&P Global said.

"The wait for clarity on government policy ahead of the Autumn Budget was widely reported to have weighed on business confidence and spending," said Tim Moore, the economics director at S&P Global Market Intelligence.

"Broader geopolitical concerns and forthcoming US elections also added to a sense of wait-and-see on business investment decisions in October. At the same time, cost of living pressures remained a constraint on household spending."

Earlier, data from the British Retail Consortium and KPMG showed that retail sales saw a modest increase in October, rising by 0.6% year-on-year.

In equity markets, water companies were on the rise as both Citi and JPMorgan sounded an upbeat note ahead of Ofwat’s Final Determinations next month, with Severn Trent, United Utilities and Pennon among the top performers.

Vodafone gained as the Competition and Markets Authority said the merger between it and Hutchison’s Three UK could proceed "if appropriate remedies are implemented".

Primark owner Associated British Foods was in the black as it posted a 33% jump in full-year adjusted pre-tax profit and announced a special dividend, with revenue growth in both the retail and food businesses.

Interdealer broker TP ICAP advanced as it reported record third-quarter revenue following strong performance in its Global Broking and Liquidnet businesses.

On the downside, asset manager Schroders tumbled as it reported net outflows of £2.3bn for the third quarter.

Morgan Advanced Materials fell after a trading statement.

Market Movers

FTSE 100 (UKX) 8,199.03 0.18%
FTSE 250 (MCX) 20,481.80 0.10%
techMARK (TASX) 4,613.35 0.00%

FTSE 100 - Risers

Melrose Industries (MRO) 491.70p 3.69%
3i Group (III) 3,313.00p 3.50%
BT Group (BT.A) 145.90p 2.64%
United Utilities Group (UU.) 1,050.00p 2.24%
Severn Trent (SVT) 2,627.00p 2.22%
Associated British Foods (ABF) 2,328.00p 1.70%
Vodafone Group (VOD) 73.32p 1.58%
BAE Systems (BA.) 1,261.50p 1.37%
Rentokil Initial (RTO) 391.40p 1.35%
Next (NXT) 10,015.00p 1.35%

FTSE 100 - Fallers

Schroders (SDR) 313.00p -13.92%
AstraZeneca (AZN) 10,840.00p -1.83%
Spirax Group (SPX) 6,500.00p -0.76%
Land Securities Group (LAND) 599.00p -0.75%
Smith (DS) (SMDS) 549.00p -0.63%
Phoenix Group Holdings (PHNX) 497.00p -0.60%
Croda International (CRDA) 3,741.00p -0.58%
Admiral Group (ADM) 2,539.00p -0.55%
Hikma Pharmaceuticals (HIK) 1,846.00p -0.54%
Pershing Square Holdings Ltd NPV (PSH) 3,452.00p -0.52%

FTSE 250 - Risers

TP Icap Group (TCAP) 238.50p 4.84%
Pennon Group (PNN) 558.00p 3.53%
International Workplace Group (IWG) 166.20p 3.17%
Aston Martin Lagonda Global Holdings (AML) 120.80p 2.81%
Ithaca Energy (ITH) 100.90p 2.64%
Bank of Georgia Group (BGEO) 4,370.00p 2.58%
Fidelity China Special Situations (FCSS) 220.50p 2.08%
Hochschild Mining (HOC) 236.50p 1.94%
TBC Bank Group (TBCG) 2,870.00p 1.77%
Helios Towers (HTWS) 111.40p 1.64%

FTSE 250 - Fallers

Burberry Group (BRBY) 796.60p -6.39%
Ocado Group (OCDO) 351.10p -1.87%
Auction Technology Group (ATG) 462.50p -1.60%
Jupiter Fund Management (JUP) 78.60p -1.38%
Spectris (SXS) 2,472.00p -1.36%
SDCL Energy Efficiency Income Trust (SEIT) 57.20p -1.04%
Chrysalis Investments Limited NPV (CHRY) 85.90p -1.04%
Computacenter (CCC) 2,142.00p -1.02%
Foresight Environmental Infrastructure Limited (FGEN) 84.60p -0.94%
Renishaw (RSW) 3,185.00p -0.93%