London midday: Stocks fall as investors mull services data

London stocks had fallen into the red by midday on Friday as data showed that growth in the UK service sector unexpectedly slowed in June as uncertainty around the election weighed on business.

The FTSE 100 was down 0.8% at 8,210.30.

According to flash data from S&P Global, the UK manufacturing output index hit a 26-month high at 54.2, while the manufacturing PMI ticked up 0.2 points to an above-forecast 51.4.

However, in contrast the services PMI business activity index fell sharply, hitting a surprise seven-month low of 51.2 compared to 52.9 a month previously.

Respondents said that while higher customer demand had boosted activity levels, it had been partly offset by spending decisions being put on hold until after the election on 4 July.

As a result, the composite output index fell from 53.0 to 51.7, a seven-month low. Analysts had expected the index to be unchanged month-on-month.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "Flash PMI data for June signal a slowing in the pace of economic growth, indicating that GDP is now growing at a sluggish quarterly rate of just over 0.1%.

"The slowdown in part reflects uncertainty around the business environment in the lead up to the general election, with many firms seeing a hiatus in decision making pending clarity on various policies."

Investors were also mulling figures released earlier by the Office for National Statistics, which showed that retail sales rose 2.9% in May, versus expectations for a 1.5% jump. This followed a 1.8% decline in April, which was revised from a 2.3% fall previously reported.

The ONS said sales volumes rose across most sectors, with clothing retailers and furniture stores rebounding following poor weather in April.

The data showed that non-food store sales volumes - the total of department, clothing, household, and other non-food stores - rose 3.5% in May. This was the largest monthly rise since April 2021, and followed a 3% fall in April.

On the year, retail sales were up 1.3% in May and were 0.5% below their pre- pandemic level in February 2020.

Elsewhere, a survey showed UK consumer confidence strengthened in June as hopes for the economic recovery gained ground.

The latest UK consumer confidence index from GfK was -14, up three points on May and well above June 2023, when it was -24.

In equity markets, Ocado was the top gainer on the FTSE 100, having tanked on Thursday after announcing that the planned launch of North American partner Sobeys' customer fulfilment centre in Vancouver had been paused and that the two have agreed to end terms related to mutual exclusivity.

United Utilities and Severn Trent were both up after JPMorgan Cazenove upgraded the shares to ‘overweight’ from ‘neutral’ and to ‘neutral’ from ‘underweight’, respectively.

"We believe that the share prices now reflect headwinds including low regulatory visibility, and expectations of less attractive proposed returns compared to electricity networks," it said.

Events group Informa was little changed, giving back earlier gains after saying it was on track to deliver earnings at the upper end of guidance as revenues grew by 10.1% in the year to date.

Britvic rallied after confirming it had rejected two takeover proposals from Danish brewer Carlsberg, the first at 1,200p per share and the second at 1,250p.

On the downside, B&M European Value Retail was knocked lower by a downgrade to ‘underweight’ at Morgan Stanley.

Market Movers

FTSE 100 (UKX) 8,210.30 -0.75%
FTSE 250 (MCX) 20,395.06 -0.51%
techMARK (TASX) 4,804.49 -0.37%

FTSE 100 - Risers

Ocado Group (OCDO) 318.40p 2.71%
United Utilities Group (UU.) 1,008.50p 1.52%
Burberry Group (BRBY) 982.40p 1.05%
Severn Trent (SVT) 2,459.00p 0.74%
Centrica (CNA) 136.95p 0.74%
Flutter Entertainment (DI) (FLTR) 14,830.00p 0.71%
Compass Group (CPG) 2,247.00p 0.40%
British American Tobacco (BATS) 2,469.00p 0.37%
London Stock Exchange Group (LSEG) 9,632.00p 0.29%
Fresnillo (FRES) 566.50p 0.27%

FTSE 100 - Fallers

Rolls-Royce Holdings (RR.) 472.10p -2.76%
Smurfit Kappa Group (CDI) (SKG) 3,650.00p -2.35%
DCC (CDI) (DCC) 5,570.00p -2.19%
CRH (CDI) (CRH) 5,876.00p -2.10%
B&M European Value Retail S.A. (DI) (BME) 467.20p -2.08%
Antofagasta (ANTO) 2,102.00p -2.05%
Hikma Pharmaceuticals (HIK) 1,959.00p -2.05%
Land Securities Group (LAND) 624.00p -1.96%
Ashtead Group (AHT) 5,332.00p -1.88%
3i Group (III) 3,101.00p -1.87%

FTSE 250 - Risers

W.A.G Payment Solutions (WPS) 71.80p 8.79%
Britvic (BVIC) 1,077.00p 6.11%
Barr (A.G.) (BAG) 622.00p 4.36%
ITV (ITV) 79.75p 3.98%
Hammerson (HMSO) 28.50p 2.00%
Trainline (TRN) 323.40p 1.44%
C&C Group (CDI) (CCR) 160.40p 1.13%
Tate & Lyle (TATE) 622.00p 1.06%
Indivior (INDV) 1,298.00p 1.01%
Ninety One (N91) 173.30p 0.99%

FTSE 250 - Fallers

Aston Martin Lagonda Global Holdings (AML) 144.80p -4.99%
Patria Private Equity Trust (PPET) 548.00p -3.69%
CMC Markets (CMCX) 306.00p -3.47%
Playtech (PTEC) 456.00p -3.29%
Wizz Air Holdings (WIZZ) 2,260.00p -3.09%
PureTech Health (PRTC) 209.00p -2.79%
Octopus Renewables Infrastructure Trust (ORIT) 71.00p -2.74%
4Imprint Group (FOUR) 5,940.00p -2.62%
Energean (ENOG) 1,046.00p -2.52%
Telecom Plus (TEP) 1,744.00p -2.24%