London midday: FTSE pares opening gains; UK construction data in focus

London stocks had pared gains by midday on Tuesday as the relief rally lost steam following a heavy selloff a day earlier which saw global markets plunge.

The FTSE 100 was up just 0.1% at 8,018.15, having briefly dipped into the red.

Stocks tumbled on Monday after the non-farm payrolls report for July released on Friday came in much weaker than expected, fuelling concerns the Fed may have made a mistake by not cutting rates last week.

Russ Mould, investment director at AJ Bell, said: "Fears about a sharp recession in the US, engendered by weak jobs data, remain and the unwinding of the yen carry trade may continue to play out, although whether the market moves are being exacerbated because many traders are on the beach is an open question.

"The next key test will come with the market open in the US this afternoon, with futures prices suggesting a recovery rally will take hold on Wall Street too.

"Investors will have to wait until next week for significant economic releases from the US, with data on consumer sentiment, retail sales and inflation all due. These could help point towards whether the Federal Reserve will cut rates in September and how far they might go."

Investors were also digesting the latest reading on the UK construction sector, which showed activity grew in July at the fastest pace in 26 months.

The headline S&P Global construction purchasing managers’ index rose to 55.3 from 52.2 in June. This marked the fastest rate of expansion since May 2022.

A reading above 50.0 indicates growth, while a reading below signals contraction.

The survey found that all three categories of construction saw activity increase in July as work on housing projects returned to growth.

Commercial activity increased solidly, but the fastest expansion was seen in civil engineering, where the rate of growth accelerated to the sharpest in almost two-and-a-half years.

Andrew Harker, economics director at S&P Global Market Intelligence, said: "The election-related slowdown in growth seen in June proved to be temporary, with the pace of expansion roaring ahead in July. Firms saw the strongest increases in new orders and activity since 2022 as paused projects were released amid reports of improved customer confidence.

"The strength of demand moved the sector closer to capacity, bringing a recent period of improving supplier performance to an end. There were also signs of inflationary pressures picking up, something that will need to be watched closely if demand strength continues in the months ahead."

In equity markets, InterContinental Hotels rallied after saying its bottom line shrank by 10% in the first half due to the planned reduction of its so-called System Fund surplus, but underlying profits improved by 12% due to solid margin improvements and an acceleration in RevPAR growth in the second quarter.

Operating profit from reportable segments improved to $535m, up from $479m the year before.

Rolls-Royce got a boost as JPMorgan Cazenove lifted its price target on the stock to 535p from 475p "after another set of strong results".

Keller surged as it said its full-year performance was set to be "materially ahead" of current market expectations after a strong first half.

Flexible workspace provider IWG racked up strong gains as it reported record first-half revenue.

On the downside, Domino’s Pizza was in the red as it warned full-year profit would be towards the lower end of the current range of market expectations after a slower start to the first half.

Rightmove lost ground as it said its contract with OpenRent will end on 1 September, but reiterated its revenue and margin guidance for the full year.

Market Movers

FTSE 100 (UKX) 8,018.15 0.12%
FTSE 250 (MCX) 20,319.95 0.41%
techMARK (TASX) 4,694.69 -0.06%

FTSE 100 - Risers

Melrose Industries (MRO) 477.30p 5.62%
Rolls-Royce Holdings (RR.) 462.60p 4.24%
Intermediate Capital Group (ICG) 1,968.00p 2.39%
Lloyds Banking Group (LLOY) 55.80p 2.27%
InterContinental Hotels Group (IHG) 7,504.00p 2.04%
Barclays (BARC) 209.80p 1.75%
Standard Chartered (STAN) 698.60p 1.72%
3i Group (III) 2,937.00p 1.56%
Schroders (SDR) 340.40p 1.43%
M&G (MNG) 196.95p 1.42%

FTSE 100 - Fallers

Rightmove (RMV) 523.20p -4.53%
Burberry Group (BRBY) 695.00p -2.63%
Haleon (HLN) 362.60p -1.79%
Croda International (CRDA) 3,878.00p -1.75%
GSK (GSK) 1,524.50p -1.45%
AstraZeneca (AZN) 12,284.00p -1.40%
Entain (ENT) 512.40p -1.39%
Smith & Nephew (SN.) 1,151.50p -1.33%
Hikma Pharmaceuticals (HIK) 1,832.00p -1.29%
Fresnillo (FRES) 543.50p -1.18%

FTSE 250 - Risers

Keller Group (KLR) 1,522.00p 10.45%
International Workplace Group (IWG) 171.10p 7.21%
Wood Group (John) (WG.) 134.40p 5.00%
North Atlantic Smaller Companies Inv Trust (NAS) 4,030.00p 4.68%
Bridgepoint Group (Reg S) (BPT) 277.60p 3.74%
Senior (SNR) 152.20p 3.26%
Abrdn (ABDN) 164.75p 2.94%
Patria Private Equity Trust (PPET) 529.00p 2.72%
Bytes Technology Group (BYIT) 471.60p 2.57%
IP Group (IPO) 36.85p 2.50%

FTSE 250 - Fallers

Domino's Pizza Group (DOM) 287.60p -6.93%
Morgan Advanced Materials (MGAM) 305.00p -3.33%
Trustpilot Group (TRST) 191.60p -2.54%
Hilton Food Group (HFG) 873.00p -2.35%
Endeavour Mining (EDV) 1,594.00p -1.85%
Aston Martin Lagonda Global Holdings (AML) 135.80p -1.59%
Primary Health Properties (PHP) 91.25p -1.56%
Wizz Air Holdings (WIZZ) 1,427.00p -1.52%
Zigup (ZIG) 392.00p -1.51%
Elementis (ELM) 149.40p -1.32%