London midday: FTSE pares losses to trade flat ahead of US inflation

London stocks had pared earlier losses to trade flat by midday on Thursday as investors eyed the release of key US inflation data.

The FTSE 100 was steady at 6,824.98, while sterling was 0.5% higher versus the dollar at 1.1151.

The US consumer price index for September is due out at 1330 BST. The headline rate of inflation is expected to have slipped to 8.1% from 8.3% in August, while the core rate is expected to have fallen to 0.4% from 0.6%.

Russ Mould, investment director at AJ Bell, said: "It feels like the markets are feeding hungrily on any scraps of good news and even the merest hint inflation is cooling would likely be taken as a sign that, despite the US Federal Reserve’s earnest protestations, the tide is about to turn on interest rates.

"Investors probably shouldn’t hold their breath given the trend in core inflation suggests higher prices are proving as sticky as toffee.

"The situation in the US is not as unhappy as in the UK where pension funds are scrambling to prepare for the withdrawal of liquidity support from the Bank of England on Friday - a race which is likely to have few, if any, winners.

"Pressure for further U-turns on the mini-Budget is only likely to build as gilt yields rise and sterling falls, and in the meantime the Bank’s insistence that the time-limited measures will be just that could face a severe test."

Investors were also digesting the latest residential market survey from the Royal Institution of Chartered Surveyors, which showed that house prices are poised to fall in the coming months as soaring borrowing costs weigh on demand.

House price growth continued to slow in September, with a national net balance of 32. That was well below both August’s balance of 51, and consensus expectations of 45.

House price growth has now been slowing since April, when the net balance reached a record high of 78, and respondents said they expected that trend to continue.

The government recently doubled the threshold for stamp duty, to £250,000. But respondents said that any potential uplift from the tax cut was likely to be wiped out by "substantial" rises in mortgage rates.

As a result, 12-month expectations for house prices have turned negative, with a net balance of -18 against August’s reading of 3.

Sales also fell in September, to the most negative reading since May 2020, while new buyer interest eased to -36, a fifth month of decline. New instructions were also weaker, with stock levels remaining at historic lows.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said: "The turmoil in mortgage markets in recent weeks has compounded the increasing level of economic uncertainty, resulting from higher energy bills and the wider cost of living crisis, in shifting the dial in the housing market.

"Even though the headline price balance remains in positive territory for now, storm clouds are visible in the deterioration of near-term expectations for both pricing and sales."

Rubinsohn also warned that mortgage arrears and re-possessions, currently at historic lows, were "inevitably" going to increase over the next year.

In equity markets, Taylor Wimpey, Tesco and Close Brothers were all lower as they traded without entitlement to the dividend.

Shares in bingo hall and casino group Rank fell sharply as the company reported weaker customer spending and warned of challenging times ahead as consumers tightened their belts.

On the upside, Ladbrokes owner Entain shot to the top of the FTSE 100 as it posted an uptick in third-quarter net gaming revenue and said online gaming revenue for the fourth quarter was expected to rise, thanks in part to the World Cup.

Low-cost airline easyJet flew a little higher after saying it expects to report annual pre-tax losses of £170m to £190m, as it flew 88% of pre-Covid capacity in the fourth quarter.

Market Movers

FTSE 100 (UKX) 6,824.98 -0.02%
FTSE 250 (MCX) 16,725.66 0.69%
techMARK (TASX) 4,057.38 -0.04%

FTSE 100 - Risers

Entain (ENT) 1,132.00p 4.00%
Harbour Energy (HBR) 416.80p 3.97%
NATWEST GROUP (NWG) 220.20p 3.67%
JD Sports Fashion (JD.) 92.12p 3.27%
Rolls-Royce Holdings (RR.) 68.40p 3.26%
Lloyds Banking Group (LLOY) 40.30p 3.10%
Melrose Industries (MRO) 98.14p 2.72%
Informa (INF) 549.00p 2.58%
Barratt Developments (BDEV) 333.60p 2.52%
Flutter Entertainment (CDI) (FLTR) 10,255.00p 2.24%

FTSE 100 - Fallers

Halma (HLMA) 2,014.00p -3.17%
Taylor Wimpey (TW.) 83.90p -2.89%
Spirax-Sarco Engineering (SPX) 10,155.00p -2.45%
Croda International (CRDA) 6,392.00p -2.29%
Reckitt Benckiser Group (RKT) 5,796.00p -1.93%
Intertek Group (ITRK) 3,566.00p -1.93%
WPP (WPP) 723.80p -1.92%
Relx plc (REL) 2,189.00p -1.40%
Unilever (ULVR) 3,879.00p -1.37%
GSK (GSK) 1,340.80p -1.32%

FTSE 250 - Risers

Paragon Banking Group (PAG) 388.40p 6.12%
TI Fluid Systems (TIFS) 117.20p 5.59%
Discoverie Group (DSCV) 660.00p 5.43%
Playtech (PTEC) 494.00p 5.11%
Carnival (CCL) 567.00p 4.92%
ASOS (ASC) 532.50p 4.72%
Oxford Instruments (OXIG) 1,800.00p 4.65%
HICL Infrastructure (HICL) 151.00p 4.57%
Bellway (BWY) 1,678.00p 3.58%
Redrow (RDW) 385.80p 3.54%

FTSE 250 - Fallers

Drax Group (DRX) 485.60p -5.06%
Close Brothers Group (CBG) 873.50p -4.90%
Spirent Communications (SPT) 245.40p -2.31%
Urban Logistics Reit (SHED) 118.50p -2.07%
Kainos Group (KNOS) 1,180.00p -1.91%
Softcat (SCT) 1,091.00p -1.80%
NCC Group (NCC) 207.00p -1.66%
Primary Health Properties (PHP) 97.10p -1.62%
Liontrust Asset Management (LIO) 736.00p -1.60%
easyJet (EZJ) 281.00p -1.44%