London midday: FTSE maintains gains as budget U-turn expected

London stocks were still firmly in the black by midday on Friday, with prime minister Liz Truss expected to hold a press conference amid growing speculation the government will backtrack once more on its controversial mini-budget.

The FTSE 100 was up 1% at 6,934.11, gilt yields fell and sterling was down 0.5% against the dollar at 1.1266.

It was reported that Truss will hold a press conference later in the day but that chancellor Kwasi Kwarteng - who has just landed back in the UK after returning early from his visit to the International Monetary Fund in Washington - will not be appearing alongside her.

According to reports, Truss could announce a U-turn on plans to scrap the rise in corporate tax to 25% from 19% next April, but will keep the cut in National Insurance and the 1p income tax basic rate cut.

Friday’s shenanigans coincide with the end of the Bank of England’s £65bn bond-buying programme, which was implemented as a result of the chaos brought about by the mini-budget.

Oanda market analyst Craig Erlam said: "The backlash against the mini-budget has been absolutely fierce to the point that after only five weeks in office, the chancellor looks like a dead man walking and the prime minister is under immense pressure, perhaps even at risk herself. That is the scale of the atrocious handling of the situation in recent weeks and now both are scrambling to save their jobs.

"Meanwhile, the BoE emergency gilt buying programme is scheduled to draw to a close today which may coincide nicely with certain government U-turns and hopefully bring some stability back to the markets. Of course, we should be in no doubt that if we see further turmoil, the central bank will step back in but looking at longer-dated yields this morning, there's some hope for the Governor, who himself has come under fire this past week. It's not been a great few weeks for brand UK has it?"

Investors were also turning their attention to earnings across the pond, with banks JPMorgan, Citigroup, Morgan Stanley and Wells Fargo all slated to report.

In UK equity markets, banks and housebuilders were among the top performers, with Barclays, Lloyds, Taylor Wimpey, Barratt and Berkeley all up following recent heavy losses.

Packaging and paper group Mondi gained as it reported a 55% jump in third-quarter underlying core earnings amid higher selling prices and volume growth.

On the downside, International Distribution Services tumbled after it said Royal Mail was looking to cut 10,000 jobs by the end of August 2023 and warned of financial losses due to industrial action and lower parcel volumes.

The newly renamed Royal Mail parent company said the job loss figure could include up to 6,000 redundancies. For the current fiscal year, Royal Mail forecast an adjusted operating loss of around £350m, including the direct, immediate impact of eight days of industrial action which have taken place or been notified to Royal Mail, but excluding any charges for voluntary redundancy costs.

"This may increase to around a £450m loss if customers move volume away for longer periods following the initial disruption," it added.

Market Movers

FTSE 100 (UKX) 6,921.64 1.04%
FTSE 250 (MCX) 17,150.88 1.31%
techMARK (TASX) 4,116.20 1.10%

FTSE 100 - Risers

Hargreaves Lansdown (HL.) 831.00p 4.21%
Taylor Wimpey (TW.) 89.94p 3.86%
Barratt Developments (BDEV) 353.90p 3.54%
Lloyds Banking Group (LLOY) 43.22p 3.47%
SEGRO (SGRO) 735.80p 3.37%
Ocado Group (OCDO) 450.40p 3.35%
Centrica (CNA) 72.62p 3.26%
Entain (ENT) 1,168.50p 3.13%
B&M European Value Retail S.A. (DI) (BME) 316.40p 3.13%
Spirax-Sarco Engineering (SPX) 10,585.00p 2.97%

FTSE 100 - Fallers

Burberry Group (BRBY) 1,837.50p -0.94%
Aveva Group (AVV) 3,153.00p -0.63%
Standard Chartered (STAN) 548.80p -0.51%
Harbour Energy (HBR) 418.30p -0.45%
Intermediate Capital Group (ICP) 985.00p -0.42%
Prudential (PRU) 894.20p -0.38%
Shell (SHEL) 2,293.00p -0.35%
Fresnillo (FRES) 728.00p -0.03%
CRH (CDI) (CRH) 2,888.00p 0.17%
Imperial Brands (IMB) 2,015.00p 0.20%

FTSE 250 - Risers

Petrofac Ltd. (PFC) 102.30p 7.35%
Quilter (QLT) 92.12p 6.94%
Workspace Group (WKP) 367.80p 5.75%
Drax Group (DRX) 532.00p 5.66%
Genus (GNS) 2,494.00p 5.14%
AJ Bell (AJB) 295.60p 4.82%
Sirius Real Estate Ltd. (SRE) 70.70p 4.43%
Hipgnosis Songs Fund Limited NPV (SONG) 85.80p 4.25%
Abrdn Private Equity Opportunities Trust (APEO) 387.00p 4.03%
easyJet (EZJ) 304.20p 3.93%

FTSE 250 - Fallers

International Distributions Services (IDS) 183.90p -12.30%
Softcat (SCT) 1,092.00p -2.67%
RHI Magnesita N.V. (DI) (RHIM) 1,620.00p -2.53%
Syncona Limited NPV (SYNC) 168.00p -2.33%
ICG Enterprise Trust (ICGT) 1,006.00p -2.14%
Network International Holdings (NETW) 295.20p -1.80%
Ashmore Group (ASHM) 187.50p -1.57%
Bank of Georgia Group (BGEO) 1,976.00p -1.45%
Ferrexpo (FXPO) 120.00p -1.23%
TBC Bank Group (TBCG) 1,778.00p -1.22%