London midday: Stocks edge up ahead of FOMC minutes; M&S rebounds

London stocks nudged higher by noon on Wednesday as investors sifted through a raft of corporate news and looked ahead to the release of Federal Reserve minutes, although a downgrade of China’s credit rating weighed on the mining sector.

The FTSE 100 was up 0.3% to 7,504.96 at midday, while the pound was flat versus the dollar at 1.2962.

With no major data releases due in the UK, the main macroeconomic focus will be on the Federal Open Market Committee's latest minutes at 1900 BST.

Oanda analyst Craig Erlam said: "While the dollar’s performance in recent months would suggest otherwise, traders have become increasingly convinced that we’ll see a rate hike in June, the second this year, but questions are being asked about where the Fed will go from there. A lot of the expectation in the final couple of months of the year came from the expectation that President Donald Trump would announce huge spending and tax reform plans but as of yet, that’s not happened."

Meanwhile, investors were mulling over news that Moody’s has downgraded China’s credit rating by one notch to A1 from Aa3. The ratings agency - which also changed its outlook on China to stable from negative - said the downgrade reflects expectations that the country’s financial strength would “erode somewhat over the coming years”.

Fixed income strategist Jim Reid at Deutsche Bank noted that it was the first time Moody’s has cut China’s rating since 1989 and that the rating was now level with that of Japan and below other Asia economies of Taiwan and Macau.

Although the downgrade didn’t appear to be having too much of an effect on wider sentiment, it did hit London’s mining stocks, which are heavily dependent on demand from China, with Randgold Resources, Rio Tinto and Fresnillo among the fallers.

In corporate news, Marks & Spencer reversed earlier losses to trade higher after it reported steady sales but a 64% plunge in profit for the year to 1 April after taking a £437.4m hit mainly from changes to its pension scheme, international stores, and UK head office.

BAE Systems was the biggest riser on the FTSE 100 however as UBS said the new US defence budget blueprint supports accelerated revenue growth for the company, with around 37% of its sales exposed to US defence.

Similarly, Severn Trent advanced after analysts at JP Morgan lifted their target price a day after the water company surprisingly upped its dividend.

ZPG racked up healthy gains as it said first-half revenues rose 22%, while Dixons Carphone rallied as it highlighted a 2% increase in fourth-quarter like-for-like revenue.

Soft drinks producer Britvic was on the front foot as it posted an 11.5% jump in first-half revenue and said it was on track to deliver a full-year performance in line with market expectations.

Glencore fell initially as it confirmed it has been in talks with US grain trader Bunge over a potential merger with its agricultural arm, before righting itself later.

B&Q owner Kingfisher led the fallers after it said sales in the first three months of the year declined 0.6% due to weak French sales. Analysts at IG said: "Improving eurozone economic figures would suggest that this problem is more related to Kingfisher itself than any problem with the broader French market, and this is perhaps why the shares have taken such a battering this morning."

Mediclinic was under the weather as it posted a 25% jump in full-year pre-tax profit but cautioned that revenues in the Middle East will only rise marginally in the coming year.

Babcock lost ground despite reporting a rise in full-year pre-tax profit and revenue and lifting its dividend.

Acacia Mining was a major faller after being accused by the Tanzania government of under-declaring the mineral content of its gold and copper exports, so the export ban on the London-listed company will continue. A presidential committee investigation into the export of gold/copper concentrates has stated that Acacia "has not fully declared all of the minerals contained in the concentrate".

Commercial laundry group Berendsen was down after reconfirming its 2017 profit forecast and saying the bid from Elis "very significantly undervalues" the business.

TalkTalk and Homeserve were hit by downgrades at Goldman Sachs and RBC Capital Markets, respectively, while Go-Ahead was dragged lower by a downgrade from JP Morgan Cazenove. However, National Express was boosted by an upgrade at JPM.

Market Movers

FTSE 100 (UKX) 7,504.96 0.26%
FTSE 250 (MCX) 19,956.75 0.18%
techMARK (TASX) 3,608.73 0.58%

FTSE 100 - Risers

BAE Systems (BA.) 659.50p 2.81%
Marks & Spencer Group (MKS) 396.20p 2.19%
Severn Trent (SVT) 2,539.00p 1.93%
easyJet (EZJ) 1,325.00p 1.84%
TUI AG Reg Shs (DI) (TUI) 1,161.00p 1.75%
Royal Bank of Scotland Group (RBS) 269.30p 1.66%
Whitbread (WTB) 4,277.00p 1.59%
Old Mutual (OML) 195.40p 1.35%
Hargreaves Lansdown (HL.) 1,385.00p 1.32%
AstraZeneca (AZN) 5,199.00p 1.13%

FTSE 100 - Fallers

Kingfisher (KGF) 335.20p -6.68%
Mediclinic International (MDC) 841.50p -3.16%
Randgold Resources Ltd. (RRS) 7,150.00p -1.24%
Rio Tinto (RIO) 3,154.00p -1.21%
Fresnillo (FRES) 1,563.00p -1.20%
CRH (CRH) 2,778.00p -1.10%
SSE (SSE) 1,537.00p -0.90%
Hikma Pharmaceuticals (HIK) 1,667.00p -0.77%
Ashtead Group (AHT) 1,556.00p -0.51%
Merlin Entertainments (MERL) 515.00p -0.48%

FTSE 250 - Risers

Dixons Carphone (DC.) 345.50p 5.79%
SIG (SHI) 151.60p 4.55%
National Express Group (NEX) 376.30p 3.69%
Cranswick (CWK) 3,058.00p 3.45%
ZPG Plc (ZPG) 370.00p 3.32%
Britvic (BVIC) 722.00p 2.70%
Sanne Group (SNN) 665.00p 2.31%
Dairy Crest Group (DCG) 623.50p 2.21%
NMC Health (NMC) 2,188.00p 2.10%
Auto Trader Group (AUTO) 415.70p 2.06%

FTSE 250 - Fallers

Acacia Mining (ACA) 387.00p -10.79%
Softcat (SCT) 426.20p -6.86%
TalkTalk Telecom Group (TALK) 177.10p -3.17%
Homeserve (HSV) 753.00p -3.15%
Wood Group (John) (WG.) 738.00p -2.96%
Hochschild Mining (HOC) 278.50p -2.93%
Petrofac Ltd. (PFC) 613.50p -2.93%
Big Yellow Group (BYG) 774.50p -2.52%
Go-Ahead Group (GOG) 1,815.00p -2.00%
Amec Foster Wheeler (AMFW) 532.50p -1.84%