London midday: FTSE's gains slowly fade through morning trading

London’s top-flight index saw its gains slowly dissipating by lunchtime on Friday, following a solid session on Wall Street overnight, as investors waded through another flood of earnings reports.

At 1204 BST, the FTSE 100 was up 0.002%, or just 0.11 points, at 7,509.62, while the FTSE 250 was 0.66% firmer at 20,756.04.

“The UK stock market continued its recovery from the big falls seen at the end of last week and beginning of this week amid some solid corporate updates and strong trading in Asia and on Wall Street,” said Russ Mould at AJ Bell.

“Like several of its rivals, NatWest smashed forecasts but for investors the focus is much more on the outlook, which despite the boost to profit implied by rising interest rates, is heavily clouded by the risk of an increase in bad debts linked to the cost-of-living crisis.

“Households are under such severe financial pressure that it seems almost inevitable that some of the bank’s customers will get into difficulty.”

Mould added that, while Covid-19 was still affecting millions of people globally, AstraZeneca’s forecast for a big decline in demand for its vaccine suggested that while the pandemic was not over, the world was moving into a new phase.

“Elsewhere the pharmaceutical giant, which was almost an accidental participant in the Covid vaccine battle, reported revenue a touch ahead of expectations and outlined plans to keep innovating with the opening of a new research and development site in the US slated for 2026.”

On the economic front, a closely-watched survey showed UK house price growth slowing more than expected in April amid the ongoing squeeze on household incomes and rising interest rates.

According to lender Nationwide, house prices rose at a month-on-month pace of 0.3%, which marked their slowest clip since September.

That dragged the annual rate of increase down to 12.1% from 14.3% in March, below consensus expectations for 12.6%.

“Nevertheless, it is surprising that conditions have remained so buoyant, given mounting pressure on household budgets which has severely dented consumer confidence," said Nationwide chief economist Robert Gardner.

Gardner attributed that to the strikingly large proportion of Britons, 38%, who were either moving or planning to do so, as per the results of a separate survey conducted by Nationwide.

Elsewhere, industry research showed the number of shops standing empty fell in the first quarter, as the UK economy reopened following the worst of the pandemic.

According to the latest BRC-LDC Vacancy Monitor, the overall vacancy rate decreased to 14.1% in the first three months of the year, 0.3 percentage points down on the fourth quarter and only the second quarter of falling vacancy rates since the start of 2018.

All locations reported falls, with vacancies easing to 14.1% from 14.4% three months earlier on the high street and to 19.0% from 19.1% in shopping centres.

In retail parks, the number of empty shops eased by 0.7 percentage points to 10.6%.

“The economy has fully reopened, with more city workers back in the office and more tourists out on the streets,” said Helen Dickinson, chief executive of the British Retail Consortium.

“This allowed some businesses to grow and invest in repurposing and reopening empty units, especially in retail parks and high streets.”

Across the channel, cost of living in the single currency bloc continued rising in April as inflationary pressures broadened out from energy.

According to Eurostat, the euro area consumer price index jumped at a month-on-month seasonally-adjusted pace of 0.6%.

That pushed the annual rate of increase to 7.5% in April from 7.4% in March, as markets had widely expected.

Data for Belgium, Germany and Spain the day before had led some economists to believe that a dip to 7.3% was possible, however.

In equities, Johnson Matthey was soaring after reports that the Standard Investments affiliate of US firm Standard Industries had taken a 5.23% stake in the chemicals company.

Packaging specialist Smurfit Kappa was in the green, after reporting that both revenue and underlying earnings had grown by a third in the three months ended 31 March as a result of "significant, ongoing capital investment" it had made.

The firm said revenues were up 33% year-on-year at €3.02bn, while EBITDA had also grown 33% to €514.0m, with an EBITDA margin of 17% for the period.

Education publisher Pearson was up after saying it would receive a one-off tax boost this fiscal year as it maintained annual guidance.

The company said its effective tax rate would fall to 15-17% from 21% after the statute of limitations lapsed on a number of provisions.

