London midday: Stocks extend gains but oil giants BP, Shell under the cosh

London stocks had extended gains by midday on Thursday as a retreat in US Treasury yields provided some relief after the recent selloff.

The FTSE 100 was up 0.5% at 7,452.42.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Another day, and another US jobs report has set the tone, but this time it’s relief rather than anxiety washing through. The FTSE 100 is treading water amid calmer sentiment in early trading, after tech stocks on Wall Street powered indices higher. Hopes are increasing that interest rates in the US might not have to stay at quite such high levels for quite so long.

"Investors are fixated on data indicating the strength of the American economy and what it will mean for monetary policy. The ADP National Employment report showed that 89,000 jobs were created in the private sector in September, far below estimates. If this pattern is reflected in the key non-farm payrolls report on Friday, it could mean cuts to interest rates might be brought a little closer on the horizon and the possibility of another hike will diminish fast. Fed policymakers want signs that the economy is cooling to keep a lid on bubbling inflation before easing restrictive policy. If Friday’s payroll numbers indicate employers are becoming a lot more cautious, there may well be another relief wave, but attention is then set to turn quickly to whether the US may suffer a harder landing after all.

"Closely watched US Treasury yields have also retreated from highs reached this week, as the market reassesses the potential path of interest rates.”

On home turf, a survey showed that the construction sector contracted sharply in September as new orders tumbled at the fastest rate for over three years.

The latest S&P Global CIPS UK construction purchasing managers’ index was 45.0, a steep decline on August’s 50.8 and the first time it has fallen below the neutral 50.0 level since June. It was also well below consensus expectations of 50.0.

A reading above 50.0 indicates growth, while one below suggests contraction.

The worst-performing sector was residential, which fell from 40.7 to 38.1. Respondents cited cutbacks to housebuilding projects amid higher borrowing costs and weaker demand. It was the lowest level since May 2020, and the worst since April 2009 once the pandemic was stripped out.

Civil engineering also fell, however, to 45.7 from 52.4, while commercial building slid to 47.7 from 54.2.

Total new business orders received by companies across the sector declined for the third time in the past four months, at the steepest rate since May 2020.

Expectations for the coming year were also the weakest in 2023 to date, although the number of firms expecting output to rise - 41% - continued to outstrip those forecasting a decline, at 17%.

Tim Moore, economics director at S&P Global Market Intelligence, said: "A rapid decline in house building activity acted as a major drag on workloads, with construction companies widely commenting on cutbacks to new residential development projects in the wake of sluggish demand and rising borrowing costs.

"Concerns about the domestic economic outlook also dampened client spending, which contributed to the fastest reduction in commercial building since January 2021."

In equity markets, tobacco giant Imperial Brands gained after saying it will buy back a further £1.1bn in shares as it announced it was on track to hit forecasts this year.

Abrdn was boosted by an upgrade to ‘buy’ at Panmure.

Ventilation products supplier Volution surged as it reported a rise in full-year revenue and profit, pointing to solid demand.

On the downside, oil giants BP and Shell were among the worst performers following a sharp drop in the price of Brent crude on Wednesday.

Weir Group, Bank of Georgia and Hays lost ground as they traded without entitlement to the dividend.

Metro Bank tumbled as it confirmed it is considering its refinancing options following reports it was looking to raise hundreds of millions of pounds from investors. The challenger bank said in a statement that it was "evaluating the merits of a range of options, including a combination of equity issuance, debt issuance and / or refinancing and asset sales".

Metro said no decision has been made on whether to proceed with any of these options.

The company said that following its update on capital planning on 12 September, it continues to consider how best to enhance its capital resources, "with particular regard to the £350m senior non-preferred notes due in October 2025".

The Financial Times cited people with knowledge of the plan as saying that Metro was looking to raise as much as £600mn after its share price fell nearly 50% in recent weeks.

Market Movers

FTSE 100 (UKX) 7,452.42 0.54%
FTSE 250 (MCX) 17,656.92 0.94%
techMARK (TASX) 4,102.65 0.50%

FTSE 100 - Risers

Imperial Brands (IMB) 1,645.00p 4.11%
Tesco (TSCO) 279.90p 3.40%
Entain (ENT) 924.20p 2.39%
Halma (HLMA) 1,955.00p 2.22%
Rentokil Initial (RTO) 610.20p 2.21%
Flutter Entertainment (CDI) (FLTR) 13,425.00p 2.17%
Compass Group (CPG) 2,052.00p 2.04%
International Consolidated Airlines Group SA (CDI) (IAG) 154.25p 1.98%
Reckitt Benckiser Group (RKT) 5,856.00p 1.95%
Auto Trader Group (AUTO) 624.20p 1.93%

FTSE 100 - Fallers

BP (BP.) 491.55p -1.58%
Shell (SHEL) 2,498.00p -0.93%
JD Sports Fashion (JD.) 143.00p -0.90%
GSK (GSK) 1,476.20p -0.71%
Anglo American (AAL) 2,129.00p -0.58%
Barclays (BARC) 153.00p -0.57%
SSE (SSE) 1,501.50p -0.43%
Airtel Africa (AAF) 119.80p -0.42%
Endeavour Mining (EDV) 1,500.00p -0.40%
Glencore (GLEN) 441.70p -0.36%

FTSE 250 - Risers

Volution Group (FAN) 384.40p 14.20%
International Distributions Services (IDS) 260.40p 7.78%
Wizz Air Holdings (WIZZ) 1,933.50p 4.51%
easyJet (EZJ) 441.30p 4.47%
Spirent Communications (SPT) 93.85p 4.16%
Ferrexpo (FXPO) 74.00p 4.15%
Grainger (GRI) 235.40p 3.43%
Genus (GNS) 2,084.00p 3.27%
Bridgepoint Group (Reg S) (BPT) 190.20p 3.15%
Ascential (ASCL) 224.60p 3.12%

FTSE 250 - Fallers

Bluefield Solar Income Fund Limited (BSIF) 113.40p -2.91%
Hays (HAS) 103.00p -2.74%
Oxford Instruments (OXIG) 2,005.00p -2.43%
Aston Martin Lagonda Global Holdings (AML) 258.00p -2.42%
Bank of Georgia Group (BGEO) 3,430.00p -2.42%
Morgan Sindall Group (MGNS) 1,920.00p -1.64%
Wood Group (John) (WG.) 144.40p -1.57%
Bytes Technology Group (BYIT) 479.60p -1.44%
Shaftesbury Capital (SHC) 109.70p -1.08%
Harbour Energy (HBR) 234.90p -1.05%