London midday: Oil plays lead gains after strong morning

London's equity markets remained in the green by lunchtime on Monday, with energy shares pacing the advance.

At 1200 BST, the FTSE 100 was ahead 1.17% at 7,242.74, and the FTSE 250 was 0.97% firmer at 19,016.11.

“Given the US and Asian tailwinds, the UK markets also followed suit in early trade, with a broad mark-up of prices building on Friday’s strong close,” said Interactive Investor head of markets Richard Hunter.

“Early features included a bounce for oil and mining stocks, while there was also interest in retailers and those stocks with an Asian exposure such as HSBC and Burberry.”

Hunter said that there was, however, a “considerable mountain” to climb to reverse the declines from earlier in the year.

“The FTSE 100 still has a good chance of being one of the first to recover, now down by just over 2% in the year to date, while the FTSE 250 is just out of bear market territory for the time being after a loss of 19%.

“The earnings season has the potential to provide some relief, although the likelihood of a global slowdown is still the base case for many.”

On the economic front, house prices pushed higher for the sixth consecutive month according to property marketing platform Rightmove, fuelled by a shortage of homes for sale.

The average price of a property coming to market rose by 0.4% to £369,968 in July compared to June, or by 9.3% year-on-year.

As a result, Rightmove had revised its 2022 full-year forecast for house price growth up to 7%, from earlier guidance for 5%.

It found “a continuing desire to move and low numbers of homes for sale” were driving price growth, despite the cost of living crisis.

While the number of sellers rose 13% on 2021, the number of available homes for sale was down 40% on 2019.

“Though a softening in demand is moving the market from a boil to a simmer, it remains 26% up on 2019,” said Tim Bannister, Rightmove’s director of property science.

“With such an imbalance remaining between supply and demand, prices look underpinned and we would therefore only expect typical smaller seasonal month-on-month falls, rather than more significant price falls in the second half of the year.”

In equity markets, oil giants Shell and BP were both more than 5% higher, as prices for the thick black stuff rose.

Brent crude futures were last up 2.3% on ICE at $103.49 per barrel, and West Texas Intermediate 1.98% firmer on NYMEX at $99.52.

Elsewhere, Euromoney Institutional Investor surged after agreeing to be bought by a private equity consortium led by France’s Astorg Asset Management for £1.6bn.

The consortium, which also comprises London-based Epiris, will pay 1,461p per share in cash.

Deliveroo reversed earlier losses and was in the green by midday, even after it downgraded its full-year revenue guidance, highlighting "consumer headwinds" amid the cost-of-living crisis.

Based on the gross transaction value seen in the second quarter and a more cautious economic outlook, the company now forecast full-year gross transaction value growth of between 4% and 12% at constant currency, down from previous guidance of 15% to 25%.

On the downside, Direct Line Insurance tumbled after it cut its full-year profits outlook after a spike in motor claims inflation and market volatility.

The company revised its combined operating ratio target range to 96% to 98% from a previous 93% to 95% outlined in May.

A ratio closer to 100% indicates reduced profitability.

Peer Admiral Group was also under pressure, with a downgrade to both stocks from Jefferies adding to the negative sentiment.

Reporting by Josh White at Sharecast.com. Additional reporting by Michele Maatouk and Abigail Townsend.