On the downside, building materials supplier Travis Perkins was falling after it said higher prices would form a higher proportion of sales growth this year due to inflation, as it posted a rise in first-quarter sales and maintained guidance.

Its total sales for the three months to 31 March were up 13.6%.

“The group's forecast for materials price inflation, which was originally expected to ease into the second half of the year, is now more uncertain with pricing likely to form a higher proportion of sales growth across the year than previously thought,” the company said.

NatWest reversed its earlier small gains to be trading in the red, after it reported soaring first quarter profit driven by a rise in interest rates and income.

The state-backed bank said pre-tax profits for the three months to 31 March rose 41% to £1.2bn, up from £885m the previous year, and ahead of the £755m average of analyst forecasts compiled by the bank.

Elsewhere, manufacturer Rotork was falling despite trading in line with internal expectations in the first quarter, with order intake growing "high-single digits" year-on-year on an organic constant currency basis, as a fresh wave of Covid cases in China led to the shuttering of its key Shanghai factory.

Computer services provider Computacenter was tumbling after it reported "strong top-line growth" in the first quarter, with growth in adjusted pre-tax profits at a more modest level due to a "very large volume customer" diluting overall margins.

Note: This story has been amended to clarify that Standard Investments specifically has taken a stake in Johnson Matthey, rather than the wider Standard Industries group.

Market Movers

FTSE 100 (UKX) 7,510.81 0.02%
FTSE 250 (MCX) 20,751.26 0.64%
techMARK (TASX) 4,358.39 -0.04%

FTSE 100 - Risers

Aveva Group (AVV) 2,148.00p 4.58%
Mondi (MNDI) 1,514.50p 3.66%
Smurfit Kappa Group (CDI) (SKG) 3,388.00p 3.58%
Smith (DS) (SMDS) 334.50p 2.73%
Sainsbury (J) (SBRY) 234.90p 2.71%
Pearson (PSON) 791.60p 2.67%
Land Securities Group (LAND) 762.60p 2.36%
Dechra Pharmaceuticals (DPH) 3,654.00p 2.24%
Ocado Group (OCDO) 930.40p 2.13%
Scottish Mortgage Inv Trust (SMT) 904.00p 2.01%

FTSE 100 - Fallers

Hikma Pharmaceuticals (HIK) 1,910.00p -5.86%
Vodafone Group (VOD) 122.30p -3.73%
NATWEST GROUP PLC ORD 100P (NWG) 215.00p -3.54%
National Grid (NG.) 1,206.00p -1.59%
Lloyds Banking Group (LLOY) 45.59p -1.57%
Hargreaves Lansdown (HL.) 925.00p -1.32%
BT Group (BT.A) 177.15p -1.20%
AstraZeneca (AZN) 10,436.00p -1.19%
Standard Chartered (STAN) 541.20p -1.17%
International Consolidated Airlines Group SA (CDI) (IAG) 143.02p -1.05%

FTSE 250 - Risers

Johnson Matthey (JMAT) 2,223.00p 18.78%
Oxford Biomedica (OXB) 584.00p 7.16%
Coats Group (COA) 71.50p 5.30%
Fidelity China Special Situations (FCSS) 250.50p 4.81%
Biffa (BIFF) 347.20p 4.77%
Playtech (PTEC) 529.50p 3.82%
International Public Partnerships Ltd. (INPP) 167.60p 3.46%
PureTech Health (PRTC) 180.00p 3.45%
Dr. Martens (DOCS) 217.60p 3.42%
Hochschild Mining (HOC) 118.60p 3.31%

FTSE 250 - Fallers

Cranswick (CWK) 3,248.00p -5.64%
Indivior (INDV) 316.60p -4.23%
Computacenter (CCC) 2,638.00p -3.65%
Currys (CURY) 93.50p -3.26%
Network International Holdings (NETW) 260.00p -2.77%
Rotork (ROR) 294.40p -2.58%
WH Smith (SMWH) 1,468.50p -1.87%
Premier Foods (PFD) 111.00p -1.77%
FirstGroup (FGP) 111.50p -1.76%
HGCapital Trust (HGT) 420.50p -1.75%