London midday: Stocks dip amid interest rate worries

London stocks had nudged into the red by midday on Thursday, as interest rate worries dented sentiment.

The FTSE 100 was down 0.1% at 7,620.36 .

Russ Mould, investment director at AJ Bell, said: "Canada and Australia don’t often have a central role in moving the markets but the decision by both countries’ central banks to resume rate hikes this week has reverberated through the financial system and helped stoke fears about sticky inflation.

"Much of the narrative sustaining the uneven if material rally in stocks this year has been that the battle with inflation is nearly won by the central banks. If the Federal Reserve follows the lead of its Australian and Canadian counterparts then this could be badly undermined and the next Fed decision is now just a week away."

On home shores, a survey out earlier showed the housing market saw a modest recovery in May, although rising interest rates and stubborn inflation continued to weigh heavily.

According to the latest RICS UK Residential Market survey, there was an improvement in both demand and agreed sales in May.

While the net headline balance for new buyer enquiries remained in negative territory, at -18, it was up significantly on April’s -34. The agreed sales indicator rose to -7 from -18 a month previously, and from -29 in March.

House prices continued to fall, with a net balance - the difference between the percentage of surveyors seeing rises and falls in prices - of -30. But that was well above February’s low of -46 and an improvement on April’s -39.

It was also better than expected, with analysts looking for a net balance of -38.

However, the Royal Institute of Chartered Surveyors continued to sound a note of caution. Tarrant Parsons, senior economist, said: "The latest feedback indicates a modest recovery in the sales market activity, with generally less negativity compared to the end of 2022.

"However, it seems storm clouds are gathered, with the UK’s stubbornly high inflation likely undermining the recent improvement in activity by prompting the Bank of England to take further action through interest rate rises, leading to higher mortgage rates and ultimately reducing affordability and buyer demand."

The RICS survey coincided with interim results from house builder Crest Nicholson, which posted a slide in profits and warned that higher interest rates would hit the property market. Shares in the housebuilder tumbled.

Elsewhere, Vodafone, Sainsbury, WPP, Johnson Matthey, AJ Bell, Dr Martens, RHI Magnesita and C&C Group all fell as they traded without entitlement to the dividend.

Rio Tinto was a high riser after an upgrade to ‘buy’ from ‘neutral’ at Citi, while NatWest was up as JPMorgan put the shares on ‘positive catalyst’ watch.

Budget airline Wizz Air flew higher as it said it expects to post a net profit this year after it reported a net annual loss due to higher fuel prices and the war in Ukraine. The company posted an operating loss of €535m, narrower than the €642m a year earlier.

Revenue more than doubled to €3.9bn, while passenger numbers were up 88% to 51 million. Wizz said it expects a net profit of €350 - 450 million in the current financial year, subject to the absence of adverse events such as an incremental impact from the war in Ukraine or delivery delays.

FirstGroup surged after the transport operator reported a better-than-expected full-year operating profit and extended its buyback programme.

Market Movers

FTSE 100 (UKX) 7,620.36 -0.05%
FTSE 250 (MCX) 19,152.97 0.00%
techMARK (TASX) 4,564.96 -0.49%

FTSE 100 - Risers

Kingfisher (KGF) 244.00p 1.88%
Ashtead Group (AHT) 5,384.00p 1.85%
Abrdn (ABDN) 218.40p 1.58%
Hargreaves Lansdown (HL.) 844.80p 1.56%
3i Group (III) 2,006.00p 1.21%
Entain (ENT) 1,293.50p 1.13%
Airtel Africa (AAF) 128.10p 1.03%
Smith (DS) (SMDS) 318.00p 1.02%
Mondi (MNDI) 1,269.00p 0.91%
Rio Tinto (RIO) 5,149.00p 0.90%

FTSE 100 - Fallers

Vodafone Group (VOD) 74.77p -4.73%
Sainsbury (J) (SBRY) 267.60p -3.74%
Endeavour Mining (EDV) 2,010.00p -3.46%
WPP (WPP) 861.60p -2.82%
Johnson Matthey (JMAT) 1,759.50p -2.09%
Centrica (CNA) 115.85p -1.70%
Auto Trader Group (AUTO) 610.60p -1.36%
Reckitt Benckiser Group (RKT) 6,144.00p -1.32%
JD Sports Fashion (JD.) 151.95p -1.27%
Ocado Group (OCDO) 366.60p -1.27%

FTSE 250 - Risers

FirstGroup (FGP) 138.40p 16.60%
TI Fluid Systems (TIFS) 134.40p 4.19%
National Express Group (NEX) 116.60p 3.74%
Clarkson (CKN) 3,085.00p 3.70%
Investec (INVP) 461.00p 2.97%
Petershill Partners (PHLL) 161.80p 2.80%
Ruffer Investment Company Ltd Red PTG Pref Shares (RICA) 284.00p 2.34%
Balanced Commercial Property Trust Limited (BCPT) 81.90p 1.87%
Bridgepoint Group (Reg S) (BPT) 226.60p 1.52%
Ferrexpo (FXPO) 97.40p 1.51%

FTSE 250 - Fallers

Crest Nicholson Holdings (CRST) 228.40p -8.42%
Dr. Martens (DOCS) 128.80p -3.95%
Auction Technology Group (ATG) 721.00p -3.22%
Renishaw (RSW) 4,026.00p -2.57%
Morgan Advanced Materials (MGAM) 286.00p -2.56%
C&C Group (CDI) (CCR) 138.40p -2.54%
RHI Magnesita N.V. (DI) (RHIM) 2,558.00p -2.52%
FDM Group (Holdings) (FDM) 681.00p -2.44%
Energean (ENOG) 1,096.00p -2.40%
Liontrust Asset Management (LIO) 779.50p -2.32%